US, Amtrak hammer out rescue plan
Tentative deal reportedly sets loans, cash aid

By Glen Johnson, Globe Staff, 6/27/2002

WASHINGTON - The Bush administration and Amtrak officials reached tentative agreement last night on a plan for a loan guarantee package that would allow the financially ailing railroad to avert a shutdown next week.

Following five hours of negotiation, Transportation Secretary Norman Y. Mineta and Amtrak chairman John Robert Smith released a joint statement reporting ''excellent progress'' in their discussions.

''Significant details are still being finalized, and no final agreement has been signed,'' they said. ''We are confident that, with congressional support, Amtrak services will not be disrupted.''

Mineta was expected to spell out the terms of the deal this morning during testimony before the Senate Appropriations Committee. An aide to a senior congressional Democrat said the package would include $100 million in loan guarantees to keep Amtrak running through August, and support for another $100 million in direct cash through a homeland security bill that Congress is expected to approve in the next several weeks.

The proposal came after reports that the administration had sought to link the aid to more burdensome requirements, such as Amtrak selling off assets including stations and track along the Boston-to-Washington Northeast Corridor. Railroad officials balked at that, the aide said.

Meanwhile, Senator Tom A. Daschle, the majority leader, told top congressional Democrats the Senate would vote on a separate $205 million emergency appropriation for Amtrak after the members returned from their weeklong Fourth of July recess. Despite last night's agreement, Democrats are still expected to push for the entire appropriation because half of the administration's proposal involves loans.

Amtrak serves about 60,000 passengers daily on routes that run across the country. It also provides commuter rail service under contracts with transit authorities such as the MBTA. In Greater Boston, 70,000 people daily ride commuter trains operated by Amtrak.

Last night's negotiations involved Mineta and David L. Gunn, president of Amtrak, as well as Smith. Their public comments gave a hint of the dynamic behind the closed doors of the secretary's office at Department of Transportation headquarters.

Early yesterday, Mineta told a group of Republicans he hoped to reach a solution ''by the close of business.'' He said the administration was prepared to get Amtrak a loan of at least $102 million without the kind of strings that reportedly delayed a deal later in the day.

Gunn met at midday with Senator Dick Durbin, Democrat of Illinois, and the senator said Gunn had expressed concern that the administration was seeking immediate reforms the railroad could not accomplish. ''I would oppose dramatic reforms of Amtrak as part of the cost of survival,'' Durbin said, ''and I hope the Amtrak board would oppose them, too.''

Founded in 1971 to maintain passenger rail service as freight carriers exited the business, the railroad was envisioned as a for-profit enterprise. Nonetheless, it has never operated without a government subsidy. Its officials say it has never received enough money to flourish.

Congress sought to resolve the debate five years ago, when it gave Amtrak a $2.2 billion capital infusion, with the provision that it reach self-sufficiency by the end of this year. Lawmakers also created the Amtrak Reform Council to monitor its progress, and the watchdog group reported last year that Amtrak would miss its goal.

Gunn was hired five weeks ago to straighten out the service, but after paring expenses and pledging to reconstitute some of Amtrak's operations, he said the railroad still needed about $205 million to complete its fiscal year at the end of September. Mineta said last week the administration would oppose additional funding for Amtrak without fundamental reforms that included selling off assets, seeking competitors for the most popular intercity routes, and eliminating some other routes. Gunn rejected talk of privatization as impractical.

Democratic lawmakers argue that the federal government should support the railroad as it does interstate highways and the federal aviation system.

Mayor Thomas M. Menino of Boston, in his capacity as president of the US Conference of Mayors, sent President Bush a letter urging him to avert a shutdown.

''The tragic events of Sept. 11 have forced our constituents to evaluate viable alternatives to driving and flying, and Amtrak was there when many of our citizens needed it,'' Menino wrote. ''It is clear that a national system of short- and long-distance passenger trains is a real alternative, but is dependent on meaningful and sustained federal investment.''

Representative John F. Tierney, Democrat of Salem, yesterday addressed the issue on the House floor, saying, ''Amtrak has responded to the growing expectations placed on the passenger rail carrier since Sept. 11. Congress should, too.''

This story ran on page A1 of the Boston Globe on 6/27/2002.
© Copyright 2002 Globe Newspaper Company.
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