Bush Targets Amtrak Funds

Democratic senators last week led an attempt to override a White House proposal that would "zero out" funding for Amtrak, but the amendment to secure $1.04 billion in funding for 2006 failed last Wednesday 52 to 46.

With its entire federal subsidy on the chopping block, indebted and embattled Amtrak once again tilts on the prospect of bankruptcy, yet travel managers—especially those whose companies have operations within Amtrak's heavily trafficked Northeast corridor—continue to value and rely on the perennially struggling passenger railway operator.

Travel managers and others in the industry said the railway has provided travelers with a practical alternative to flying certain routes in the post-Sept. 11, 2001, climate, has lessened air and road congestion in the Northeast, and in many cases has been favored by travelers when taking short-haul trips in that region.

Of 15 travel managers based throughout the Northeast polled last week by phone and e-mail, 13 said they had contracts with the railway operator and several cited travelers who favor rail to air when applicable.

"For places like the Northeast Corridor this is a huge, important part of the business travel system," according to National Business Travel Association executive director Bill Connors. "It's really relieved some congestion at airports and on the road. It's a vital part of the business travel system."

Sue Kernan, University of Maryland associate director of business services, said her travelers depend on Amtrak rail service as an alternative to the hassles of air travel.

"We take the train all over but we negotiated right when Acela was introduced," Kernan said of her negotiated contract with Amtrak for its high-speed Northeast rail service in the Boston-New York-Washington, D.C., corridor. "It's preferred to take the train from New York to here," Kernan said.

Despite winning favor among some business travelers, Amtrak consistently has been a losing proposition since its inception in 1971, and in recent years has heightened borrowing from the federal government.

As such, President George W. Bush's proposal to "zero out" funding for the railway has sparked a battle in Washington, which, as of press time, continued to ferment.

"In terms of what's going in the annual ebb and flow of threats and promises (from the government), this one appears to be a little more serious than in the past," according to Business Travel Coalition chairman Kevin Mitchell. "If Amtrak dodges the bullet this time around, they may find they don't have many opportunities left. The patience is running out."

Several lawmakers, however, have come to the aid of the ailing rail provider. Sen. Patty Murray (D-Wash.) and Sen. Charles Schumer (D-N.Y.) continue to lead the challenge to Bush's proposal to eliminate most of a $1.2 billion federal subsidy and forcing Amtrak into bankruptcy, where the rail system's oversight would be assigned to a court-appointed trustee.

That would threaten service along critical business corridors, including the Washington-Boston line, which is served by 19 high-speed Acela Express trains, Murray said.

"Ceding control of the national railroad to a bankruptcy trustee is both reckless and irresponsible," Murray said. "This plan will put at grave risk the travel options of every Amtrak rider, not just those riding the worst performing lines."

President Bush and U.S. Department of Transportation Secretary Norman Mineta said ending federal support for Amtrak, which serves about 25 million passengers a year, most of them between Boston, New York, Philadelphia, and Washington, is the only way to revamp a system plagued with cost overruns and inefficiencies.

Amtrak is "dying, and everyone knows it," Mineta said.

"Everyone agrees that Amtrak is on financial life support," Mineta said, "but the answer to the problem is not throwing more money into a system that is fundamentally flawed. The answer is top-to-bottom reform."

This is the first time Bush has sought to withdraw federal support for the railroad. Congress rebuffed a 2003 proposal by Mineta to turn responsibility for the railroad over to the states and approved the $1.3 billion.

Amtrak president and CEO David Gunn contends the company has been rigorously cutting costs since he took the helm in 2002—slimming its workforce by nearly 5,000, terminating its mail and express operations, and eliminating three long distance routes, all the while boosting the number of riders from 22.5 million in 2000 to 25.1 million last year. "Our costs are more under control than ever," he told employees in a memo last month.

Yet, while Amtrak increased ridership by just under 12 percent, annual federal funding for the railway has jumped nearly 45 percent since 2002, totaling $1.2 billion this year.

Gunn said the heightened funding largely has been contributions for infrastructural capital investments in the Northeast Corridor.

"There's no doubt that Amtrak adds value, but there's also no doubt that it's been mismanaged over the years and they've just dug themselves into a deeper and deeper hole and capital requirements become greater," said Business Travel Coalition's Mitchell.

While the numbers appear staggering and Amtrak's requests for federal funds continues to grow, the National Business Travel Association said rail funding is a drop in the bucket when compared to other modes of transport.

"When you look at the funding that the federal government provides for highways and for airports, the amount provided for rail isn't even a fraction of that," said NBTA's Connors. "Since Amtrak's inception in 1971, the federal government has contributed just under $2 trillion to air and highway and only about $30 billion in rail."

Although the battle lines have been drawn and last week's attempt by lawmakers championing Amtrak failed, it may be months before a clear resolution is drawn.

"The President's proposal is only the start of a long legislative process, and we are taking it very seriously," Amtrak CEO Gunn said to employees in a memo issued last month.

"This process has a lot of twists and turns, and it always takes six to nine months to sort out," according to Gunn's memo. "It won't have any impact through the 2005 fiscal year, but there's going to be very little cash left at the end of this year."

~Patty Donmoyer contributed to this report