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Short-line tax credit extension passes House, stalls in Senate


Legislation aimed at extending the short-line tax credit has sailed through the House but needs to navigate choppy waters in the Senate because of partisan interests, according to the American Short Line and Regional Railroad Association's (ASLRRA) latest "Views and News" newsletter.

The Section 45G Short Line Tax Credit expired on Dec. 31 and ASLRRA lobbyists tried to extend the tax credit legislation by three years prior to the expiration. Currently, they're pursuing a one- or two-year extension through an extenders package bill that would extend a number of tax-related provisions that expired at 2007's end.

The House recently passed the Energy and Tax Extenders Act of 2008 (H.R. 6049), which proposes to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, and extend certain expiring provisions. The bill would extend the short-line tax credit for one year retroactive to Dec. 31.

The Senate now is considering the Energy Independence and Tax Relief Act of 2008 (S. 3125), its version of the legislation sponsored by Senate Finance Chairman Max Baucus (D-Mont.). The bill needs 60 votes to end debate and bring the measure to a vote, and then 51 votes to pass. However, two procedural votes on June 10 and 16 failed to total 60, said Keith Hartwell, a partner with ASLRRA lobbying firm Chambers, Conlon & Hartwell L.L.C.

"The dispute is a partisan one that involves how all the tax items in the package will be paid for.  Democrats want them paid for with tax increases on others and the Republicans don't believe Congress should have to raise taxes to cut taxes," he said. "The two procedural votes demonstrate that neither side has enough votes to proceed, so it is hoped that real negotiations are proceeding."

Enacted in 2005, Section 45G enabled short lines to claim a tax credit of 50 cents for every dollar spent on infrastructure improvements, up to a cap of $3,500 per mile of owned or leased track. The tax credit is worth $165 million per year to short lines and will spur additional infrastructure investment of up to $330 million annually if renewed, according to the National Railroad Construction and Maintenance Association.

Contact Progressive Railroading editorial staff.

More News from 6/24/2008