NIT League supports short line rail tax credit extension

NIT League supports short line rail tax credit extension The National Industrial Transportation League has formally endorsed legislation extending the short line railroad rehabilitation tax credit, the shippers' association said Thursday.
   The extension is contained in identical House and Senate bills, HR 1584 and S 881, and provides for a three-year extension of the credit.
   'Short line railroads are playing an increasingly important role in the freight transportation system, and the tax credit has proven a very cost effective way to maximize rehabilitation on these tracks,' NITL President John Ficker said in a statement. 'The league endorsed the initial version of this tax credit in 2004 and we are pleased to endorse this extension.'
   The rehabilitation tax credit, known as 45G, was first enacted in 2004 and has been available to short lines from 2005 to 2007. It provides a credit of 50 cents for every dollar spent on track rehabilitation up to a credit cap equal to $3,500 per mile of railroad owned or leased by the short line.
   'The ultimate beneficiaries of the tax credit are the customers that depend on short lines to move their goods,' NIT League Chairman Curt Warfel said. 'Today, short lines handle, in origination or termination, one out of every four railcars moving on the national rail system. Short lines serve over 12,000 facilities that employ over 1 million people. The majority of these businesses are located in areas of the country that have no other rail service. When these lines are rehabilitated shippers get more efficient and more productive service.'
   Ficker said that one of the drivers of the original tax credit was the advent of the heavier 286,000-pound railcar, which is an important component in increasing shipper productivity.
   'As Class I railroads moved to rationalize their systems, many lines were considered as abandonment candidates,' he said. 'Short lines took the risk to assume these lines which had not been maintained to today's standards. That track needs a lot of work to begin with and the new heavier railcars require an even higher level of investment.'
   HR 1584 has 180 House co-sponsors and S 881 has 34 Senate co-sponsors. The proposed legislation increases the credit cap to $4,500 per mile to take into account the large increases in steel prices in the last three years.