Today is Monday, June 26, 2017

Bailout hopes dim for shortline rails

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District 46 State Rep. Mark Pody, R-Lebanon, doesn’t have much hope for the success of pending legislation to bail out the Nashville & Eastern Railroad Authority.

However, he will continue to work on other ways to help the financially-struggling shortline rail authority, which owes the maintenance debt for the tracks that the Music City Star operates on.

Pody said he offered two possible amendments to the state budget which would have helped: one for more than $400,000 for a debt due in June to the U.S. Department of Agriculture, and one for $250,000 to cover an already past-due note from First Tennessee Bank.

“When we talked about the bills, they (the budget committee) said no amendments were being passed,” the local legislator said. “But they did agree to vote on the $250,000 one, and I agreed to withdraw the second one.”

The committee hasn’t voted yet, but Pody added that he thinks the chance of the funding being passed is very slim. “It’s kind of a Hail Mary,” he said.

One of the reasons Pody is not very hopeful at this point involves the problems that the state already faces with this year’s budget.

“We are trying to find something, but there are a lot of competing needs,” he said. In particular, pay raises for teachers and state government employees are being considered, Pody said.

The competition for funding is especially intense because state revenues are falling about $270 million short of budget projections, Pody explained. “And we are not seeing any turnaround,” he said. “Tennessee is in good-enough shape to absorb some of that, but maybe not enough to fund shortlines.”

The shortlines will have to face this problem, according to Pody. One solution, he said, might be trying to convince the USDA to accept a delayed payment schedule similar to what First Tennessee already accepted.

He pointed out that neither the federal nor the state government wants to see the shortline railroads fail, but a long-term solution will take time.

Pody is also working with Tennessee Department of Transportation on possible emergency funding from that agency to support the NERA until longer-term measures can be put in place.

According to Pody, the long-term solution is legislation which, if passed, would include a tax on diesel fuel purchases by railroads similar to the diesel tax paid by the trucking industry.

Currently, truckers pay 18 cents per gallon at the pump. Before the Class 1 railroads including CSX, BNSF and the Illinois Central won federal lawsuits making them exempt from paying a fee on their diesel fuel, they paid 7 percent of their actual price of fuel.

This fee helped support the shortline railroads that feed into the Class 1 systems, but lawyers for the Class 1 railroads argued that the law governing the fee was unconstitutional, and won.

Pody said he thinks it will be about 18 months before the legislature can get legislation that taxes railroad fuel in a similar way to trucking fuel written and passed.

“We’re trying to solve this, not just kick it down the road for someone else to deal with.” he said. “But even when we do, the (Class 1) railroads will challenge it. That means the people drafting that bill need to be very sure it will pass the constitutionality test.”

Correspondent Connie Esh may be contacted at

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