Thursday, December 03, 2009

ASLRRA: Tax credit has strong congressional support

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Hard and persistent work by short line and regional railroad advocates throughout 2009 have solidified congressional support for extending and improving the short line railroad tax credit, according to officials of the American Short Line and Regional Railroad Association meeting Wednesday in Washington, D.C.

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Ed McKechnie, chief commercial officer for Watco Cos., Inc., and chair of ASLRRA’s Legislative Policy Committee, detailed widespread support for the tax credit bills. House bill H.R. 1132 has acquired 241 sponsors, while S. 461 in the Senate has 52. Both bills would provide a tax credit of 50 cents for every dollar a railroad spends on track improvements. ASLRRA noted the credit is capped based on a mileage formula.

“This is the first time in the history of [this] tax credit that we have a majority of both houses supporting the bill” as sponsors and co-sponsors, McKechnie asserted.

Both versions of the bill would extend Section 45G for three fiscal years (2010, 2011, and 2012, ending Dec. 31, 2012); Section 45G currently expires December 31. Both would “allow eligibility for new short line railroads created after Jan. 1, 2005 and before Jan. 1, 2009,” ASLRRA said, adjusting for previous language seeking to limit incentives for short-line abandonment by Class I railroads.

Both also would increase the per-mile credit limitation from $3,500 to $4,500, “to account for increased construction costs since 2004, and to bring the credit closer to its original goal of $10,000/mile supported bynearly 290 representatives and senators in 2004,” ASLRRA said.

Bipartisan support is indicated in the House bill by sponsors Rep. Earl Pomeroy (D-N.D.) and Rep. Jerry Moran (R-Kan.), and in the Senate version by Sen. Blanche Lincoln (D-Ark.) and Sen. Mike Crapo (R-Idaho). Asked by Railway Age if such bipartisan support extended to the numerous subsequent co-sponsors, McKechnie said it indeed did.

ASLRRA representatives said Congress supported the measure in part because it was in some ways a “precursor” to or model of the larger stimulus packages passed this year, and because the short line tax credit has “no special interests; it’s in the public interest,” according to George Betke, CEO of Farmrail System, who also sits on ASLRRA’s Legislative Policy Committee. “Any short line railroad has an equal shot; there are no favorites.”

Added McKechnie, “This is an instant job creation [process] not just for the railroads, but throughout the supply chain. He observed, too, that “there are 500-plus short lines, and 500-plus ways to do this” to best benefit short lines, their suppliers, and their customers.

McKechnie also observed, “The tax credit is not about short line railroads; the tax credit is about rural economic development,” while allowing that short lines in urban areas also could benefit. But the list of co-sponsors for both bills, at present, carries an unmistakable rural tilt, with support especially strong in the nation’s heartland states. Urban New Jersey, by contrast, has three of its 13 House representatives supporting the bill, all from relatively rural districts within the Garden State.