(The following story by Tom Polansek of Copley News Service appeared on the Peoria Journal Star website on April 21.)
SPRINGFIELD, Ill. — Local and national railroads that operate in Illinois warned Monday that they will fire union workers and raise shipping costs for farmers if state lawmakers approve an expanded tax proposed by the governor.
In a letter sent to Gov. Rod Blagojevich last week, the CEOs of the nation’s six top freight railroads said they will decrease their business in Illinois if the Motor Fuel Tax is expanded to include railroads.
“If this tax is enacted, it will make Illinois the most burdensome state in the country to do business with,” said Joseph Ciaccio, president of the Illinois Railroad Association. “Somebody has to pay the tax. … Some of it will certainly be passed to the shippers.”
Ciaccio spoke on behalf of the group, comprising Canadian Pacific Railway, Canadian National, Union Pacific Corporation, Norfolk Southern Corporation, CSX and Santa Fe Railway.
The governor proposed charging railroads and other non-farm, non-highway vehicles the tax in his budget plan for the fiscal year that begins July 1. He estimates it can earn $74 million for the state’s main checkbook account, the general revenue fund.
“The attempt here is to broaden the tax base,” said Mike Klemens, spokesman for the state Department of Revenue. “Certainly railroads benefit from facilities and services in the state of Illinois.”
Trains use public bridges and crossings in Illinois and should pay their share, he said.
But Spencer White, president of Springfield-based Illinois & Midland Railroad Inc., said his company probably could not pay the tax without downsizing.
“There are several risks,” White said. “(First) the direct employment risk. Then, what I’d call the trickle down effect. If we have to raise our rates, that would mean higher prices for the people who use our services, which in turn would mean higher prices for the consumer.”
Illinois & Midland employs 75 people from the areas around Springfield and Pekin. The tax would cost the company $1.2 million a year, Spencer said.
Overall, the railroad industry would pay $40 million for the tax, Ciaccio said. Further effects could include trains fueling up in other states and bypassing Illinois on their routes, he said.
A bill proposing the tax expansion has not been unveiled yet, so specifics are unclear. It is unknown whether Amtrak would be affected.
Construction companies, which also would begin paying under the expanded tax, have also said they might have to lay off workers and increase prices if it is approved.
Speaking in Springfield on Monday, U.S. Rep. Ray LaHood said he disapproved of expanding the tax.
“That’s not a wise use of the money,” LaHood said. “It’s not being spent on roads and bridges.”