Hotline #249-A - June 29, 2002

Amtrak and the Bush Administration finalized their tentative agreement to keep trains running, in the evening on Friday, June 28. A tentative agreement (discussed in material posted here June 28) had been reached June 26.

A statement from Transportation Secretary Norman Mineta listed the following terms to the agreement:

• "Amtrak will provide clear, timely, financial information to the board of directors and DOT;
• "Amtrak will complete a third-party study to identify a full range of possible management efficiencies and cost reduction options;
• "Amtrak will provide a complete list and value of its current assets;
• "Amtrak will provide a list of at least $100 million in operating reductions.
• "In addition, Amtrak agrees to seek the cooperation of all its employees in achieving the operating cost reductions needed to meet Amtrak's financial crisis."

In the end, there was a compromise on two sticking points that lingered after the tentative agreement was reached. An Administration requirement -- to keep Amtrak from entering into labor agreements that would prevent contracting out work now done by union employees -- was dropped. Another Administration requirement, to set a target of cost savings for 2003, was retained.

The $100 million Amtrak will get in loan guarantees from the DOT must be repaid by November 22, using Amtrak's 2003 appropriation. If the Administration sticks to its position of an appropriation of only $521 million, there won't be much left over.

Another condition, not on the list above, is that Amtrak not spend any of its own money planning or operating new services, through fiscal 2003. This has implications for the several states that are exploring high-speed services, as well as states interested in expanding conventional services, like California, Florida, Maine, and Vermont. The clear intent of the Administration is to stabilize Amtrak before letting it expand, but banning planning activities pushes start-up dates ever farther into the future.

The reaching of an agreement is very good news, in terms of fending off an immediate shutdown crisis for Amtrak and a good share of commuter operations. However, several challenges remain -- getting Congressional funding or loan guarantees to operate all the way to September 30, getting an adequate appropriation for 2003 (opposed by the Administration without further "reforms," quite possibly including a demand to cut routes), and setting up a sustainable policy and funding framework for long-term survival and growth.

As regards Congress' short-term role, the June 29 Washington Post quotes Senate Transportation Appropriations Chairman Patty Murray (D.-Wash.): "When Congress returns next Monday [July 8], I intend to press for a direct appropriation for Amtrak's urgent needs so that Amtrak does not find itself even deeper in debt in October" [the start of fiscal 2003].