Banking on Amtrak

Kay Bailey Hutchison's Been Workin' on the Railroad


illustration by Doug Potter

Don't be surprised: The Texas Legislature has made history again. Amtrak Corp. announced in April that they were practically busted and the Texas Eagle line -- from San Antonio to St. Louis -- was shutting down. There were five other routes marked for extinction across the nation. Amtrak begged for the money at every available source, but Texas was the only state to step forward. One day before the May 10 cutoff date, Lone Star legislators approved a $5.6 million loan to keep the Eagle chugging through September.

High spirits abounded during the debate. After 3.5 hours of testimony, House Appropriations Chair Robert Junell told the Amtrak spokesteam, "We're a little less formal down here in Texas than they are in Washington or other places you've testified. But I think you're on the...right track." The House Committee poked fun and holes in a particular part of the deal, its collateral: Amtrak offered three luxury rail cars, valued at $2.5 million each, with a loan value of $500,000 per car. "What are we going to do with these railroad cars?" asked one member. "Take a nap," came the anonymous reply. The collateral offering remained an issue, climbing from three cars to 12, finally settling at 20 cars by the time the measure passed.

The loan gives the Texas Eagle a lifeline through the fall, which is supposed to be enough time for a federal remedy. That's where the surprise comes. A lead player, call her an honorary conductor, in the negotiations to save Amtrak is Sen. Kay Bailey Hutchison. The arch Republican, who has voted against passenger rail on every single vote since she took office, announced in mid-May, "All aboard Amtrak."

This is no garden variety flip-flop. Hutchison's rationale: "Amtrak is a 26-year-old experiment, not a viable transportation system, because Congress has never adequately funded its mission and provided it with a proper business-like operating environment." Hutchison opposes "allowing the Amtrak experiment to go on as it is," according to aide Eric Ruff. With a no-bullshit proposition that would make LBJ proud (or have him quaking in his casket) Hutchison is in effect saying, If we're gonna run a railroad, let's run it right. She wants to revamp how Amtrak, or more officially, the National Railroad Passenger Corp., does business.

Hutchison's "business-like" proposal does some predictable, some say admirable, trimming. Here's what it suggests:

* Repeal the mandated labor protection agreement. Currently Amtrak workers are guaranteed six years of continuing wages if they lose their jobs because a line or service is terminated. When workers were transferred from freight-line jobs to the "experiment" of nationalized passenger rail in 1971, unions insisted that people willing to make the switch shouldn't get burned if the system failed. The protection clause isn't the wooly monster of union lore it may first appear to be, according to Tony Padilla, a former Austin resident and now a Washington lobbyist for the Transportation Communication Union. Padilla says the issue is "always misconstrued. The six-year guarantee applies only to workers who lose their jobs because a line is removed. It doesn't apply to reductions in service or staff. There's also a rule that says the worker has to accept a transfer if one is offered. Otherwise, no protection." Since there have only been minor discontinuances up to this time, the impact of this provision either way -- saving money or safety-netting jobs -- won't be that great. Padilla doesn't want to lose the protection, of course. But there are more pressing concerns right now.

Repeal the prohibition on contract labor. Amtrak workers make between $18,000 and $35,000 a year. There are 23,000 of them nationwide, 120 in Texas. Hutchison's provision to allow jobs to be contracted out (that's outsourcing to Austin techies) worries Padilla. "They want to get a bunch of people in they can pay minimum wage to," he says. Hutchison's measure doesn't say which jobs would be let out, just "certain services." Padilla says the unions are willing to deal, allowing some cleaning and maintenance jobs to be contracted, but they have to protect their core positions.

* Limit damage suits. Amtrak would adopt the latest Congressional product liability laws, capping punitive damages at $250,000 or twice the compensatory damages, whichever is greater.

* Establish oversight and accountability structures. Who's not for accountability? This provision demands an audit of "how Amtrak allocates its cost among routes" and a tally on the corporation's "financial assumptions" for the next decade or so. The Amtrak Reform Council, created in this bill, would sit in judgment: If they're unconvinced by the railroad's chances for success, the council gives Congress, simultaneously, a plan to reorganize and a liquidation plan: "If Congress fails to act on a reorganization plan, the liquidation plan will go into effect automatically," according to the bill. This is the LBJ portion of the proceedings. It says, "Put up or shut up."

