The Amtrak Reform Council, with bitter opposition from some members, said yesterday that Amtrak cannot truly meet its congressional requirement of operational self-sufficiency by 2002 because it chooses not to count some major expenses as operating expenses.

Amtrak replied that the council's first annual report had reached a "wholly unsupported conclusion" about what Congress had required.

The exchange between Amtrak and the council, created by Congress in 1997 to evaluate Amtrak's performance and make recommendations for the future, is the latest in a war of words that has slowed the council's work and left questions about whether it will meet its own congressional mandate.

Under the law, the council has the power to declare at any point that Amtrak cannot survive without operating grants after the end of fiscal 2002, after which the council would have 90 days to submit plans for a restructured intercity passenger network. Amtrak would then be required to submit a plan for its own "complete liquidation."

Council Chairman Gil Carmichael stressed yesterday that the board's negative report, which passed 8 to 3, was not a "finding" for legal purposes and would not start the 90-day clock.

Few observers, including sources on the council, believe that Congress would allow Amtrak to be liquidated. Since Amtrak was created on May 1, 1971, Congress has repeatedly rebuffed attempts to cut many individual trains, much less kill Amtrak.

Yesterday's report and the adverse reaction from Amtrak, labor unions and the administration highlighted the different ways that Amtrak's future can be viewed. Amtrak constantly talks in rosy tones about its future and how well it is doing while the council and some Amtrak opponents in Congress say the railroad faces serious troubles.

In the report, the council took issue with Amtrak's claims of ridership gains, saying any recent improvements have done little more than bring ridership back to 1990 levels. The council also said that Amtrak's claim that it is doing $8 million better than projected is actually skewed by an increase in non-passenger items such as payments from commuter agencies and commercial activities.

"Amtrak's core business of providing intercity rail passenger service actually performed marginally worse than anticipated in the FY 1999 plan," the report said.

While Amtrak said that it forecasts it will meet the zero-operating subsidy goal by the 2002 deadline, the council said that if Amtrak used generally accepted accounting principles, it would need a $567 million operating subsidy then. If Congress had not taken Amtrak's excess railroad retirement taxes off its budget, the figure would be $752 million.

The council said Amtrak chooses not to count a projected $487 million in depreciation expenses and $80 million in "progressive equipment overhauls" as operating expenses.

In comments printed in the council report, Amtrak said Congress never intended it to count those items. "Depreciation is a non-cash expenditure and as such is not funded as part of a federal operating contribution," Amtrak said. Amtrak also said that Congress gave its assent in 1993 to count progressive equipment overhauls as a capital expenditure.

Amtrak expressed fear that the council report could hurt its ability to go to private capital markets to raise funds and actually increase its costs.

"We are deeply concerned with the negative impact that ARC statements concerning [accounting] application to the operational self-sufficiency determination could have on the capital and credit markets available to Amtrak," Amtrak said.

Clarence Monin, international president of the Brotherhood of Locomotive Engineers, and Jolene Molitoris, Federal Railroad administrator, were far more blunt. Monin and Molitoris, two of the negative votes on the council, said that "the report reflects an aggressive anti-Amtrak and pro-privatization agenda; that it is replete with statements that are misleading, inaccurate and unsubstantiated; and that it is the culmination of the very fiscal irresponsibility that it claims to address."

The third no vote, public policy consultant Donald Sweitzer, did not submit comments explaining his position.

CAPTION: Passengers board train Thanksgiving weekend in Alexandria. Amtrak and its monitors are on different tracks regarding progress toward self-sufficiency.