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Rail News: Rail Industry Trends

Short-line tax credits still stalled in the Senate


The U.S. Senate didn't bring a "tax extenders" bill to a vote before entering recess last week. So, Section 45G — or the short-line tax credit legislation — will have to wait until after Labor Day before the Senate returns to action and reconsiders the bill, according to a legislative update included in the American Short Line and Regional Railroad Association's (ASLRRA) latest newsletter.

For several months, the Senate has considered the tax extenders bill, which in addition to the short-line tax credit includes dozens of expired provisions, ranging from wind and solar energy tax credits to a research and development tax credit to tax accounting standards for NASCAR racetracks. ASLRRA lobbyists are seeking a one- or two-year extension for the tax credits.

Under Senate procedures, 60 votes are required to consider legislation, while a simple majority is required to pass legislation. The tax extenders bill has been five to seven votes shy of 60 since October, according to the ASLRRA.

"The major barrier facing this legislation is an ideological dispute between Republicans and Democrats dealing with how changes in tax law are paid for — usually with tax increases elsewhere," the ASLRRA news item states. "The inclusion of tax credits for renewable energy have tied the extenders package to the heated debate on increased domestic oil production offshore and in Alaska, which has served as an additional drag on the effort to secure 60 votes."

During the remainder of August, ASLRRA lobbyists are calling on short liners to:
• help recruit 800 additional rail shippers to join "Saving Our Service" to bring the total number of customers endorsing the tax credits to 2,000;
• organize meetings with senators in their home state;
• continue to prompt shippers and local leaders to call senators about the tax credits to increase the legislation's profile; and
• try to get local newspapers to run stories about how infrastructure improvements are improving operations and customer service so senators can read them while they're home during recess.

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 estimated to be worth up to $165 million per year to short lines and is expected to spur additional infrastructure investment of up to $330 million annually if renewed.