The Wall Street Journal-20080116-Amtrak Expects Shortfall If Contract Plan Passes
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Amtrak Expects Shortfall If Contract Plan Passes
Amtrak is facing a budget shortfall of about $150 million next year under a plan to reach new contracts with its labor unions and avoid a crippling strike.
Odds of a strike at the passenger railroad are still considered remote. But the potential shortfall resulting from a proposed labor settlement could weaken Amtrak's ability to expand and upgrade operations just as Congress is beginning to look more favorably at passenger trains to help ease traffic gridlock, energy waste and global warming concerns. At the same time, a budget gap at Amtrak would give new ammunition to critics who see the passenger railroad as a drain on the federal government. Congress provides funding of about $1.3 billion a year to Amtrak.
"This is just symptomatic of a Soviet-style train operation, and it isn't going to get better," said Rep. John Mica, a Florida Republican and longtime Amtrak critic.
Amtrak spokesman Cliff Black says the company is hopeful that it can prevent a strike and is considering a wide range of options to fund a settlement, including possible cost cuts and additional funding from Congress. Talks between Amtrak and the unions are scheduled to resume today.
Last month, a panel appointed by President Bush recommended that Amtrak raise wages about 35% and provide full retroactive back pay to 2000 for about 10,000 Amtrak employees. The employees have been working without an updated contract for nearly eight years.
Amtrak said it can afford to pay the wage increases, which total about $166 million a year. But it can afford to pay only about 40% of the back pay, which totals $252 million. Amtrak said that the proposed settlement would leave the railroad with a budget gap of $150 million in the fiscal year that begins Oct. 1.
The potential shortfall "creates enormous fiscal and physical operating problems for Amtrak," said David Gunn, Amtrak's former president and chief executive officer.
The panel also turned down Amtrak requests for significant work-rule changes that would allow the railroad to make more-productive use of employees. Currently, for instance, Amtrak may need employees from three different crafts to repair a single air-conditioning unit on a passenger-train car, increasing costs and sometimes delaying when trains leave terminals.
W. Dan Pickett, president of the Brotherhood of Railroad Signalmen and chairman of a group representing the eight unions involved in talks with Amtrak, said the eight-year contract dispute is extraordinarily long even in the railroad industry, where it isn't uncommon for contract negotiations to take a year or two. The previous contracts remain in effect, and employees receive small cost-of-living increases until new contracts are reached.
"We want to see Amtrak be successful, but not on the backs of our membership," Mr. Pickett said.
