Friday, October 16, 2009

Short Line/Regional Perspective: Let Congress know the tax credit works

Written by 

By Richard F. Timmons
President, American Short Line
and Regional Railroad Association

richard-timmons-web.jpgQuestion: How many man-hours  are hired when a short line railroad spends $1 million on upgrading typical short line track?
Answer: 20,800.

Q: How many man-hours are hired when a short line railroad spends the $2 million in company money required to match the $1 million tax credit?
A: 62,400.

Q: What percentage of the ties and rail required to upgrade short line railroad track are purchased from American manufacturers?
A: 100%.

Q: If the short line tax credit extension passed today, when could short line railroads begin hiring those man-hours and purchasing those materials to undertake new projects?
A: Tomorrow.

Q: Why hasn’t Congress extended the short line tax credit as part of its effort to stimulate the economy and create jobs?
A: Good question.

Time is running out for the short line rehabilitation tax credit (45G) which expires on Dec. 31, 2009.  At a time when the federal government is focused almost entirely on stimulating the economy through immediate job creation, extending the short line tax credit should be on everyone’s “to do” list.

I am encouraged that, as of this writing, 167 House representatives and 39 Senators have co-sponsored the extension legislation. That number grows every week. These are among the highest co-sponsor numbers of any bill being considered in this session of Congress.

Even more significant, the co-sponsors are divided almost evenly between Democrats and Republicans, representing the kind of bipartisanship that everyone says is so necessary to get things done in Washington.

While this support is gratifying, it will not mean much if Congress does not enact the extension by the end of the year.

Q: Who are the primary beneficiaries of short line railroad track rehabilitation?
A: Railroad shippers.

When their short lines upgrade track, shippers receive faster, safer, and more competitively priced service. Most important, they can utilize the newer heavier-load railroad cars that are becoming the standard for the Class I industry and that require a much stronger track structure than exists on many short lines today. Absent that ability to handle the new equipment, shippers are cut off from the main line rail network.

As Watco Cos. Inc. CEO Rick Webb recently testified before the House Transportation & Infrastructure Committee, “For small businesses and farmers, the short line’s ability to take a 25-car train 75 miles to the nearest Class I interchange is just as important as the Class I’s ability to attach that block of traffic to a 100-car train moving across the country. My Kansas grain customers cannot make the journey to export markets in the Gulf without Class I railroad service. But they can’t start the journey without short line service.”

Q: When is an investment in railroad track good for the highway?
A: Always.

Improving short line railroad service takes heavy trucks off the highway, and that reduces highway congestion and pavement damage. A single railcar can hold three to four truckloads.
Taken together, the short line industry diverts over 33 million truckloads from the nation’s highways and in so doing saves approximately $1.4 billion in pavement damage. Much of this savings is in rural areas where so many short lines operate and where state and local government is hard-pressed to come up with road repair money for local roads.

Question: If Congress extends the short line tax credit, will railroads put up a green sign beside track being rehabilitated that says “Project Funded by the 45G Rehabilitation Tax Credit?”
Answer: Yes!

William Vantuono

With Railway Age since 1992, Bill Vantuono has broadened and deepened the magazine's coverage of the technological revolution that is so swiftly changing the industry. He has also strengthened Railway Age's leadership position in industry affairs with the conferences he conducts on operating passenger trains on freight railroads and communications-based train control.