- The Washington Times - Thursday, July 26, 2001

Amtrak will not meet its December 2002 deadline for financial self-sufficiency if current trends continue, witnesses told Congress yesterday.

In the first eight months of fiscal 2001, cash losses were $21 million greater than Amtrak's projected "glide path" for weaning itself from government subsidies, said Kenneth Mead, the Transportation Department's inspector general.

Last year, Amtrak posted a $944 million loss, the largest in its history. The national passenger railroad has never been profitable in the 30 years since Congress created it out of a conglomeration of smaller bankrupt railroads.

In 1997, Congress set a five-year deadline for Amtrak to become self-sufficient in its operating costs, which include day-to-day expenses such as salaries, fuel, cleaning and routine maintenance. Otherwise, Congress said it might cut off funding and sell Amtrak's assets or restructure the railroad.

Few members of the House Transportation and Infrastructure Committee seemed willing to support a cutoff yesterday.

"We can't afford not to have a national passenger rail service," said Rep. James L. Oberstar, Minnesota Democrat and ranking member of the committee.

The hearing was one of the first to explore options for the railroad after the Dec. 2, 2002, deadline.

"We really do have a very serious situation dealing with a very serious issue," Mr. Mead said.

Amtrak has pursued a strategy of trying to increase its revenue by expanding service, thereby bringing in more fare-paying customers. However, to expand service, the railroad has had to purchase new equipment such as the 150-mph Acela Express trains and take on more debt.

The strategy has been only marginally successful, Mr. Mead said.

"Revenues are ahead of expectations, but expenses outpaced gains," he said.

He said Amtrak could become profitable by the deadline by selling off its assets. But there would be so little left of the railroad that it could not operate effectively as a national passenger railroad, which Mr. Mead said would be a "hollow" victory.

Legislation pending in the House and the Senate would allow Amtrak to sell $12 billion in bonds over 10 years to raise money for capital improvements, such as high-speed rail corridors.

The Amtrak Reform Council, which oversees the railroad's efforts to become self-sufficient, wants the bonds to be sold by government agencies to eliminate Amtrak's financial risk.

The Reform Council wants to divide Amtrak into three parts. One would be a profit-seeking company that operates the high-speed trains, a second would be a government-owned corporation to maintain assets such as tracks and stations and a third would be a government oversight agency.

Gilbert Carmichael, Amtrak Reform Council chairman, yesterday proposed the changes to the bond sales.

Rep. John L. Mica, Florida Republican, opposed any legislation to help Amtrak with bond sales.

"Congress cannot continue to put good money after bad," Mr. Mica said.

Mr. Oberstar suggested that Amtrak concentrate high-speed service only along the most heavily traveled and profitable routes between major cities, such as the Northeast Corridor. Other routes might then be eliminated.

However, Rep. Bob Clement, Tennessee Democrat, said Amtrak sometimes overlooks the needs of potential customers who do not live in major cities. Amtrak makes only one stop in Memphis, a city of 600,000 in his home state.

"You talk about high-speed rail, we'll take a slow train," Mr. Clement said. "I think you need to look at the whole country and not just part of the country."

Amtrak President George Warrington, with a touch of anger in his voice, complained about government policies that require the railroad to provide passenger service but fail to provide adequate funding.

"It is wacky, it is irrational and it is frustrating," Mr. Warrington said.

Government policy-makers desire to operate Amtrak as a public-private joint venture, with a bigger portion of the funding coming from private investors.

Mr. Warrington, however, said the federal government first must fund improvements, such as high-speed rail, that can be profitable.

"Until this basic infrastructure is built as a public responsibility, it's going to be difficult to attract private investment," Mr. Warrington said.

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