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Rail News: Mechanical

New Mexico enacts locomotive fuel tax bill

New Mexico Gov. Susana Martinez on Tuesday signed a bill governing a locomotive fuel tax exemption for railroads.

The legislation enables railroads operating in the state to receive gross receipts tax-free fuel if they commit at least $50 million in capital to eligible infrastructure improvements in the state, including locomotive refueling facilities, track, signals and supporting networks that were located in New Mexico after July 1, 2012.

A gross receipts tax deduction for railroad fuel was adopted by the 2011 Legislature to encourage the development of a new railroad refueling facility in southern New Mexico. The enacted bill reduces the new investment requirements for the deduction.

The legislation aims to encourage rail industry growth, and spur more exports and manufacturing in New Mexico, Martinez said in a prepared statement.

"New Mexico has a deep and rich history with rail transportation and economic development, and the growth and vitality we are currently seeing in Santa Teresa in the wake of new investment by Union Pacific shows remarkable progress in our efforts to position New Mexico well for the production and movement of goods in our state," she said, referring to a UP intermodal facility that's under construction in Santa Teresa.

BNSF Railway Co. officials believe the legislation is all about ensuring fair tax treatment among members of the same class of taxpayers.

"Every year BNSF makes major investments in its facilities and infrastructure all across New Mexico, not just in its fueling facilities or in just one county. By amending the underlying statute, now railroad investment will be encouraged all across New Mexico," BNSF officials said in an emailed statement. "For BNSF and our 1,400 employees who call New Mexico home, this legislation sends a strong message that the state values our commitment to, and continued investment in, New Mexico."

Martinez also announced that her administration and BNSF recently signed an agreement that requires the Class I to return $5 million to the state. The funds were expended in 2008 to purchase a portion of track from Lamy to the Colorado border, a segment the state never officially assumed ownership of, Martinez said.

The pact also converts a $50 million escrow account for liability protections on RailRunner track to a line of credit so the funds can be used for highway construction and maintenance projects in the state, she said.


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