Senator Murray Challenges Administration on Amtrak

Jun 20 2002

Either propose appropriate funding, or be prepared to tell the American people why passenger rail service has gone bankrupt

(WASHINGTON, D.C.) – Sen. Patty Murray, the Chair of the Senate Appropriations subcommittee on transportation today challenged the Bush administration to request enough funding to keep Amtrak running through the rest of the fiscal year or "be prepared to explain to the American people why it will allow Amtrak to go bankrupt in the middle of the summer travel season."

The chronically-indebted national passenger rail service may cease some operations as early as July if it is unable to secure a $200 million loan. Thus far, the Bush Administration has not come forward with a meaningful proposal about how to save Amtrak.

Sen. Murray held a hearing of the Transportation Appropriations Subcommittee today to discuss Amtrak's financial condition. David Gunn, Amtrak's new President testified along with the Federal Railroad Administration chief, Allan Rutter, and the Department of Transportation's Chief Financial Officer and Inspector General.

Sen. Murray made the following statement:

"Four months ago, this Subcommittee held a hearing to examine Amtrak's precarious financial condition.

As I said at that hearing, I want Amtrak to succeed. I believe that intercity passenger rail service plays a critical role in easing congestion in our country. I think it's an important travel option for the American public.

Americans hear about Amtrak's financial problems and want to know if they'll be able to get on a train later this summer.

We in Congress want Amtrak to succeed, but every time we offer a dollar more than the White House, the President threatens a veto.

At our hearing four months ago, our witnesses included George Warrington -- then president of Amtrak – and Michael Jackson -- the Administration's Deputy Secretary of Transportation, who serves on the Amtrak Board of Directors for Secretary Mineta.

Mr. Jackson also serves as Chairman of Amtrak's Audit Committee of the Board of Directors and as a member of the Board's Finance Committee.

At that hearing, Mr. Jackson told us three things.

First, Mr. Jackson said we could expect a clean audit opinion from Amtrak's auditors in a very short period of time.

Second, he told us that we could soon expect the Administration to release its Master Plan for Amtrak – a plan that would embody the Administration's vision for Intercity Passenger Rail Service across the nation.

Finally, Mr. Jackson addressed funding for Amtrak.

He admitted that President Bush's budget request for Amtrak of $521 million would effectively gut the railroad and put it into bankruptcy.

Mr. Jackson said that budget request was just a "place holder." He suggested that when the Bush Administration finally released its Master Plan, the Administration might support a different level of funding for Amtrak.

That was almost four months ago. Some things have changed, and some things have not. Some promises have been kept, and others have not.

First, despite Mr. Jackson's assurances, Amtrak's auditor has not released a clean audit opinion for Amtrak. As a result, Amtrak has lost access to the private capital markets.

Amtrak's new president -- David Gunn -- now finds himself in a desperate struggle to keep the railroad out of bankruptcy.

In fact, Amtrak is now weeks away from running out of cash entirely and perhaps days away from informing the States that rail service will be terminated.

This morning, the Administration did release its Master Plan for Amtrak's future.

I suspect that my calling this follow-up hearing created the necessary pressure on the Administration to finally release its plan.

But on that third issue of funding, the Administration has not changed its proposed budget for Amtrak by a single dollar. It still stands at $521 million.

By contrast, Amtrak maintains that it must have $1.2 billion to continue operating next year.

As part of this hearing, I believe we need to discuss both the long-term and short-term prognosis for Amtrak. In the short-term, we need to know what the Administration plans to do about Amtrak's pending financial crises.

Since the Bush Administration took office, this Subcommittee has provided Amtrak with every dollar the Administration has requested and then some.

Even so, we are now informed that -- for the second year in a row -- the railroad is desperately short of cash. We hear the Administration may be planning to signoff on yet another financial transaction that will boost Amtrak's skyrocketing debt so it can crawl along for the duration of the fiscal year.

Last year, Secretary Mineta signed off on a $300 million financing deal that mortgaged off portions of Penn Station in New York City. As far as I can tell, that transaction just enabled the Administration to put their head $300 million deeper into the sand while Amtrak went $300 million deeper into debt.

This year, we are told that the Administration may propose that Amtrak borrow $200 million against its future appropriation.

Four months ago, Mr. Jackson told us that Secretary Mineta signed off on the Penn Station deal because he had no choice. It wouldn't surprise me if the Administration takes the same posture with the upcoming proposed financing deal.

But the fact is the Administration does have a choice.

The Administration could back off its opposition every time Congress tries to fund Amtrak at levels above the White House request.

Right now, we are in conference on an emergency supplemental appropriations bill that the Administration is complaining is too large. That bill includes $55 million for Amtrak – not to bail out the railroad -- but to rehabilitate damaged rail cars and to improve security.

Rather than complain that this funding does not belong in the bill, the Administration should come forward with a formal request for us to add adequate funding in this bill to save Amtrak.

Unless the Administration changes its tune, Congress alone will not be able to save Amtrak because of the President's looming veto threat.

Four months ago, President Bush's Deputy Transportation Secretary told us, and I quote

'Secretary Mineta and I, and the Federal Railroad Administrator all agree that Intercity Passenger Rail is an indispensable component of our transportation network.'

If the Bush Administration is not prepared to ask for sufficient funds to maintain the Intercity Passenger Rail Service that Secretary Mineta and Mr. Jackson say is so indispensable, then the Bush Administration needs to be prepared to explain to the American people why it will allow Amtrak to go bankrupt in the middle of the summer travel season.

The Administration can explain why it would allow Intercity Passenger Rail Service to die when many of us in Congress are ready and willing to fund it.

So during this hearing, we'll focus on the immediate crises, but we'll also discuss the Administration's long-term plan for Amtrak. Because it was announced just this morning, we don't have all the details.

But certain things are clear from what we have heard.

For the most part, the Bush Administration wants to dump the costs of intercity rail service onto the States. The States, however, are struggling to close budget shortfalls approaching $40 billion.

At the same time, the Bush Administration is proposing to cut federal highway funding to the states by $8.6 billion. That is the largest reduction of any proposed cut in President Bush's budget.

My State of Washington ranks second only to California in the amount of State subsidy for Amtrak service.

As I mentioned at our last hearing, I believe there must be equity in the way States are treated when it comes to Amtrak.

There is no reason why States like mine must put up scarce funds for service that is barely adequate while the States in the Northeast Corridor put up almost nothing and receive the best service in the nation.

As such, I will be suspect of any policy that treats the Northeast Corridor any differently than rail service elsewhere in the country.

That said, however, it is not realistic to expect that the States can pick up all the costs of rail service any more than it is realistic to think that the States can pick up the costs of Medicare.

The Administration's proposal calls for a portion of Amtrak to be privatized.

It's not clear to me who will want to buy a company that is carrying over $4 billion in debt. Perhaps the Administration knows someone who does.

This is one of many questions that we can get into this afternoon.

But I want to make clear that unless the Administration changes its budget request for Amtrak, both for the remainder of this year and for next year, there will be nothing to discuss other than the costs associated with liquidating the railroad."