Amtrak, Faced With Subsidies Cut, Reduces Passenger Service

Amtrak, faced with a 10.5% reduction of federal subsidies this fiscal year, is cutting back on its passenger rail service today, and officials fear new deep budget cuts could bankrupt the railroad.

Amtrak said that while no lines are being eliminated, the railroad is reducing the number of runs on several lines.

Federal subsidies this year totaled $616 million, about $68 million less than Amtrak was getting during the previous fiscal year.

Amtrak officials said eliminating the subsidies--a move advocated by President Reagan but thus far rejected by Congress--would kill the railroad because it can cover only 60% of its expenses with ticket sales.

The officials believe that if the subsidies are slashed deeply, Amtrak might be forced into filing for bankruptcy. The railroad cannot eliminate operating routes and lay off workers to save money because it would be forced to pay stiff labor penalties under existing contract agreements.

“We’re assuming that our budget will be cut by another 3% to 5% this fiscal year because of the Gramm-Rudman deficit reduction measure passed by Congress,” an Amtrak spokesman said in an interview. “We’re going to see whether we can do it without any further route operating cuts.

“But if our subsidies are slashed again next year by, say, 25%, this might force us into bankruptcy,” he said. “The minute you knock a route out, you trigger the labor protection penalties that could run as high to some as six years of salary.”