Boston Herald
Thursday, October 3, 2002

Deep Amtrak debts spur backers to urge revamping, fund hike

by Jules Crittenden

Rail advocates say a new federal report that describes more than $22 billion in Amtrak debt and liabilities shows the need for dramatically restructuring the nation's passenger rail service and greater federal subsidies.

Despite Amtrak projections of 25 percent growth in ridership over the next decade, its financial woes and infrastructure problems still threaten the passenger rail service's viability, recent reports issued by the General Accounting Office indicate.

According to a GAO report released this week, Amtrak's secured liabilities included $3.8 billion in debt to private lenders for equipment and property. Amtrak has another $4.4 billion in unsecured liabilities, including severance pay and debts to vendors. It owes the government $14.2 billion on a promissory note that has a principal balance of $3.8 billion.

Efforts to reach an Amtrak spokesman and directors yesterday were unsuccessful.

Several rail advocates said the reports underscore the need for greater government subsidies to improve rail service, making it more competitive with air travel and road travel.

``Amtrak's debt is the direct result of Congress' inability or unwillingness to act on the needs of the national transportation system,'' said James RePass of the Boston-based National Corridors Initiative, a rail advocacy group. ``Are we just going to pay for highways and airports with tax dollars, and not pay for rail?''

Another rail advocate, Gilbert Carmichael, said Amtrak's increasingly dire situation points out the need to split Amtrak, creating a new federal agency to manage and maintain the Northeast Corridor's infrastructure. That would allow the issuance of bonds to finance needed improvements, while Amtrak, freight and regional commuter rail services are charged fees for using it.

The report does not say how much Amtrak's assets are worth. The equipment is old, it says, and the market value of its most valuable property, the Northeast Corridor, hasn't been tested.

The prospect of bankruptcy increased Friday with a vote in the House Appropriations Committee to give Amtrak $762 million, less than the $1.2 billion the railroad says it needs to keep running for another year. Although the Senate approved a $1.2 billion appropriation for Amtrak, the Bush administration wants to give it $521 million.

In 1997, Congress gave Amtrak five years to wean itself from federal subsidies. If the railroad could not meet that goal by the end of 2002, lawmakers ordered it to draw up a plan to liquidate its assets.

Russ Capon of the National Association of Railroad Passengers said liquidation is an old threat that is unlikely to be acted upon.

``I don't think anyone thinks you can shut down Amtrak and still have passenger trains,'' he said, adding Amtrak was created because private passenger rail services were failing.

The Associated Press contributed to this report.

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