Before this gets out of hand:
(1) Railroads do pay property taxes, it just happens to be administered and collected by the states. The mess before the Interstate Commerce Act of 1913 resulted in federal oversight of the tax assessment process. Since the ICC Valuation Act of 1913, all parties play by the same rules. The good-ol-boy system was kept in check under these rules and the playing field levelled. Didn't help in places like New York (ask CSX) where cronyism rises to higher levels like the really big chunks. There are multiple cases in the country where locals got beyond greedy and as a result, whole terminals were moved by the railroad. Examples I can think of include Ellis/Oakley, KS (UP); Hugo/Limon, CO (UP) and Syracuse/Coolidge, KS (ATSF)...
(2) Wasn't that long ago that railroads paid fuel taxes that never came back in terms of public interface safety projects (like road crossings). Those monies supported the highway infrastructure (aka the taxpayer subsidized trucking industry) or went into the general fund. Railroad lobbying in the early 1990's to have that fuel tax money put in a Section 400 fund for grade crossing improvements went nowhere.
If the individual State Boards of Equalisation quit doling out disbursement checks to the counties (from railroad taxes collected by the state), the county fathers would be bawling like babies. In my railroad career, I have seen multiple cases where clueless county officials try to assess new taxes on railroads that the railroads were neither informed of or asked for their consent on. (usually that have no benefit for the railroad in terms of benefits from some improvement district) The state usually issues a stearn warning to the county to cease & decist.
And the sad thing is that the new bridge is being pre-fabbed in China and will be installed by Chinese workers here, and not just b/c of costs: " I don't think the U.S. fabrication industry could put a project like this together," Brian A. Petersen, project director for American Bridge/Fluor Enterprises.
http://prestowitz.foreignpolicy.com/posts/2011/06/27/cheap_is_expensive#.TgpFCep7oT8.facebook
C&NW, CA&E, MILW, CGW and IC fan
freight guy ... Maybe it is better to build them to the class that they are now, just require the user to pay for the extra cost of construction and the wear and tear. Also consider that in urban areas, for a given width of interstate, the lanes could be narrower for automobiles. This would enable an additional lane in many places and would ease our commute to and from work. But we keep the lanes wide so the trucks can use our roads. ...
When the San Francisco-Oakland Bay Bridge was built in the mid-'30's, the upper deck had 6 fairly-narrow lanes (3 in each direction) for automobile traffic only. The lower deck had 3 wider lanes (one in each direction, and one reversible) for trucks and busses (and cars), plus a double-tracked standard guage rail line (initially electrified by both catenary and third rail) used by 3 interurban operators. In early '60's, was converted to 5 wider lanes on each deck, with each deck being one-way only for all traffic (and no rails).
It always seemed to me that the exclusive auto lanes on one deck (even though narrower), and the bigger/heavier traffic isolated on the other deck, was both safer and more efficient. (But they didn't ask me.)
henry6 (Business/commercial property is usually taxed at a higher rate than residential, of course.)
(Business/commercial property is usually taxed at a higher rate than residential, of course.)
Not necessarily. In Illinois, while the effective tax rates are different for residential, commercial and industrial in Cook County, the rate is the same in all other counties. Where the difference occurs is in the assessed value of the property.
Henry 6. Good topic, railroad property taxes. Why should railroads pay property taxes? What services to they derive from these taxes? Interstates do not pay property taxes, neither do airport authorities, an obviously the barge users do not pay taxes on the rivers. (more about river traffic later on). The taxes paid for rail property is ultimately paid for by the shippers because the railroads charge shippers for the total costs of providing the service. So……..for maintaining and being responsible for their infrastructure, the railroads, alone among freight transportation providers, are taxed on thier property. Class I railroads pay over $750 million per year for taxes. Think of what they could do for $750 million each year!! Ironically, in urban areas this real estate tax pays for the city streets that the trucks use without paying anything. Trucks pay at least some tax for state and federal roads, but they use city and county roads for free.
