Amtrak has some breathing room-but only until October 1

Amtrak has some breathing room-but only until October 1

July 22, 2002

Congress on July 18 approved a no-strings-attached $205 million grant to Amtrak that, with a $100 million loan approved on June 28, will keep the carrier rolling until the end of the fiscal year on September 30.

            The grant was included in a $28.9 billion spending bill that was sent to the White House that same day and signed by the president soon after.

            Congressional negotiators from both houses had agreed on the $205 million appropriation but the White House budget office rejected that. The budget office said that a loan would entail more financial discipline for Amtrak than an appropriation grant.

            In the Senate, Patty Murray (D-WA), chair of the Appropriations transportation subcommittee, said that "Congress should provide the funding needed to maintain passenger rail service. And that is the deal the House and Senate had agreed to, until the White House stepped in to scuttle the deal."

            But Congress and Amtrak won, for now.

            "We have to mobilize because there will be a major battle to achieve the $1.2 billion Amtrak needs for fiscal year 2003," says President Bob Scardelletti. "And there will be a fight over long-term funding. At every juncture our enemies will try to tie funding to unfair attacks on Amtrak’s workers." 


Monday, July 1, 2002 — The Bush Administration has agreed to give Amtrak a direct loan for $100 million, enough to keep the beleaguered passenger service operating for one month.

            The deal was reached Friday evening June 28 after the Administration dropped a demand that Amtrak negotiate unlimited authority to contract out work. Amtrak President David Gunn refused to agree to the White House’s contracting out ultimatum. The Administration put forward this demand even though Secretary of Transportation Norman Mineta told rail labor leaders only three days earlier that there would be no anti-labor conditions for a loan.

            The $100 million loan was conditioned on Amtrak agreeing to provide clear financial information, something that Mr. Gunn had already promised to do. For a complete text of the loan agreement, click here.

            Amtrak was seeking a loan of $270 million in order to reach the end of the fiscal year (September 30, 2002). Because the Department of Transportation (DOT) is providing less than half of what is needed, Amtrak may now be forced to ask for a supplemental appropriation from Congress when it returns from the July 4 recess. Secretary Mineta testified to the Senate on Friday that “The Administration is committed to supporting additional funds for Amtrak above the direct loan –however whether the second tranche of funding is a direct loan, loan guarantees or supplemental funds are options we are still looking at.”

            Senator Patty Murray (D-WA), Chairman of the Appropriations Transportation Subcommittee, stated afterwards that “I am very confused as to what the Administration is going to ask us for.” Senator Murray added that she favored an emergency appropriation for Amtrak to be attached to the fiscal 2002 supplemental spending bill (H.R. 4775) because another loan would add to Amtrak’s nearly $4 billion debt. 

            “The struggle to keep Amtrak afloat is just beginning,” said TCU International President Robert Scardelletti. “This $100 million loan is only a very short term reprieve. Now we have to mobilize to get $170 million more just to keep Amtrak going until October, then there will be a major battle to achieve the $1.9 billion Amtrak needs for FY 2003, and finally there will be a fight over long term funding. At every juncture, our enemies will try to tie funding to unfair attacks on Amtrak’s workers.”

            Already several Republican leaders have begun to target Amtrak workers. In a speech on the Senate Floor on June 25, 2002, Amtrak supporter Kay Bailey Hutchison (R-TX), said, “Amtrak has never engaged in tough negotiations with its unions, even four years ago, when we were trying to reauthorize Amtrak. As a result, labor costs are out of line with other workers in our country.”

            Senate Minority Leader Trent Lott (R-MS) stated, “They’re going to have to look at labor contracts, they’re going to have to look at routes, they’re going to have to look at better management, they’re going to have to look at how they get more income and that may even include higher ticket prices.”

            In the House, Transportation and Infrastructure Committee Chairman Don Young (R-AK) has refused to move an Amtrak reauthorization bill and has instead introduced legislation that would allow the federal Surface Transportation Board to “direct” commuter and freight rail service to continue in the Northeast should Amtrak be forced to shut down. Senator Hillary Rodham Clinton (D-NY) derided Young’s bill as unrealistic. “What people are they going to send in to operate the trains, manage the stations and perform other operations,” Clinton asked. “Are they going to hire them from Amtrak?”

            The most serious pro-Amtrak bill in play is the National Rail Defense Act (S. 1991), which was introduced by Senator Hollings and successfully voted out of committee earlier this year. The bill provides significant long-term funding for Amtrak and repeals the requirement that Amtrak achieve operating self-sufficiency. TCU is supporting this bill. However, it will take unanimous consent by the Senate to be heard this session, and Senator Lott is objecting on behalf of Amtrak critic Senator John McCain (R-AZ) and other Republicans who oppose the Hollings bill. Without Lott’s concurrence, Senator Majority Leader Tom Daschle (D-SD), a strong Amtrak supporter, cannot bring the bill to the floor.

            “We must turn up the pressure on Congress and the Administration,” says TCU President Scardelletti. “Every TCU member, active and retired, should e-mail and call your Congressman, Senators, and the White House now in support for adequate Amtrak funding.” Click here to e-mail your Representatives, or call congress at 1-800-284-2919.


June 28, 2002

By mid-day Friday no agreement had been reached between Amtrak and the Bush Administration for a federal loan guarantee that would prevent a shutdown of Amtrak operations as early as July 8th. Both sides had previously announced that a tentative deal had been reached but talks broke down when the Bush Administration added several conditions to the loan guarantee which Amtrak President David Gunn found unacceptable.

