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House subcommittee members laud short-line tax credit extension; Kentucky lawmakers create small-road tax credit


Last week, four members of the House Subcommittee on Railroads testified on behalf of the short-line tax credit extension bill during a House Subcommittee on Select Revenue Measures hearing on long-term financing options for the Highway Trust Fund.

Railroad subcommittee Chair Corrine Brown (D-Fla.) called efforts to extend the tax credit a “no-brainer” and stressed it will cost about $13 billion to upgrade the national short-line network to current axle-load requirements, according to a hearing summary released by American Short Line and Regional Railroad Association (ASLRRA) lobbying firm Chambers, Conlon & Hartwell L.L.C.

The Short Line Rehabilitation Tax Credit bill (H.R. 1132/S. 461) proposes to extend the Section 45G railroad track maintenance credit, which is set to expire on Dec. 31, for three years. The legislation also would provide eligibility for new short lines and increase the credit limitation from $3,500 per mile of owned or leased track to $4,500.

Section 45G supports more than $330 million in short-line infrastructure investments each year, and encourages small railroads to partner with customers and suppliers to make those investments, said Rep. Earl Pomeroy (D-N.D.).

“Customers like the cement and lumber industries have fallen on hard times,” he said. “But these industries will come back, and our railroads must be ready.”

As of July 24, H.R. 1132/S. 461 had attracted 124 co-sponsors in the House and 34 in the Senate, according to Chambers, Conlon & Hartwell partner Adam Nordstrom.

Meanwhile, the state of Kentucky already has passed legislation that provides a tax credit to short lines, according to the ASLRRA. The tax credit is limited to 50 percent of expenditures for track maintenance and repairs, capped at $3,500 times the number of miles of track a short line owned or leased as of Jan. 1, 2008.

Another law provision establishes a 25 percent tax credit, capped at $1 million, that’s designed to encourage investment in rail upgrades or expansions involving Kentucky shippers who own fossil fuel or biomass resources for fuel production.

The legislation also enacts a short-line assistance fund to help Class IIs and Class IIIs finance infrastructure rehabilitation and improvement projects, and authorizes the use of industrial access road funds for rail improvement projects needed for an economic development project. Funds previously could only be used for roadways.

Contact Progressive Railroading editorial staff.

More News from 7/28/2009