So – the railroads have taken advantage of this. This is one big benefit of intermodal transportation! Let the trucks make the local delivery. Why pay real estate taxes? Why be responsible to maintain the track and bridges on a branch line? Why pay for grade crossing maintenance? Because the competition does not have to pay these charges the railroads will continue to lose this business. The railroads tear out the line; they let the trucks make the delivery on public highways. The shippers get “just-in-time” delivery and city tax dollars maintain the roads.
Schlimm: good question. Trucks (and therefore the shippers that pay truck freight charges) did not pay for the interstates as they were initially constructed. It is likely that a truck operator will argue that they pay for roads when they pay a toll or when they pay certain state and local taxes, and I can see why they do. Transportation funding is so skewed that it is very hard to decipher the fine points of the funding. But the big question is federal funding and trucks don’t pay for new construction and never have. The interstate system is a total gift to the trucking industry and they pay only a fraction of the damage they do to it. The taxes the trucks pay goes into the maintenance and operation of the roads. Over the years hundreds of billions of dollars have gone into the road system for construction. Your question: would the roads cost less? It stands to reason that it would cost less to build a lighter roadway that would adequately support automobiles and lighter trucks. But, I’m not sure that would be best. I just don’t know. Maybe it is better to build them to the class that they are now, just require the user to pay for the extra cost of construction and the wear and tear. Also consider that in urban areas, for a given width of interstate, the lanes could be narrower for automobiles. This would enable an additional lane in many places and would ease our commute to and from work. But we keep the lanes wide so the trucks can use our roads.
The railroads have upgraded their infrastructure to handle heavier loads. The industry went from 263,000 lbs to 286,000 lbs over a couple of decades. The upgrading has taken place over many years and required billions in private capital. Some Class II’s and III’s have had government subsidies, or government loans, to upgrade bridges and other infrastructure. But the vast majority of this upgrade, nearly all of it when one looks at the big picture, was done by the major carriers at their own expense. Where did the railroads get the money? From the freight that the shippers paid for the railroads to haul their freight.
That is the difference in the two forms of freight transportation: Truck shippers do not pay for the infrastructure, and only a portion of the upkeep. Rail shippers pay for the whole enchilada. Question: Who is supporting the increase in TS&W (truck size & weight)? Ans: the shippers. Who is supporting re-regulation of rail shipments? Ans: the shippers.
And that, indeed, is the danger of giving private enterprise lots of tax exemptions, etc. The question that arises, as in this case, is if the From Here to There Railroad Company is as equal a landowner as Mr. and Mrs. John Doe and vice versa or equal to the local Whatever We Make factory as a landowner and taxpayer? (Business/commercial property is usually taxed at a higher rate than residential, of course.)
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
henry6 The problem of taxing railroads in many communities and school districts was that 1) they thought the railroad was a cash cow and found everything marked railroad taxable and at as high a rate as possible, and 2) when railroads scaled back from two to one track or to no track at all, when the major yard and or shops were closed, or the depot closed and demolished, there was nothing left to tax. And like any other industry, a railroad company is going to look for loopholes, grants, easments, lower assessment, and exemptions wherever and whenever they can. A single track running a mile or two through a town or township that doesn't use utilities, maintains its property (to stated use level and for public safety), has no need for any of the normal taxing district services has an arguement about paying taxes the same as a factory or warehouse that uses roads, water, sewer, lights, etc.
The problem of taxing railroads in many communities and school districts was that 1) they thought the railroad was a cash cow and found everything marked railroad taxable and at as high a rate as possible, and 2) when railroads scaled back from two to one track or to no track at all, when the major yard and or shops were closed, or the depot closed and demolished, there was nothing left to tax. And like any other industry, a railroad company is going to look for loopholes, grants, easments, lower assessment, and exemptions wherever and whenever they can. A single track running a mile or two through a town or township that doesn't use utilities, maintains its property (to stated use level and for public safety), has no need for any of the normal taxing district services has an arguement about paying taxes the same as a factory or warehouse that uses roads, water, sewer, lights, etc.
Based on this logic, I should be exempt from paying property taxes to my local school districts since I have no children currently attending school.
