January 9, 2017 – TRA Newswire –
Representative Trent Ashby (R), Lufkin, has filed House Bill 3566 that would allow the 43 short line railroads that operate in Texas the ability to use tax credits for certain railroad reconstruction and replacement expenditures.
The bill would be limited to Class II and Class III railroads. Those are smaller railroads serving local industries and feed carload traffic on to larger national carriers such as Union Pacific, BNSF Railway and KCS Railway in the state.
The bill would allow short lines to reconstruct or replace track, roadbeds, bridges, industrial leads or other track-related structures. It would also include the new construction of switches, spurs, sidings and industrial tracks. With a qualified investment the short line would be able to receive a franchise tax credit of up to $3,500 a mile. The tax credit could be transferable to another entity. The Texas Department of Transportation would be required to adopt rules to govern the tax credits.
The state short line tax credit would be similar to what is called “45-G” at the federal level. That tax credit helps over 550 short line railroads preserve nearly 50,000 miles of track that otherwise would have been abandoned, according to the American Short Line and Regional Railroad Association. The ASLRRA said that much of the short line network received little investment by its previous owners and new local owners must upgraded and maintain their railroad if over 10,000 rail customers are to stay connected to the national main line rail network. The freight rail connections are critical to preserving the first and last mile of connectivity to factories, grain elevators, power plants, refineries, mines, and facilities that employ over 1 million Americans, according to the short line association. The federal tax credit for short lines expired at the end of 2016.