Take the Money - Please

Take the Money - Please

Copyright 2003, Traffic World, Inc.

It''s never been easy to organize shippers for a common cause and promoting a plan that gives tax credits to their carriers apparently goes only so far in achieving that end.

At least that''s been the case so far with the American Short line and Regional Railroad Association''s "Save Our Service" initiative, a grass-roots coalition of shippers formed in June. The initial goal of the coalition is to push legislation introduced in the House that provides shortline railroads a $10,000-per-mile tax credit for investing in track upgrades.

The coalition had been hoping to have 200 shipper members by the end of September but as of Oct. 1 the effort had garnered only about 50. The number seems particularly low given that shippers served by shortlines "probably number in the thousands," SOS states in its promotional material.

"Two hundred was an approximate goal," said Leslie Blakey, president of Blakey & Agnew, whose consulting firm was hired to run the coalition. "We may find we''re closer to that in October. But it wasn''t a scientific number. We just figured we''d set a high target."

In fact, the legislation, called the Local Railroad Rehabilitation and Investment Act of 2003, has more congressional co-sponsors (roughly 150 so far) than the coalition created to back it. That''s a result, Blakey said, of the level of participation from current members in alerting their representatives. "I think (shippers) understand that this legislation is greatly needed to keep their service competitive," she said. "Sometimes when putting coalitions together, the point can be difficult to grasp before people say it''s in their self interest, that it''s something they need. But I think our members are having a good impact."

ASLRRA President Richard Timmons was not concerned about a lack of shipper support. "To put much significance on the 200 number would mischaracterize the situation," he said. "The fact that shippers are coming together to support a railroad bill is the real story. Our members are ecstatic that people are attending our conferences, writing letters to their congressman and calling them on the phone."

The legislation is flexible in that if a shortline does not have enough taxable income to use the credit, the credit can be sold to one of its shippers that does. The railroad would be required to use the cash for track rehabilitation and the shipper would reduce its tax liability. The legislation also allows for the $10,000-per-mile credit to be taken each year for five years, which would allow the railroad to undertake significant rehabilitation work, the coalition states.

State government studies are helping SOS make its case for public investment in infrastructure. One such study showed that Iowa Northern Railway saved that state over $16 million in costs related to highway deterioration by attracting rail carloads that otherwise would have moved over the road, according to the coalition.

In addition, a Kansas Department of Transportation study estimated that Kansas shortlines save the state $49.9 million per year in pavement damage costs. That study also showed that the state''s shortlines save shippers $3.8 million per year by charging rates an average of 7.7 cents per bushel less than trucks.

Perhaps one of the biggest advantages to shippers of such a tax-incentive program is that it would open up funds to upgrade track infrastructure. That would enable shortlines to pull 286,000-pound railcars, the standard used by the Class 1 railroads, and thereby give shortlines greater access to the Class 1 marketplace.

Blakey said the House bill and a companion Senate bill likely would be attached to other tax legislation as part of a larger package. The hope is to get it passed by the end of 2003 but the more likely scenario is sometime next year.

In terms of SOS members, "eventually we would like to see as many as we can get - we have no upper number," Blakey said. "Our founding members have lot of say in this. Recruitment does take work."