The idea of being exempt from property taxes has merit but a few pitfalls. Property taxes are levied on a county or city/school district basis. Exempting the rail lines would place an undue burden on local entities. A subsidy by comparison is normally paid by the state or feds with minimal impact on the local economy.
freight guy and Mike - Thanks for a good summary of the Federal Davis-Bacon Act a/k/a Prevailing Wage Act. For 13 years I worked for a trackwork company that did a fair number of projects subject to it, and well as quite a few that weren't - and was a project manager/ administrator for both kinds, including subcontractors, etc. - and for the last 11 years have worked for an engineering company that also handles both kinds of projects. As Mark Twain said about his premature obituary, those stories are often "greatly exaggerated". I don't have the time to write and post a detailed rebuttal, so thanks for yours. The worst I've seen is about a 50% differential in the pay rates, but the labor costs are usually heavily diluted by all the other costs - materials, subcontractors, outside/ off-site trucking, equipment rentals, surveyors, bonds, insurance, supervision, home office and other overheads, and of course contractor's profit, etc., plus the owner's engineering, legal, and financing costs, etc. - that the differential is usually more like only 10 to 20% of the total project cost. Sometime I'll explain how the "Law of Unintended Consequences" acting on Prevailing Wage projects has facilitated the contractors going non-union or 'open shop', esp. for military contracts behind security fences . . .
- Paul North.
freight guy: Interesting post and welcome. One thing I wonder about in road construction is this. If the weights were less than the 80K per truck, would that mean that roads could be built and maintained more cheaply, with less steel reinforcement, thinner layers of crushed stone base and thinner layers of concrete or asphalt? I wonder where that fits into the equation of user-pay for trucks? The above question also could apply to the rails, where the weights per axle have increased, requiring more expensive track, both to build and maintain.
The PWA requires that all workers be paid is if they are members of a UNION workforce even if they are NOT ONE. My township had to replace the Sewwage system in the area I live. Well the Cost was close to 15 Million dollars to do that. Yet one of the Non-Union workers in the area I talked to stated without the PWA since this is a Goverment Project it could have been done for 9 million and done faster. The crew that got the job all the Supervisors are sure as hell riding in NEW Pickups and all their Equipment aka Bobcats and such was Brand new when they started on this job.
Also the repairs they are doing to the road are nothing more than freaking Sackcrete for the Concrete and cold patch for the Blacktop and that is all they are using.
I responded back from the email notification but I guess it didn’t go to this post, hmmmmm..... I’ll have to figure out how this works.
Ed,
The federally funded (USDA-RD) project I'm currently working on, the wages are broken down by the county of the work performed. Since I'm not in NY, they're not paid NY wages. That being said, I've told many laborers I'll trade paychecks this Friday. The upside, I still get one in winter while many don't.
greyhounds Welcome Freight Guy. You make great sense. However, I would like to point out that Adam Smith had this figured out in the 18th Century --make the intercity roads tollways and charge by weight transported His writing was before the American Revolution. The government is involved. They consistantly try to change economic reality. They just as well pass a law that water will run uphill. They screw things up and their supporters deride those of us whoe disagree as "free market types." It ain't gonna' change and we gotta' just live with it Entitites such as the ethanol and trucking crowds want their own subsidies and their own tariffs. If the American People suffer, they'll make up facts to justify their posistion. So, bring on your own facts. What you say will be true, but it will also be irrelevent. Things ain't gonna' change.
Welcome Freight Guy.
You make great sense. However, I would like to point out that Adam Smith had this figured out in the 18th Century --make the intercity roads tollways and charge by weight transported His writing was before the American Revolution.
The government is involved. They consistantly try to change economic reality. They just as well pass a law that water will run uphill. They screw things up and their supporters deride those of us whoe disagree as "free market types." It ain't gonna' change and we gotta' just live with it
Entitites such as the ethanol and trucking crowds want their own subsidies and their own tariffs. If the American People suffer, they'll make up facts to justify their posistion. So, bring on your own facts. What you say will be true, but it will also be irrelevent. Things ain't gonna' change.
