updated 5/26/2005 6:24:09 PM ET 2005-05-26T22:24:09

Transportation Secretary Norman Mineta is urging Amtrak to immediately cut costs, saying the railroad could be as much as $40 million in debt by Sept. 30.

In a letter sent late Wednesday to Amtrak President David Gunn, Mineta said Amtrak should cut costs by "reducing expenses and conserving cash in a manner that does not jeopardize safety." Mineta did not state how much money Amtrak should be trying to cut.

The secretary said he was concerned with Gunn's May 12 testimony before a Senate subcommittee, when he said the railroad would end fiscal year 2005 with a $20 million positive cash flow. Mineta said Gunn was assuming Amtrak would be getting $60 million set aside by law to "pay for directed service in the event Amtrak ceases operations."

"It is irresponsible to project a positive cash balance based on an assumption about reserve funds, when without those dollars, Amtrak's cash position before Sept. 30 could be as much as $40 million in the red," Mineta wrote.

Mineta's concerns were raised at Amtrak's Board of Directors meeting Thursday. Gunn told the members that if Amtrak receives the $60 million, "it should end the year with a positive cash balance," according to a statement issued by Amtrak.

The railroad also said its budget, originally approved by the board, included the $60 million in question.

"While Secretary Mineta's letter yesterday suggests an intention to withhold the $60 million, today his proxy to the board indicated that Amtrak should, in fact, receive the $60 million by the end of the fiscal year," Amtrak said.

Amtrak officials did not comment on whether they discussed cost-cutting measures at the meeting. Transportation spokesman Brian Turmail said Mineta looked forward to seeing how Amtrak would cut costs to ensure it could receive the $60 million. The board's meetings are closed to the public.

Mineta also wrote that Amtrak cannot continue to spend at current levels because the brake problems with the Acela Express trains are costing the railroad about $1.25 million per week in revenue. Acela's entire 20-train fleet was taken out of service in April after cracks were found in some of the trains' disc brake rotors. The cause of the problem is still not known.

But Amtrak said, despite the Acela woes, it projects ending the year with $30 million to $40 million in working capital.

Amtrak is asking for $1.82 billion for 2006 in federal funding. President Bush has proposed cutting off all federal funds. The railroad is getting $1.2 billion this year.

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