Railroads have complained for years that New York levies higher taxes than other states, and that rail lines pay property taxes at a higher rate than other commercial properties. CSX Corp. says the high taxes are restraining capital improvements it would like to make that could boost rail's freight market share in the state. The Governor's proposal would allow the railroads to more rapidly depreciate capital improvements than the law now allows for, effectively lowering their local taxes (to qualify, the improvements would have to be OK'd by the NY State DOT). It would also provide state aid over 10 years to ease the impact the reduction would have on local governments (MTR #301).

CSX has been most the aggressive railroad in urging the tax change. In addition to heavy lobby in Albany, the railroad has filed suit against NY State, NYC and other municipalities charging that the tax rates are discriminatory (MTR #308). CSX says it will drop the suit if Albany changes the law.

With all parties in Albany agreeing on the tax relief package, the railroads now say it makes sense to break the provision out of the budget and approve it as a stand-alone bill. They sense that NY State's budget may drag through the summer, and are eager to reap the benefits of the hard-won agreement.