No Agreement Reached

NO AGREEMENT REACHED

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.