As history has shown over the long haul, passenger railroads encourage schizophrenic thinking. Remember, Amtrak was signed into law in 1970 by a trains enthusiast named Richard Nixon, who recalled, "Sometimes at night [as a child], I was awakened by the whistle of a train. All through grade school, my ambition was to become a railroad engineer." Oh, the thrill and quaintness of it all. On the other hand, it takes money and might to keep the steel rails humming -- about $1 billion a year and constant bickering over when the money's arriving and how much it ought to be.

Hutchison's bill will probably be folded into the larger reorganizations of the national transportation system. Right now 4.3cents of the 16cents federal gasoline tax is dedicated to deficit reduction payments. A growing movement wants to take the 4.3cents back and dedicate it to transportation projects, partly because the deficit isn't eating up network airtime anymore, and mainly because American transport is, pardon the expression, tanking.

Supporters of the 4cents grab include bipartisan notables like Bud Schuster (R-PA), William Roth (R-DE), and Patrick Moynihan (D-NY) in the Senate, along with Representatives Susan Molinari (R-NY) and Robert Wise (D-WV). Shuster dubbed his approach the "Truth in Budgeting Act": "My colleagues understand that Americans are tired of the dishonest practice by which dedicated taxes are hoarded instead of being used to improve our crumbling highways, transit systems, vacuum tube air traffic control systems, and choked waterways," Shuster said at a press conference in April. It's simple, the truthmongers assert: Transportation taxes should fund transportation projects.

If the coalition gets its 4.3cents, a half cent would go to the Intercity Rail Trust Fund. The fund would yield between $700 and $750 million a year for capital improvements like high-speed routes in the Northeast Corridor running from Boston to Washington, D.C. For the near future, anyway, Amtrak would know it had money coming in, and how much, without having to beg and battle with Congress every session. This is the "stable source of funding" Hutchison requires to make her realignment work. If this sounds peachy for everyone, it's not. In this case the crank is the Highway Users Alliance (HUA), which has its own dedicated budgeting agenda: The HUA people are griping about the "billions in highway user taxes [taken] away from roads and bridges to subsidize non-highway programs, such as Amtrak..., a little-used passenger rail system catering to a prosperous customer base." (This despite the billions -- somewhere between $30 billion and $80 billion -- that the Federal Highway Administration will now be doling out for road work.)

Amtrak's Mark Cane, the fairly new director of operations who visited Texas for the first time to secure the Eagle loan, said his company is ready to roll. Since 1995 Cane's management team has reorganized operations into three strategic business units (SBUs) -- Northeast Corridor, Intercity, and Western. Cane is a reserved middle management sort of guy who's ready "to make this a self-sufficient business." Mark Magliari from the Chicago office says, "We'll always need capital funds, just like any other form of transportation. But we're finding ways to fund our operating budget on our own." High-speed rail in the Northeast will hopefully double or triple that ridership; that's significant because the Corridor is the only line that's ever paid for itself. The big move will come when trains start hauling express mail. Unlike airplanes, trains are rarely shut down for inclement weather. Under new contracts with carriers like Federal Express, Amtrak hopes to make a bundle hauling packages.

Mail service will have another effect here in Texas. The Texas Eagle, currently running three days a week through Austin, will start offering service seven days a week. Austin resident Roy Stoddard takes the Eagle to Dallas several times a year for business, and given the chance says he'll take it more often. "If they give me seven days, and I know I can leave here anytime and come back anytime, I'm going to take the train. I can relax better on the train, if I want to work, or sleep or just talk to my neighbor."

Hutchison says so far so good: "I intend to see that Amtrak follows through on its commitment to provide reliable passenger rail service, expand its schedule to seven days a week and obtain mail and other delivery contracts to keep the service viable." There are lessons to be learned here. Like never think you've got a politician pegged. Strange as it seems, the senator places herself among "those who believe Texas' future must contain passenger rail and those who believe that a passenger rail system without Texas simply isn't a national system."

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