(The Aberdeen American News posted the following Associated Press article by Andrew Nelson on its website on March 5.)
PIERRE, S.D. — The state House voted Tuesday to restore tax credits that would help railroads improve their tracks.
For more than 20 years, state law allowed railroads to get property tax reductions for money they spent to replace or repair their lines, but the tax credit was repealed several years ago as part of a package of railroad-law changes.
Legislators said the state tax credit will help Dakota, Minnesota, and Eastern Railroad to continue fixing its tracks in South Dakota. SB188, passed 59-9, would reinstate the assistance.
Credits for railroad improvements would be provided in equal installments over three years.
No tax credit would be available for repairing or replacing tracks that have been washed out, ruined by fires or wrecked in train derailments.
Some county officials have opposed the bill because they want to receive full payment of property taxes from DM&E and other railroads.
But Rep. Joel Dykstra, R-Canton, said economic development across the state, which is dependent on railroads, would suffer. The soybean processing plant at Volga and several ethanol plants have sprung up along rail lines, Dykstra said.
DM&E has a $2 billion plan to rebuild its existing lines in South Dakota and Minnesota, and extend its tracks to Wyoming coal fields. However, a legal challenge to the project is pending in a federal appeals court.
If DM&E succeeds with its expansion project, counties where the railroad runs would get $19 million in new property taxes, legislators have said.
Dykstra offered an amendment Tuesday to end the tax credit program when DM&E begins moving coal, but a majority of representatives opposed his proposal because it would eliminate assistance for other railroads, too.
SB188, which was passed earlier by the Senate but must be returned because of House changes, would automatically cut off tax credits when railroads that hit a certain annual freight volume. The trigger is set at 10 million gross tons per mile. At that level of cargo, tax credits would not be suspended in the following year.