Jun 20 2002
U.S. Senator Richard C. Shelby (R-AL), Ranking Member of the Senate Transportation Appropriations Subcommittee, today commented on Amtrak's financial condition:
"I regret that I can not be here this afternoon, but I must attend a classified session of Senate and House Intelligence Committees' joint inquiry of the September 11 terrorist attacks.
"I would like to welcome Mr. David Gunn, who has been at the helm of the federal railroad for the past five weeks. I commend the new president for taking quick action to adopt long overdue steps to restructure the organization and streamline decision-making. I also believe that his candor and willingness to shed light on Amtrak's books will ease the mistrust of the Congress and the financial community.
"Anyone who has followed Amtrak for longer than a year, however, knows that we have been here before. Financial crises at Amtrak are old hat. Amtrak seems to steer into a financial emergency virtually every year and has been teetering on the brink of shutting down since it was created. Even as George Warrington was testifying before this subcommittee on March 7 that he 'do[es] not expect' Amtrak to go bankrupt this year, Amtrak was losing more money than ever. After all, Amtrak's cash and operating losses were breaking records each year; it was out of assets to monetize; and its debt has increased $2.7 billion over the past five years.
"It should come as no surprise that Amtrak is having difficulty persuading the lending institutions that it is a viable business that can meet its financial obligations. Amtrak has been on a credit watch list since last November, and it has been in jeopardy of losing its credit rating. Moreover, the behind-the-scene scheming to secure a short-term operating loan guarantee for Amtrak under the Railroad Rehabilitation Infrastructure Financing (RRIF) Program -- a long-term capital financing program -- would make an Enron accountant blush.
"The only new twist to this old story is that Amtrak has threatened to shut down the entire system, including the Northeast Corridor, unless Congress provides a federal loan, federal loan guarantee, or appropriation. This is the mother of all Washington Monument strategies. It is clearly designed to expand the number of Senators Amtrak can hold hostage to support a bailout. I am disappointed that Amtrak has turned to Congress just before the beginning of the last quarter of the fiscal year instead of adopting modest steps to slow the cash burn rate. If anything, this proves Amtrak is a political adventure, not a business enterprise.
"We have dealt with Amtrak for the past 31 years and nothing has changed. In light of the proposal to transfer other agencies within the Department of Transportation, perhaps the time has come to transfer Amtrak over to Health and Human Services because the railroad has been living on life-support for so long.
"Without a change in the business model of Amtrak and without fundamentally reconsidering the way passenger rail service is provided around the country, we will never get out of this cycle. This will take leadership from the Administration, the Congress, and the new Amtrak president. Passenger rail in America cannot support a linked national network, and the sooner we extricate the railroad from that model, the sooner we can get to the point of providing passenger rail service that makes sense."