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Serving Northern St. Louis County, Minnesota

Cook and Orr would benefit from rail safety funding plan

Tom Klein
Posted 3/20/15

ST. PAUL – Gov. Mark Dayton unveiled proposals last week that would generate nearly $3 million in additional tax revenue for St. Louis County to use for rail safety improvements.

But railroads …

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Cook and Orr would benefit from rail safety funding plan

Posted

ST. PAUL – Gov. Mark Dayton unveiled proposals last week that would generate nearly $3 million in additional tax revenue for St. Louis County to use for rail safety improvements.

But railroads and Republicans voiced opposition to many of the governor’s ideas and suggested some of the proposed measures would be forbidden under federal law.

Under Dayton’s proposals, the community of Orr would get $8,427 while Cook would receive $12,495 in new tax revenue. Duluth would get $342,704, Hibbing would receive $125,645, Virginia would gain $39,953 and Eveleth would get $9,163. A complete list of new revenue for counties, cities and townships can be downloaded at www.mn.gov/governor/images/fact_sheet._rail_tax_revenues.pdf.

Under the plan, $330 million would be invested over the next decade for 75 railway safety projects across Minnesota. A snapshot of the proposed projects can be downloaded at www.mn.gov/governor/images/fact_sheet_rail_projects.pdf.

Four communities — Willmar, Coon Rapids, Moorhead and Prairie Island — would receive $75 million. Democratic lawmakers also would like to see a rail and pipeline training facility for First Responders.

Safety along rail crossings has become a hot-button issue in the wake of several major derailments in recent years.

Although none happened in Minnesota, at least four trains hauling crude derailed within the last month. There have been derailments in Illinois, West Virginia and Canada. In addition, 400,000 gallons of crude spilled in North Dakota in December of 2013.

According to state authorities, seven to nine trains carrying oil from North Dakota travel through Minnesota every day.

Dayton expressed concerns about increased rail traffic hauling hazardous cargo putting a strain on communities.

“Over the last year, I have traveled across Minnesota and seen firsthand the very serious and costly challenges that increased rail traffic has thrust upon our communities,” said Dayton. “Minnesotans did not cause these disruptions; they are not responsible for the endless barrage of dangerous cargo being shipped through their communities every day. The railroads responsible for these problems have a responsibility to pay for these essential safety improvements.”

Funding would be provided by changes in railroad property taxes that would expand taxable property to include rolling stock, rail cars, trestles and rail bridges. Other measures, including assessments on Class I railroads’ state general obligation bonds, would provide additional revenue.

The plan also calls for property tax relief and more quiet zones for communities located along busy rail lines.

Many of the proposals being made by Gov. Dayton are being opposed by the Minnesota Railroads Association, of which CN (Canadian National) is a member. “The governor continues to propose a slew of new taxes on Minnesota’s railroads that are punitive and unnecessary in light of the hundreds of millions of dollars that are being invested by railroads to improve the state’s rail system,” said CN spokesman Patrick Waldron. “Gov. Dayton’s proposals add up to nearly $100 million per year in new tax increases on the railroad industry in Minnesota. These tax increases would have a significant impact on shippers, farmers, grain companies, mining companies, retailers and others that use rail as a cost-effective way to move goods.”

Waldron said the governor’s proposed new grade crossing tax “ignores the improvements that railroads make year after year and the more than $500 million in safety and service improvements that railroads across the state will be making in Minnesota this year alone.”

The state’s railroads also claim the governor’s proposed new personal property tax increase on railroads is prohibited under the federal 4-R Act.

“That federal law is designed to prevent exactly what Gov. Dayton is attempting to do here — discriminating against railroads by taxing them differently from other commercial/industrial entities,” said Waldron. “Local communities would be well advised not to bank on promises of a windfall from new railroad taxes.”

Safety and service remain top priorities for the state’s railroads, Waldron said. “Railroads devote enormous resources to safe operations. We appreciate the governor’s interest in our industry and his proposal to hire a rail office director at the Minnesota Department of Transportation. We pledge to work closely with that person in developing a new kind of partnership.”

House Republicans also voiced opposition to the plan, saying they support safety improvements but disagree on how to fund them.

But Democrats counter that the proposed changes will make the transportation of hazardous materials safer and that the railroads’ obligation is to ensure that safety.