AMTRAK'S FATE RIDES ON FUNDING : AMTRAK IN L.A.

Byline: Matt Mossman Knight-Ridder Tribune News Wire

The United States could soon lose its national passenger rail system.

Amtrak has been in financial trouble almost since it was founded in 1971, but this time the crisis is real for the railroad, which carries 20 million passengers to 510 cities in 44 states every year.

Amtrak executives expect to run out of money in less than a year.

``We'll continue to borrow money until the line of credit runs out and we go bankrupt,'' said Tim Gillespie, Amtrak vice president for government affairs.

The ultimate fate of the service could be decided in a matter of months or even weeks, as Congress weighs Amtrak's place in a new five-year national transportation plan.

President Clinton has proposed rescuing the national railroad by diverting $4.8 billion over the next five years from the federal Highway Trust Fund, but many members of Congress favor using that money to build highways.

Rep. Bud Shuster, a Pennsylvania Republican who is chairman of the House Transportation Committee, has been cooking up a compromise that would pump more money into highways while setting aside a little to help Amtrak.

But Shuster fell two votes short in an effort to divert an extra $12 billion for highways in a House budget vote last week, and that failure makes a successful alliance between Amtrak's supporters and the highway builders less likely.

Shuster also has appointed a blue-ribbon committee of transportation experts to offer recommendations on Amtrak's fate. That group could report to Congress within a few days.

Some critics say the government ought to walk away and let the failing railroad die. Amtrak is an expensive anachronism in an era of cars and air transportation, they say. Subsidies are as high as $500 per passenger on some routes.

``It would be cheaper for the American taxpayer if we just bought Amtrak passengers airline tickets,'' said Steven Moore of the Cato Institute, a Libertarian research group headquartered in Washington.

States can subsidize the costs of regional pieces of the national system they believe are necessary, critics say.

``We do not think that any highway funds should go to Amtrak,'' said Taylor Burton, the chief lobbyist for the Highway Users Federation. ``The needs in improving roads and bridges are far in excess of the money we have.''

Sen. Christopher Bond, R-Mo., has called Amtrak an ``East Coast luxury,'' and suggests states that want rail service should pay for it from their own highway funds, instead of from the federal highway trust fund.

``I will continue to oppose . . . asides out of revenues deposited into the Highway Trust Fund for Amtrak,'' Bond said.

But advocates argue that Amtrak makes economic sense in dense urban corridors - particularly the crowded Northeast - and modest government subsidies are a logical alternative to 12-lane interstate extensions.

Amtrak needs a certain source of money like the Highway Trust Fund's income from gas, tire and diesel taxes, they say.

``If we had a trust fund when we started (in 1971) that was a dedicated source of funding, we wouldn't be in this position,'' Gillespie said.

``You don't run a railroad without funding. If you don't have funding, you don't have a business, and that's a major part of the Amtrak problem,'' said Paul Karas, an Illinois businessman and a member of Shuster's Amtrak advisory panel.

As now organized, Amtrak is struggling under an array of burdens:

Persistent cash shortages mean it has been forced to borrow money to stay afloat, and is now facing annual interest rates of 17 percent on the money it borrows to operate.

A tangled mess of federal, state and local regulations block changes in staffing levels and other aspects of operations that could sharply cut the railroad's operating costs.

A lack of capital to buy new trains and make track improvements has made it increasingly difficult to compete with alternative transportation modes.

Amtrak's unionized workers can't strike, but the unions are making it difficult for Amtrak to reduce the size of its work force.

Congressional decisions have contributed to the railroad's problems.

In October, Amtrak announced it was cutting five costly routes. Congress mandated that they be continued for an additional five months and gave Amtrak $22.5 million to keep them up. But running the routes cost $35.5 million, heaping $13 million more on the debt pile.

All this has created an underfunded, inefficient and unpopular train service hurtling toward insolvency.

Shuster's expert panel is likely to recommend that Congress find some cash to help Amtrak hobble forward with the promise of a fundamental restructuring to follow. But whether Congress will agree to any further help is an open question.

Experts say possible answers to Amtrak's decline include radical reshaping of the existing system to better focus on high-use areas, replacement of the national network with regional high-speed rail systems and selling off potentially profitable parts of the operation to private interests.

Amtrak executives already are following a business plan designed to permit them to meet a federal mandate to be operating profitably without federal subsidies by 2002.

The plan involves developing high-speed service between New York City and Boston that would bring in $150 million a year starting in 1999. The railroad also hopes to increase income by carrying packages and mail.

Amtrak hopes to save money by chopping the biggest money-losing routes, buying cheaper electric power, reducing train crew sizes, contracting out food services and by doing away with most of the paperwork of ticketing.

But, so far, the Amtrak plan hasn't produced the economic benefits that were promised. Projected savings of $108 million in 1996 were $60 million short.

According to a General Accounting Office study, the Amtrak business plan relies on a steady funding source, but ``the current budget environment may limit the amount of funds actually made available to Amtrak.''

According to Kiley, Amtrak must be willing to make big changes for the congressional advisory panel to recommend funding past 2002.

``There's a real consensus on the panel that money invested is to be conditioned on change within Amtrak,'' he said. ``There has to be a radical, substantial change. I think that's what's in the air.''

Amtrak trains that serve the Los Angeles area include:

The San Diegan: San Luis Obispo/Santa Barbara to San Diego.

Coast Starlight: Los Angeles to Seattle.

Sunset Limited: Los Angeles to Florida.

Southwest Chief: Los Angeles to Chicago.

The San Joaquin: Bakersfield to Oakland (connections to Los Angeles via Amtrak bus).

Locally, Amtrak trains stop in Burbank, Chatsworth, Glendale, Moorpark, Oxnard, Simi Valley, Van Nuys and Ventura.

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BOX: Amtrak in L.A. (see text)