(Reuters circulated the following article by John Crawley and Caren Bohan on February 1.)
WASHINGTON — The Bush administration is backing off its push to cut all subsidies for Amtrak and plans to offer some assistance for the struggling passenger railroad in the upcoming budget, government sources say.
Administration officials declined to disclose the request ahead of its announcement on the federal budget next week. But congressional and other government sources familiar with the funding process said the proposed Amtrak figure for fiscal 2007 would total $900 million, which was the amount proposed two years ago.
Much of the money would be tightly controlled by administration transportation planners, who would release funding through grants when certain cost-saving goals or business reforms are met.
An Amtrak spokesman declined to comment as did a spokesman for the White House Office of Management and Budget.
Amtrak, created by Congress 35 years ago as a for-profit corporation after private railroads gave up service, depends on an annual subsidy to survive. Its operating losses have grown to more than $1 billion over the past three years, prompting pressure from budget and transportation planners for Amtrak to eliminate unprofitable routes and change core business practices.
But Congress has long been reluctant to cut Amtrak spending because many members have constituents who benefit from train service and jobs.
While Amtrak said in 2004 that $900 million would not be enough to run the railroad, the proposal served as a starting point for negotiations that eventually produced a $1.2 billion subsidy for fiscal 2005.
UNEXPECTED SHIFT
But in an unexpected shift, the White House proposed in its budget for fiscal 2006 to eliminate the annual operating subsidy — save some commuter rail and maintenance support.
Amtrak supporters and other rail advocates accused the Transportation Department of trying to dismantle Amtrak through bankruptcy. Critics included respected railroad executive David Gunn, who was fired as Amtrak’s president last fall.
Gunn said he was an obstacle to change and clashed with the board over the administration’s reform agenda.
The move also shocked railroad executives and annoyed lawmakers, who dug in during budget talks and eventually approved $1.3 billion in aid for the fiscal year that began on Oct. 1.
Nevertheless, the administration believes its zero-funding strategy created momentum for change and permits a less confrontational approach this year. “The board of Amtrak has blessed what the administration wanted,” one government source said.
Congress, responding to a presidential veto threat of crucial transportation legislation late last year, approved other modifications.
Changes included steps by Amtrak to move toward deeper involvement by states in service and funding decisions, an internal review of money losing routes and possible privatization of some service.
Amtrak is also required by law to reduce its annual subsidy by saving money on food sales and first class service. It must limit discounts on peak fares. The Transportation Department controls financing for priority capital improvements that are projected to yield savings.
An administration plan to separate Amtrak from the responsibility of managing its flagship Northeast Corridor between Boston, New York and Washington — and possibly selling it — was criticized sharply by rail experts and some in Congress. It remains unclear if the administration will pursue that initiative again with Congress moving forward on its own rail funding and capital improvement proposals.