Ken: The notion of a totally user-fee road system is technically possible, but so is changing the current fuel tax structure so that trucks pay something closer to the true cost of building and maintaining roads that can handle their weights, which have increased greatly during the Interstate era of the past 50 years. BTW, I thought you were proud of being a "FMT." [Be careful about using ideological terms.] In a philosophical vein, as long as you are celebrating the great Adam Smith, let's not forget the also great David Hume, born 300 years ago.
Lets not forget 2 things when you do a Highway involving a Govermemtn Entity. One the Prevaling Wage act. That means your Labor Costs are triple what they NORMALLY ARE since they are based on what a Union Person in New York City Gets that has been on the Job for 30 Years. 2 your Goverment requires you to use the Cheapest stuff out there instead using Quality materials that way when it does fail they can have someone ELSE come in and Fix it for an OUTRAGOUS Amont.
Around here there is a Very good Flat roofing Company Non Union place. Well he got the bid to the school my kids go to. HEstated because it was a State job and he had to use the Precvailing Wage Act that the Unions had passed to make sure they could get some contracts his bid for the contract was 50 grand HIGHER for this roof than it would have been without the PWA. Now that tell you where alot of the HTF money is going right into the UNIONS pockets.
How many times do you see a construction zone and there will be only one truck working in it yet there is 4 flaggers at 40 Bucks and hour that is WHAT they get paid under the PWA. A laborer is 30 an Hour a Backhoe or Bobcat operator is over 60 an HOUR Yet again your like raise Fuel Prices again with them hovering close to 4 Bucks a gallon. Here is an Idea Repeal the PWA and see how much FURTHER the HTF would go if we did not have to pay to outragous Wages.
So – let’s talk about the federal and state roads. The federal tax on diesel fuel is 24.4 cents per gallon and has not been raised since October 1, 1997. The federal tax on gasoline is 18.4 cents and has not increased since the same date. State tax varies but the average for all the states for diesel fuel currently is 19.2 cents, slightly less than gasoline, which is 20.6 cents. The Highway Trust Fund (HTF) has been broke for a long time. Billions have been transferred from the General Fund to the HTF and billions more will need to be transferred in the future. (Yes, some $11 billion each year is transferred to the “transit account” for subsidies to mass transit, and fuel tax has been used for deficit reduction in the past – but let’s save that for a later discussion). Since the federal fuel tax has not been raised in 14 years, it has not kept up with inflation in materials and labor costs. The Federal Highway Administration (FHWA) calculated the cost allocations for various vehicles in 1997 and updated this in 2000. It showed that trucks do not cover their cost of road damage, and that the heavier the truck, the less it paid. This was 11 years ago, and since then all costs have gone up while diesel fuel tax has not.
Here’s is a real-world comparison on a fuel taxes. Let’s assume that a 3,000-pound automobile gets 30 mpg, and let’s assume that an 80,000-pound tractor trailer gets 6 mpg. We’ll use the average state fuel tax, the federal tax is constant. If we calculate the cost for 100 miles, the tractor trailer will burn 16.67 gallons of fuel and pay (24.4+19.2) x 16.67 = $7.27 for the cost of the road. The automobile will consume 3.33 gallons of fuel and pay (18.4 + 20.6) x 3.33 = $1.30. In this calculation the truck will pay 5.6 times what the car pays. But it weighs 26.7 (80,000/3000) times what the car weighs. Pavement wear greatly increases as the axle weight increases, but as a quick demonstration of the inequity of this fuel tax payment let’s use 26 times the amount of wear and tear. To be equal to the automobile taxes, the truck would have to pay $1.30 x 26 = $33.80 per hundred miles. In this calculation, using linear wear and tear (which understates the actual damage) the truck pays only 22 percent of what the automobile pays. Trucks pay other registration taxes, a heavy use fee, and excise taxes too, but these are small in comparison with use. I’ll discuss those at a later time.
