Lawmakers have approved a measure designed to reduce New York's property taxes on railroads. Governor George Pataki hailed the bill, which was a top priority for The Business Council, and said he intends to sign it.
"This new measure will encourage the expansion of new rail lines across the state -- a key factor in economic growth and expansion," the Governor said in a release.
The Governor's release said the bill would:
- Simplify and modernize the method of assessing rail properties for local taxation and exempt all newly constructed and renovated properties from property taxation for ten years from the date of completion.
- Phase in a tax reduction of approximately 45 percent over seven years for transportation properties currently owned by railroad companies.
- Ensure that the rail companies commit additional resources to make substantial enhancements in freight and passenger services, including greater safety, expanded access, and higher speed.
- Establish a transition aid program, which will provide a total of $70 million over 10 years to local governments to offset their revenue loss, beginning with $4.7 million in 2003-04.
The Governor has proposed railroad property tax reform in each of the last two years. In budget negotiations in 2001 and 2002, agreement on the measure seemed near, especially after initial opposition by municipalities fearing the loss of revenues were addressed by provisions for increases state aid to offset any revenue shortfalls.
Business Council President Daniel B. Walsh said, "Governor Pataki, Senate Majority Leader Joseph Bruno, and Assembly Speaker Sheldon Silver "deserve credit for their persistence in pursuit of railroad property tax reforms," said Daniel B. Walsh, president/CEO of The Business Council. "We also appreciate the unwavering support of the bill's primary sponsors, Sen. Ronald Stafford and Assemblyman Paul Tokasz.
"This will benefit not only the rail industry, but also manufacturers, which depend significantly on rail freight to receive and ship goods and commodoties," he added.
Reducing property taxes on railroads has been a top Council priority for three years. A February 2002 research report by The Council's research affiliate, The Public Policy Institute, outlined a strong case for reforming these taxes.
The report, On The Wrong Track, showed that heavy property taxes on railroads in New York, with costs up to 26 times those in neighboring states, have helped drain high-paying railroad jobs from the state and impose higher transportation costs on manufacturers and other shippers.
Railroad property taxes on one major railroad, CSX Transportation Systems, are more than seven times as high as those the company pays in Massachusetts, and 26 times those in New Jersey, on the basis of tax paid per mile of track, the Institute report showed.
Property taxes go up when companies invest in new rail or other improvements, and go down when tracks are removed. The heavy tax burden is one reason trackage in New York has been cut in half and the state has lost more than 11,000 high-paying railroad jobs since 1981, according to the Institute.