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A year ago, the Bush Administration proposed a fiscal-year 2006 budget that included no funding for Amtrak unless the national passenger railroad completed “significant reforms.”

Approving a plan to create a Northeast Corridor subsidiary to assume ownership and management of infrastructure, and firing President and Chief Executive Officer David Gunn must qualify as significant reforms. Yesterday, the administration unveiled a proposed $65.6 billion FY2007 transportation budget that would allocate $900 million for Amtrak, including $500 million for capital and maintenance needs, especially along the Northeast Corridor. The remaining $400 million in efficiency incentive grants will “encourage reforms of the railroad service,” said U.S. Transportation Secretary Norman Mineta in a prepared statement.

“In last year’s budget, we demanded reform and over the past year, both Amtrak and Congress have responded,” he said. “In recognition of this progress, and with the expectation that we will see much more by the end of the fiscal year, the president requests funds to help Amtrak make the transition to a new and better model of intercity passenger rail.”

The proposal recognizes the railroad’s efforts to reduce costs and increase efficiency, said acting Amtrak President and CEO David Hughes.

“While the growth in our operating deficit has been halted and ridership continues strongly, we must seize the opportunity presented by the growing demand for passenger-rail service around the country and make improvements to our customer service,” he said, adding that the administration’s proposal is the first step in a nine-month process.

Last year, Amtrak received a $1.3 billion FY2006 appropriation.

And that’s the minimum of what the railroad will need again this year, said National Association of Railroad Passengers Executive Director Ross Capon. Amtrak cannot survive on $900 million and the budget request does not include operating grants, he said.

“To actually support a $500 million federal grant for capital, Amtrak needs $1.3 billion,” said Capon. “The administration in effect is saying, ‘We’re going to cut Amtrak’s total funding by $400 million while cutting zero from capital.’ That’s unrealistic.”