Rail Sector Adds Steam to Tax Item

Posted February 26, 2010 at 3:50pm

After a massive lobbying blitz, railroad industry groups say they expect to see Senate movement as soon as this week on an extension of a 2005 short-line tax credit that expired in December.

The provision, which encourages track rehabilitation, was included in a jobs bill proposed by Senate Finance Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa). But when Majority Leader Harry Reid (Nev.) shelved the Baucus-Grassley proposal in favor of a pared-down jobs bill, he cut out the rail credit.

Trade groups say they’re confident, though, after Thursday’s “Railroad Day on Capitol Hill,” when more than 500 railroad industry representatives from around the country steamrolled Congress. They held more than 300 meetings to push the tax credit and other rail issues.

“Their message is that the tax credit is extremely important to them and their ability to invest in their own infrastructure, and they want it passed yesterday,” said Chuck Baker, a lobbyist for Chambers, Conlon and Hartwell and president of the National Railroad Construction and Maintenance Association. “The tax credit extension won’t be in the first jobs bill. But there have been multiple commitments from the Majority Leader to move it soon, maybe as soon as [this] week.”

Sens. Blanche Lincoln (D-Ark.) and Mike Crapo (R-Idaho) co-sponsored the legislation, and a similar measure already passed the House. Baker says the bills have racked up more than 250 co-sponsors, and they’re working on dozens more. Still, Reid spokesman Jim Manley said his boss hasn’t yet committed to including such a measure in a tax extenders bill he plans to introduce this week.

Meanwhile, larger freight rail groups are pushing for a similar tax credit, said Holly Arthur, spokeswoman for the Association of American Railroads.

“We are the only mode of transportation that builds and maintains its own infrastructure,” she said. “That is great with us, but this year we’re kind of looking for opportunities for the tax incentives associated with that investment.”

Rep. Kendrick Meek (D-Fla.) sponsored a 25 percent tax credit for freight rail, but no legislation has yet been proposed in the Senate. Arthur said it should be included in a jobs bill because every railroad job indirectly supports 4.5 jobs in the broader economy.

Baker said the groups are also urging caution on a bill introduced by Sen. Jay Rockefeller (D-W.Va.) that would reauthorize the Surface Transportation Board, which regulates railroads.

They’re also hoping to push back a 2015 deadline to implement new high-tech safety measures, said Keith Hartwell of Chambers, Conlon and Hartwell.

“There’s a new federal safety requirement that will require the railroads to develop, implement and put in place … essentially GPS train control systems that are run by satellites,” he said. “They’re expensive — billions of dollars, it will cost.”