New Castle News

Closer Look

May 1, 2014

It’s full steam ahead for rail grants for corporations

HARRISBURG — Tucked in the multibillion-dollar transportation spending plan is millions available for private companies to build rail lines to help ship goods to and from their businesses.

The state will spend at least $10 million on freight rail projects by shuffling money from the Pennsylvania Turnpike, dipping into money generated by increased fees paid by motorists and, beginning in 2015-16, tapping into the increase in wholesale gas tax, according to Steven Kratz, a spokesman for the Pennsylvania Department of Community and Economic Development.

The multi-modal funds — which include dollars for rail, aviation, ports and bike paths — will be split between the Departments of transportation and community and economic development.

PennDOT plans to spend at least $10 million on freight rail improvements in 2014-15. The economic development department has not specified how it will divide its $35 million, Kratz said.

Both pots of money are open to local governments, regional transportation or planning groups and private businesses and non-profits.

In February, the state announced plans to spend $33 million on 29 rail projects, an amount that included the initial installment of new money generated by the transportation funding plan. The work includes $4 million to extend a 7,000-foot rail loop and a 400-foot siding for a business in the Keystone Regional Industrial Park in Crawford County and $524,514 for the Hodge Foundry in Mercer County to build a new 460-foot rail siding.

The transportation department announced earlier this month that it is now accepting applications for new multi-modal projects. It comes as motorists deal with rising fuel prices and increases in fees, said Leo Knepper, executive director of the Citizens Alliance for Pennsylvania, a Harrisburg-based conservative activist group.

“This is what always happens. State government fails to prioritize and then, when they get money, it’s a free-for-all,” Knepper said. “It’s one reason taxpayers are frustrated.”

Knepper said that if the freight projects are worth the cost, the businesses should find a bank to provide the financing rather than going to Harrisburg with hat-in-hand.

“That’s not the proper role of government,” he said. “That’s corporate welfare.”

Few lawmakers object to the spending though.

State Rep. Brad Roae, R-Crawford County, was a vocal critic of the transportation funding plan and the move to increase the gas tax.

While he objects to what he considers wasteful spending for transit agencies, the investment in rail freight is more worthwhile, Roae said.

“Rail service improvements in industrial parks to help companies grow and create jobs would be a better use of tax funds.”

The spending on rail freight pales compared to the price tag of planned road and bridge repairs, said Nathan Clark, a Mercer County-based consultant in the rail freight industry who has helped businesses land state dollars.

Gov. Tom Corbett said earlier this month that the transportation plan is providing $600 million more for highway and bridgework this construction season.

In addition, the rail freight investment could be an important part of the calculation made when companies decide whether to stay in Pennsylvania, Clark said.

“If we have to do spend those tax dollars to keep those businesses here, let’s do it. We’re rooting for the home team,” Clark said. “If you don’t, then other states will. Michigan, Ohio and West Virginia will be raiding our treasure chests of employers.”


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