US, Amtrak agree on funding deal

June 27, 2002 at 4:33 PM

WASHINGTON, June 27 (UPI) -- Amtrak and Transportation Department officials briefed lawmakers on Capitol Hill Thursday on a tentative agreement aimed at resolving the short-term financial crisis facing the railroad.

The deal would involve immediate financial assistance from the administration, according to a joint statement issued late Wednesday by Transportation Secretary Norman Y. Mineta and Amtrak's board chairman, John Robert Smith.

"Significant details are still being finalized, and no final agreement has been signed," they said. "We are confident that, with congressional support, Amtrak services will not be disrupted."

Lenders worried about the rail system's failure have frozen Amtrak's credit line for the remainder of the fiscal year, which ends Sept. 30.

Officials with knowledge of the deal said the Department of Transportation would immediately provide $100 million.

In the second part of the agreement, Amtrak and the Transportation Department will seek congressional action on the $105 million extra the railroad needs. The additional aid could take the form of a loan, loan guarantee or an appropriation.

"We find this to be very positive," Amtrak spokeswoman Karina Van Veen said. She also assured commuters that the railroad would operate next week as both sides work out the final details.

The proposed agreement would also make Amtrak's financial and operating performance transparent to the public and provide federal policymakers with a better understanding of Amtrak's long-term assets and liabilities, and its cost control and revenue options.

Amtrak was created by Congress in 1970 as a for-profit organization and signed into existence the following year. However, the railroad has never produced a profit. Last year it lost almost $1.3 billion.

In 1997, Congress imposed a statutory deadline of December 2002 for it to achieve operational self-sufficiency.

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