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Legislative Memo

518.465.7511

BILL:

S.7602 (Stafford) / A.11680 (Tokasz)

Support

SUBJECT:

The New York State Rail Infrastructure Investment Act of 2002

 

DATE:

June 18, 2002

 

The Business Council of New York State, Inc., whose membership includes over 3,600 companies and more than 100 chambers of commerce and professional trade associations, has reviewed the above mentioned legislation and strongly supports its enactment.

This legislation would remove one of the most significant the barriers to economic development in the state's railroad corridors, encourage rail investment by providing incentives to upgrade existing trackage and add new infrastructure, and remove disincentives for the improvement and enhancement of passenger rail transportation. The upgrades and stability afforded under this legislation will greatly aid the manufacturing and industrial communities that depend on rail for shipment of goods and commodities.

The bill's goal is to change the way railroad taxation is calculated in New York State thus allowing for major capital improvements designed to greatly foster both passenger and freight rail service. The enactment of this legislation would also effectively end any federal litigation that has been pending as a result of the Conrail settlement expiration. Lawsuits, initiated by several class one railroads - as a result of the expiration of the Conrail settlement - have already been commenced, and a trial is scheduled to begin later this year. Without this legislation hundreds of localities who have railroad properties within their taxing jurisdictions would continue be included in these lawsuits as defendants. Similarly, without the reforms included in this legislation and the expiration of the Conrail settlement, and barring any successful litigation that may be years off, the railroads are either unwilling or unable to initiate many of their planned upgrades and capital improvements.

The Business Council has consistently voiced its support for meaningful legislation that would allow private railroads to invest in New York State. Under current state law, rail is forced to bear a tremendous tax burden if it upgrades or adds to existing lines. In fact, due largely to the state's Real Property Tax laws, railroads have been removing underutilized rail lines in New York permanently reducing the state's rail infrastructure. This legislation would enable the state to bring to an end the onerous tax situation and the lawsuits encompassing hundreds of localities. Further, under this legislation the state would hold localities harmless from real property tax revenue losses for the first two years of this legislation with an eight year graduated phase-in after that commencing in 2009-2010.

The other major provisions of the bill are as follows;

The Business Council has been a strong supporter of this railroad reform legislation. This spring, The Council's research affiliate, the Public Policy Institute, published On The Wrong Track, a report outlining the problems with the way railroad taxes are calculated in New York State. Our report states that rail provides a vital and necessary means of conveyance for the chemical, agricultural, manufacturing, and utility sectors, as well as numerous others. Rail is a primary shipper of coal needed for electricity generation and many long haul commodities such as salt and chemicals. However, under New York's arcane tax laws, rail is penalized for capital improvements to their lines and must also bear the burden of an out of date system by which real property taxes are calculated. The resulting tax burden discourages railroads from operating and/or expanding in New York and adds an additional hardship to manufacturers who depend on rail service.

The provisions of this legislation would address these concerns and enable rail to make capital investments that would foster greater improvements in both passenger and freight rail service. The additional economic development afforded through railroad and other related jobs in the hundreds of communities throughout New York also adds to the economic well-being of the state.

For the above mentioned reasons, The Business Council strongly supports S.7602/A.11680 and respectfully requests its enactment into law.