Railroads will continue to receive tax benefits by Andrea Skalland Railroads in South Dakota will continue to receive tax benefits for improving their rail lines.
The House killed HB1106 that would have forced railroads to pay certain taxes.
Rep. Kenneth Wetz, R-Newell, introduced a bill to the House Feb. 2 that would have repealed the rail tax exemption.
According to Wetz, the railroads have had a rail tax credit for 25 years. The tax credit matches dollar-for-dollar any improvements made to the rail line in exchange for taxes owed. Wetz said that South Dakota is the only state in the nation to offer such a tax break.
The law states that any railroad over 10 million ton-miles, which is one ton of freight per mile are exempt from this tax credit.
Wetz argued that the railroads have avoided many millions of dollars in taxes over the years, and it is time for them to pay their fair share. He said that the railroads pay one-third of what they should to schools and the citizens have to pick up the rest.
�We were once very close to losing the railroad in South Dakota,� Rep. Ron Volesky, D-Huron said.
Since South Dakota is a transportation poor state it needs to do what it can to keep the railroad in the state and help it improve, he added.
�It is not a question of what they haven�t paid to the state, but what they have invested in this state,� Volesky said.
Rep. John Koskan, R-Wood, said the state cannot compare itself to the rest of the nation and there is a reason railroads should continue to receive a tax break.
�We are not the rest of the nation,� he said. �We don�t have coal or lots of people like other states. We are unique.�
Rep. Steve Cutler, R-Claremont, said it was time the railroads started to pay up.
�The time has come for them to step up to the plate and pay for their fair share. If they don�t, we pay a little more,� Cutler said.
According to Wetz, the two major railroads in the state are Burlington Northern and the Dakota, Minnesota and Eastern Railroad. The two railroads owe around $36 million, but will only pay about $1.5 million in taxes to the state, according to the representative.
He said the need to help smaller railroads was nonexistent because many of them will not even claim credit because they have made no improvements.
Rep. Pat Haley, D-Huron, said that the tax credit is tied directly to reinvestment in the infrastructure to allow for improvements.
�We are not a rich state and railroads could do better in neighboring states, but they choose to stay here because of this unique partnership,� Haley said.
Many of the representatives were worried that if the bill passed, and the railroads lost this tax exemption, the cost of transporting grain would go up and that would hurt agriculture.
�South Dakota ranks 47th in the nation for agriculture processing, and maybe it�s because we don�t have adequate transportation,� said Larry Diedrich, R-Elkton.
Rep. Kevin Crisp, R-Dell Rapids, argued that if the bill passed it would hurt agriculture a great deal.
�I urge you to defeat this bill and save agriculture,� Crisp said.
HB1106 failed to receive a passing vote with a final count of 26-43. Cutler announced his intention to reconsider the vote.