HILLSDALE, N.Y. — Both houses of the New York state legislature have adopted a bill that will make huge cuts in property taxes paid by railroads. The governor plans to sign the measure, but local officials aren’t happy about it, saying it will end up squeezing local taxpayers, the Hillsdale Independent reports.
The Rail Infrastructure Investment Act, a measure has been proposed by Governor Pataki for the past two years and was included in his executive budget. The governor applauded legislature’s action on the bill, saying it will spur economic growth and job creation. “This new measure will encourage the expansion of new rail lines across the state–a key factor in economic growth and expansion,” according to a statement issued by his press office.
But local officials say that the loss of revenue from the railroads will inevitably have to be made up by other taxpayers. And on Wednesday, the Columbia County finance committee voted to send a letter to Mr. Pataki and state lawmakers protesting the legislation, which would decrease assessments on railroad property by 45%.
“We don’t need more burdens on real estate tax payers,” said Kinderhook Supervisor Douglas McGivney (D), who first called for the letter of protest.
Under the plan, the state will allot $70 million over 10 years to offset the revenue lost by local governments. According to Andrew Rush, of the governor’s Budget Press Office, the new law will cover 100% of the revenue loss for the first two years of the program, in 2003-2004. For the next eight years, the program covers 50% of the loss. After that program expires, there is no additional funding for a revenue offset.
He described the program as “kind of a bridge.” As for what will happen to the municipalities after the decade-long assistance program expires, Mr. Rush said, “Ten years is a long time.”
The outcome is clear now, according to Richard Frick, Director of the Columbia County Real Property Tax Department. “It raises taxes for the rest of us,” he said. “The amount that needs to be raised is still the same.”
Mr. Frick said the total assessed valuation of railroad property in the county is just under $33 million. He could not say what the total tax revenues amount to, because each town has its own tax rate. The towns with the largest area in railroad property are Stuyvesant and Chatham, he said.
Although the situation has changed dramatically in recent years, the Town of Stuyvesant received close to 40% of its tax revenues from the railroads in the years when he was Stuyvesant’s Tax Assessor, Mr. Frick said.
In support of their petition for tax relief, the railroads have claimed that New York taxes them far more than other nearby states. But Stockport Town Supervisor Leo Pulcher (R) suggested they may be leaving out some relevant data.
“[Those states] get it in other ways,” he said, referring to fees and charges other than taxes. “Lowering taxes in New York will have them going back and saying, ‘These fees are killing us–look what New York did for us’–they play one against the other.”
Mr. Pulcher said the Town of Stockport had absorbed already a loss of revenue when property owned by the electric power utilities was re-assessed.
All newly constructed and renovated railway properties would be exempt for property taxation for ten years from the date of completion. The break on taxes would give CSX Corporation the revenue to complete improvements to tracks in the Hudson Valley corridor.
The improvements are necessary before the state can implement its high speed rail service between the Capital Region and New York City. CSX has resisted making the improvements in the past, saying the added upgrading and maintenance costs come without any potential added revenue for them.
Lawrence Edson, Jr., the East Greenbush Central School Assistant Superintendent For School Business Finance, said East Greenbush Schools has only one rail parcel within its boundaries. “We have a potential impact, an estimated $15,000,” he said.
But he also said that’s “a drop in the bucket” compared to the district’s total tax revenue of approximately $29 million. He predicted that districts like Schodack and Ichabod Crane in Columbia County and Ravena in Albany County would see a heavier impact.
Schodack Central Schools Director of Business and Support Services Sherri Fisher said she was aware the state was going to pass the bill in order to avoid a tax certiorari claim by CSX Railroad. In fact, she said, she has been advising the school board this was coming throughout this year’s budget-making process.
At press time Ms. Fisher had not received enough information on the tax reduction incentive to make a specific comment on the legislation as passed.
Officials from the Ichabod Crane School District could not be reached for comment prior to the time The Independent went to press. Tax figures from Chatham and Stuyvesant, the Columbia County towns with the highest assessments on railroad property, were not available.