(The Associated Press circulated the following story on March 5.)
HELENA, Mont. — A bill that would raise property taxes on Burlington Northern Santa Fe Railway if it doesn’t lower Montana freight rates for grain shipping is illegal and would likely lead to a lawsuit if it’s passed, the railroad has warned.
BNSF officials told the Montana House Taxation Committee on Thursday that the bill by Rep. Bob Bergren, D-Havre, is intended to punish the railroad for what some see as unfair shipping rates.
“We would have little choice but to file suit if this bill were to be enacted,” BNSF representative Alec Vincent told the committee.
Bergren said he introduced the measure to change the way railroads are taxed in the state, based in part on the rates they charge. Railroads that charge Montana farmers more for shipping than their customers in other states would pay more taxes. The size of the tax increase would depend on the gap in shipping rates between states; the bigger the discrepancy, the higher the taxes, he said.
However, if BNSF brings its Montana shipping prices in line with what it charges in other states, its taxes would not go up, Bergren said.
“I don’t look at this as a tax bill, I look at this as a fair shipping bill,” Bergren said.
“This is about equity and fairness,” he added. “That’s all we’re asking for is be fair with us.”
BNSF hauls more than 90 percent of Montana grain to markets on the West Coast. Trucks, river barges and multiple railroad lines compete for business in wheat states like Kansas and Texas.
A 2004 report on Montana freight competition found farmers in the state pay roughly 50 percent more for shipping to Pacific Northwest ports than states where competition exists. The discrepancy costs Montana farmers about $60 million a year, the report said.
Richard Owen, executive vice president of the Montana Grain Growers Association, said BNSF charges higher shipping rates in Montana simply because it can.
“We are tired of the abuse and it’s time the state of Montana took more aggressive steps in holding the railroad accountable,” Owen said.
Vincent said the bill would create “extremely poor tax policy” that is confusing and violates federal tax law prohibiting discriminatory property tax assessment of railroads.
Pat Keim of BNSF said it would be “mind boggling” to calculate the new tax formula, which requires the state to determine the average commodity freight rates for Montana and for shippers outside the state.
Ed Bartlett of Union Pacific Railroad, which operates 125 miles of track in Montana, opposed the bill, which he said violates federal law.
“It’s discriminating. It’s complicated. It’s bad tax policy,” he said.
The committee didn’t take immediate action on the bill. It is identical to one that died in the North Dakota Legislature this week.