(Forbes.com published the following Reuters article.)
WASHINGTON — The Bush administration says it is willing to quickly grant Amtrak the money it needs to operate but warns it may require cuts in service or delays in capital improvements to ensure the national railroad’s efficiency and fiscal discipline.
In a letter this week to Amtrak President David Gunn, the Transportation Department spelled out its guidelines for approving Amtrak funds through Sept. 30, the end of the fiscal year.
The guidelines build on mandates Congress imposed last month as a condition for approving $1.05 billion in subsidies. The changes were pushed by Amtrak critics who favored a lower subsidy and tighter control over how the railroad spends its money.
Federal aid for Amtrak now goes to the Transportation Department, which must approve the railroad’s spending plan and disperse grants. Previously, Amtrak had the final say on where to direct its subsidy.
The guidelines say Amtrak’s grant requests must include “sufficient supporting detail and justification” to ensure the money will be spent responsibly.
They further say Amtrak may have to reduce service or change plans for capital improvements to ensure the railroad meets contractual obligations.
Critics have targeted Amtrak’s long-distance trains, which operate at a huge loss.
NO RUBBER STAMP
Transportation Secretary Norman Mineta can reject some or all of Amtrak’s grant requests if he is not satisfied with spending proposals. Amtrak is set to receive the first installment of grant money early next month.
“DOT will not be a rubber stamp for what Amtrak proposes,” Kenneth Mead, the agency’s inspector general, told a congressional hearing on Thursday.
Mead said he was skeptical that Amtrak could avert another cash crisis this summer based on its operating results since the fiscal year began in October. The railroad nearly shut down service last July before negotiating a government bailout.
Amtrak has never made money in its 32-year history and posted a $1.2 billion operating loss in fiscal 2002.
Its passenger volume ran even with projections from October through January, but ticket revenue was behind by about 9 percent because of discounting.
The railroad hopes to save money through work rule changes from its 20,000 unionized employees, which have yet to be negotiated, and its streamlined mail hauling service that could lead to 200 job cuts.
“There are certainly many variables on ridership and expenses. We’ll see what the next six or seven months hold,” said Amtrak spokesman Bill Schulz.