There's a huge and lengthy history involved here - of which I know and follow only a part, and about which a book should be written - but the crux of it is that a huge wad of money is now being blown on a short and small highway project that will be overloaded again when it opens. It appears that no or only a little consideration was given to spending/ investment on rail alternatives that - together with other similar restorations and new services - could be equally as effective and likely better than the usual "more roads" approach of PennDOT and the suburban counties. See generally the website of the Delaware Valley Association of Rail Passengers (DVARP) at: http://www.dvarp.org/index.html
For several decades the Trenton Cut-Off has been proposed as a 'belt line' or 'rim' for rail commuter service to tie together almost all of the radial 'spokes' of the many individual commuter lines from Philadelphia, as well as restoring PSGR service from the King of Prussia area northwestward to Reading, restoring service to nearby West Chester, and others further east. Also, an even better line that paralleled Rt. 30 further west was the ex-RDG's Chester Valley branch, but that's entirely gone and pieced apart now. This region is a huge hub for pharmaceutical research and manufacturing, and some electronics, too, as well as the traditional impressive line-up of universities and hospitals - and I'm told that K of P is a shopping Mecca second only to the Mall of America, etc. Almost all of them are next to or within easy reach of one or more active rail lines or corridors, generally with lots of capacity - but nothing is being done to promote, improve, or develop that.
I'm sure that few if any of the rail services around here 'pay their own way' out of the farebox alone, and that too needs to be addressed. But the area has a dense multi-modal network and capacity similar to that of NYC and Chicago for potential, and there doesn't seem to be any official inclination or policy to make more effective use of those 'already-bought-and-paid for' assets.
Paul_D_North_Jr Just a brief data point to hopefully illuminate this discussion a little bit: News reports around the Philadelphia, PA metro area today touted the start of construction of a major upgrade to US Route 202 between Swedesford Rd. The deep and bitter irony here, of course, is that Rt. 202 is paralleled the whole length of this road project by both the ex-PRR Main Line which now has both intensive SEPTA commuter service and moderate Amtrak Keystone Corridor service; ... - Paul North.
Just a brief data point to hopefully illuminate this discussion a little bit:
News reports around the Philadelphia, PA metro area today touted the start of construction of a major upgrade to US Route 202 between Swedesford Rd.
The deep and bitter irony here, of course, is that Rt. 202 is paralleled the whole length of this road project by both the ex-PRR Main Line which now has both intensive SEPTA commuter service and moderate Amtrak Keystone Corridor service; ...
Paul,
Why do you consider it a bitter irony? What is the alternate outcome that you would have expected?
News reports around the Philadelphia, PA metro area today touted the start of construction of a major upgrade to US Route 202 between Swedesford Rd. (just north of Paoli, and about 5 miles west of King of Prussia, a northwestern suburban area), to the west and south towards West Chester as far as U.S. Route 30, encompassing a project distance of about 6 miles. The scope of work is to add a lane in each direction so that there are a total of 3 each way, plus a new interchange with the Pennsylvania Turnpike (I-76 there) in the vicinity of PA S.R. 29, and some other upgrades at Rt. 29. It's supposed to take 4 years to complete - some 70,000 cars use 202 each day.
The estimated cost ? A quarter of a Billion dollars - that's $250 Million, for a 50% expansion of only a short section of merely a single road. Allocating that amount over the 12 lane-miles included (2 directions x 1 lane x 6 miles) is a little over $20.8 million per lane-mile, or $3,945 per lineal foot, or about $328.80 per lineal inch, or about $2.28 per square inch (based on a 12 ft. wide lane); or, about $14.3 Million per acre of roadway surface !
The deep and bitter irony here, of course, is that Rt. 202 is paralleled the whole length of this road project by both the ex-PRR Main Line which now has both intensive SEPTA commuter service and moderate Amtrak Keystone Corridor service; and the former PRR's 2-track (now just 1), very low-grade, now de-electrified "Trenton Cut-Off" which typically sees only 1 train a day (steel slabs from Conshohocken to Coatesville, I believe). At the northeastern (Swedesford Rd.) end, the Main Line is about 1-1/2 miles south of 202, and the Trenton Cut-Off is only about 1/2 mile to the south; at the project's southwestern/ Rt. 30 interchange end, the highway bridges over both of them - can't get much closer than that . . .