Administration officials were insisting that Amtrak management eliminate from its labor agreements all restrictions on the contracting out of work now performed by unionized workers. The Administration also demanded that Amtrak match any loan guarantee with equivalent cost-saving cuts next fiscal year which would likely lead to the lay off of thousands of Amtrak employees.

Amtrak had readily agreed to a host of other conditions demanded by the Administration, most having to do with providing the government regular reports of its cash situation, business plan, valuation of assets and other financial matters. But Gunn balked at allowing the Administration to scapegoat Amtrak employees and to micro-manage the company in its dealing with the unions and its business plan prerogatives.

As recently as Tuesday, Transportation Secretary Norman Mineta told union leaders, Amtrak, and some members of Congress that the Administration would not allow an Amtrak bankruptcy and that there appeared to be no serious obstacles to providing Amtrak a loan guarantee that it needed to continue operations until the start of the next fiscal year, in October. Amtrak was seeking a minimum of $200 million, either in the form of an outright grant by Congress or a loan guarantee through the Department of Transportation.

On Wednesday, however, the two sides announced a tentative arrangement for the Administration to provide a $100 million loan guarantee, about half what Amtrak had asked for and enough to keep the system running only until mid-August. Amtrak and the Administration would then jointly ask Congress to authorize an additional loan guarantee of at least $100 million. Even with federal loan guarantees, Amtrak would have to obtain actual loans from banks which would need to be repaid out of future Amtrak funds.

Many Amtrak supporters in Congress were critical of the Bush Administration’s half-a-loaf approach to Amtrak’s immediate cash crisis. "This is like giving a Band-Aid to a patient who has cancer, " said Senator Charles Schumer (D-NY). "Amtrak is going to need a lot more help than this to stay alive, let alone get healthy."

TCU members should continue to contact their Congressional representatives to urge an emergency appropriation of sufficient funds to prevent bankruptcy as well as full funding for next year to ensure the continuation of Amtrak’s national system.


June 25, 2002 

At a private meeting this morning with TCU International President Robert Scardelletti and other rail labor leaders, Secretary of Transportation Norman Mineta said that a federal loan guarantee to keep Amtrak running through the end of this fiscal year would be announced no later than noon tomorrow.

Secretary Mineta said that some details still had to be worked out, but that the Administration would not allow the Amtrak system to shut down.  The Secretary added that the Administration preferred the loan guarantee route over seeking a supplemental appropriation from Congress.

Secretary Mineta said that the Department of Transportation now believes such a loan guarantee would be legal under current law. A consortium of private banks is ready to issue Amtrak the required loan once the government agrees to the loan guarantee.

Secretary Mineta added that the Administration was seeking a variety of measures from Amtrak’s Board of Directors that would lessen the amount needed for the loan guarantee. He said that the measures were not targeted at Amtrak workers, and did not include the far-reaching "reforms" the Administration unveiled last week as its long-term plan for Amtrak.

Meanwhile, Congressional supporters of Amtrak were mobilizing to pass a supplemental appropriation to keep Amtrak running should the loan guarantee not materialize.

While it appears that Amtrak’s short term shutdown crisis is close to being averted, TCU members should continue to contact Congress and the White House until the loan guarantee or supplemental appropriation is actually signed.

Mineta to meet today with Amtrak board to avert shutdown  

June 24, 2002

According to Reuters, the Bush administration weighed emergency financing options for Amtrak on Monday, including an emergency appropriation by Congress to avert a threatened shutdown this week.

Transportation Secretary Norman Mineta planned to meet with Amtrak board members later in the day to tell them how far the Transportation Department would go to help the cash-poor railroad dig out from its latest financial crisis.

The administration is considering a federal loan guarantee for Amtrak so it can access $200 million from its banks, or a one-time assistance package to cover its losses. Mineta has also alerted Congress to be ready to take quick action, if necessary.

Mineta said over the weekend that he did not want to see a shutdown at Amtrak, the nation’s only city-to-city passenger rail service.

David Gunn, Amtrak’s president, told Congress and the administration last week that he would begin an orderly shutdown of rail service in the middle of this week unless the railroad’s emergency funding needs were met.

A shutdown would disrupt travel not only for 60,000 daily Amtrak customers, but for hundreds of thousands of commuters in the Northeast, the Chicago area and in California.

Government sources said transportation planners worked through the weekend to narrow the options Mineta would bring to the Amtrak board members. Mineta holds one board seat as transportation secretary.

"The goal of Amtrak’s board meeting should be to ensure the continuation of rail service in this country by insisting that the Bush administration either issue a loan guarantee or request a supplemental appropriation from Congress," said Sen. Patty Murray, a Washington state Democrat who chairs the appropriations subcommittee on transportation.

Transportation Department officials have said a loan guarantee might not work legally because Amtrak needs the money for short-term needs, while the loan guarantee program is packaged for longer-term financing.

Senate Appropriations Committee Chairman Robert Byrd, a West Virginia Democrat, said he wanted $200 million for Amtrak included in final homeland security funding legislation that House and Senate negotiators hope to finalize this week.

The White House has threatened to veto the Senate version of the homeland security bill, claiming it is too expensive.

Other congressional sources said that $55 million in the emergency funding legislation for rail car upgrades could be siphoned off as a temporary fix for operating expenses.

Some lawmakers also fear the administration will want to use $100 million earmarked as post-Sept. 11 emergency aid for improving rail safety along tracks and tunnels under New York’s Hudson and East rivers.

"That is completely unacceptable and irresponsible," said Sen. Robert Torricelli, a New Jersey Democrat, who planned to discuss Amtrak’s plight with Bush in New Jersey on Monday.

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