GAO: Amtrak Must Improve Itself

WASHINGTON – Amtrak needs to improve the way it monitors performance and oversees its finances to reach solid financial ground, congressional investigators said Thursday.

"Amtrak's management may be able to correct a number of these issues on its own, but the company is likely to need outside help in developing a comprehensive approach to address internal control weaknesses and improve the financial information for management and external stakeholders," said the Government Accountability Office, the auditing arm of Congress.

"While Amtrak has recently reduced costs, revenues are declining faster than costs, leading to operating losses exceeding $1 billion annually," the report said. "These losses are projected to grow by 40 percent within four years."

The GAO (search) recommends that the transportation secretary direct the Federal Railroad administrator to: require Amtrak to submit a plan laying out specifically how it will improve its financial operations; provide Amtrak with direction on how to do so, and; monitor the railroad's performance and report to Congress on Amtrak's progress.

Amtrak issued a letter dated Sept. 2 from president David Gunn to the GAO as its response. In the letter, Gunn says Amtrak feels that during the last three years, the railroad has focused on "maintaining liquidity, cleaning up the books, rebuilding plant equipment and building an organization that can manage the budget and control costs."

Transportation Secretary Norman Y. Mineta (search), called the GAO report "unusual, if not unprecedented, in the scope of its review and the severity of its indictment."

"The Amtrak board must stop and take a fresh look on how to proceed in the face of this non-partisan, objective report of systemic failure," Mineta said.

Amtrak (search) has never made money in its 34-year history and an operating loss of more than $550 million was expected for the fiscal year that ended Sept. 30. The railroad has a debt of more than $3.5 billion.

The Bush administration has called for no subsidies for Amtrak, but the House has approved an appropriation of nearly $1.2 billion for this budget year.

Meanwhile, the Senate voted 93-6 Thursday to include an Amtrak overhaul amendment to the budget bill currently being debated.

The measure, sponsored by Sens. Trent Lott, R-Miss., and Frank Lautenberg, D-N.J., would cut Amtrak's operating subsidies by 40 percent, leaving it with $3.3 billion in subsidies over six years. The railroad would receive $4.9 billion over six years for capital grants and the measure would create a grant program giving states $1.4 billion for intercity passenger rail service.

"Because the administration has indicated it will not support any funding for Amtrak this fiscal year unless Congress enacts Amtrak reforms, it is imperative for the Congress to make its voice heard on Amtrak," Lott said.

Lautenberg said passenger rail service is a necessity for the 25 million Americans who ride Amtrak every year.

Sen. Charles Schumer, D-N.Y., said the overwhelming support for the amendment shows that Amtrak has a lot of supporters.

In September, Amtrak's board of directors approved a resolution authorizing splitting off the Northeast Corridor to be operated by a consortium, a plan pushed by the Bush administration.