Lat./ Long. coords. of each end (per the ACME Mapper 2.0 application), for those who are interested: Swedesford RD. interchange - N 40.06252 W 75.47421 ; Route 30 interchange - N 40.03300 W 75.58456
In the theoretical sense, the ultimate consumer of any product or service will generally be paying for all the costs incurred by the retailer, distributor/wholesaler, manufacturer, raw materials suppliers, shippers, etc., etc., etc. That is the nature of our economic system, not (IMHO) a description of a subsidy.
A subsidy is (generally speaking) a benefit provided, directly or indirectly, to a entity (or person or group) to supplement or supplant that entity's costs, in pursuit or support of some political or social or governmental policy. A "Commuter Check" provided by an employer to an employee is a direct subsidy to the employee, to support the policy of encouraging transit use; the tax deduction allowed the employer for providing it, is an indirect subsidy supporting the same policy.
If General Fund monies are used to supplement Highway Trust Funds to build and maintain roads, it is a subsidy (direct or indirect?) to all highway users, benefitting the policy of enhanced mobility for both people and goods. Using Highway Trust Fund monies for General Fund purposes (as has happenned here in California) could be considered a negative subsidy to road users.
How the various levels of government choose to levy taxes, tolls, and fees is a strictly political decision, frequently associated with some policy consideration, but usually involving very little (if any) true analysis as to exactly what the payers of the taxes, tolls, and fees are directly receiving in return.
This humble analysis comes from some 30 years in the tax business, keenly watching how taxes are enacted, enforced, and collected -- and what the taxpayers are getting back in return. We pay, and we get benefits. But trying to trace the $$ from one end to the other is utterly futile.
carnej1 Be Careful what you wish for..In some of the states up here in the Northeast there have occasionally been proposals for replacing the State Gasoline tax with a "per mile" user tax that would use a "Speed Pass"(automated toll collection system) transponder on every motor vehicle.
Be Careful what you wish for..In some of the states up here in the Northeast there have occasionally been proposals for replacing the State Gasoline tax with a "per mile" user tax that would use a "Speed Pass"(automated toll collection system) transponder on every motor vehicle.
Yes, this is right around the corner. Here is a link telling how it is being road tested in Minnesota:
http://www.ibtimes.com/articles/136087/20110419/minnesota-test-driver-mileage-electric-vehicle-gas-tax.htm
I have written about this before. It will start with the premise of collecting tax by the mile rather than by the gallon of gas. But once started, there will be no end to the micromanagement of your driving by big brother. It will be like having a highway cop riding in your passenger seat.
YoHo1975 What if, and I know this is crazy talk, neither Cars nor trucks are paying a fair share of the costs?
What if, and I know this is crazy talk, neither Cars nor trucks are paying a fair share of the costs?
What if both trucks and cars are overpaying, and the government is stealing a free lunch?
We all subsize truckers and shippers indirectly. It has nothing to do with whether you drive or not. If you eat then you most likely bought your food in a store...and that store got its food from producers who paid a subsidized trucker rate to get it to you. So if you do nothing but live in an apartment and walk to the store for groceries...you're still getting the benefit of a subsidized trucking industry. I suppose the basic setup could be changed so that trucking carriers pay the full cost of the infrastructure they use...carriers would then pass that cost on to shippers..and those of us who can afford it will still be able to buy a carton of eggs or a roll of toilet paper. Switching more to rail won't change much in that regard as the rails too are subsized.. We're all subsized to the hilt really.. and we all benefit enormously and almost freely from the hard work of others.
YoHo1975 What if, and I know this is crazy talk, neither Cars nor trucks are paying a fair share of the costs? I'd love to see a transportation budget that proposed fees(taxes) on vehicles that would actually cover the needs of the roadways. Years of neglect not withstanding, I'd accept a theoretical "If all roads were in good shape now" proposal.
I'd love to see a transportation budget that proposed fees(taxes) on vehicles that would actually cover the needs of the roadways. Years of neglect not withstanding, I'd accept a theoretical "If all roads were in good shape now" proposal.
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
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