S. Dakota House Passes Plan to Reduce Railroad Tax Breaks

PIERRE, S.D. (AP) — Tax breaks provided railroads for a quarter of a century in exchange for improvements to their lines should be reduced, the South Dakota House decided Tuesday.

A week earlier, the House had rejected a bill that sought to end the tax breaks after opponents argued that railroads still need help to survive.

Approved Tuesday was HB1106, which would slice 50 percent from the credit railroads receive on property taxes. Instead of a dollar-for-dollar reduction, based on money spent for improvements, railroads would have to spend $2 for every $1 taken off their property taxes, said Rep. John Koskan.

"It requires that the investments be put back on the rail where the tax credit was accrued," he said.

"It also eliminates the ... carryover of the tax credits for a three-year period," Koskan added "They wouldn't be able to accumulate those after July first of this year."

The carryover provision allowing the tax credits to build up would end in 2002, he said.

The measure, which is headed next to the Senate, also would repeal the existing 50 percent break that railroads receive on purchases of materials in other states, Koskan said. The companies now pay a 2 percent sales and use tax, and the bill would require them to pay the full 4 percent.

Arguing against the bill, Rep. Ron Volesky said it would harm the finances of the Dakota, Minnesota and Eastern Railroad just as it embarks on a $1.4 billion project to begin shipping coal from Wyoming to the Mississippi River.