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Rail task force recommends ways to pay for improved passenger and freight rail infrastructure

 The Oregon Rail Funding Task Force has issued a report to the Oregon Transportation Commission on potential long-term sustainable funding sources for passenger and freight rail in Oregon.  The group, chaired by Port of Portland Executive Director Bill Wyatt and Allyn Ford, President of Roseburg Forest Products, was formed by ODOT Director Matthew Garrett and included 14 diverse representatives of Oregon industries, passenger rail advocates, local governments and community leaders.
The task force’s report made it clear that Oregon’s lack of dedicated funding for rail puts the state at an economic disadvantage. 
 “Oregon’s lack of dedicated, sustainable funding for rail investments is the number one challenge facing a viable rail system for both passenger and freight in Oregon. Without such funding, Oregon does not have revenue available for the required match for federal funds to improve passenger rail service, nor the substantial revenue to maintain or operate the infrastructure once built,” wrote co-chairs Wyatt and Ford.  “Additionally, funds are needed to maintain and improve the freight rail systems that are vital to Oregon businesses and the economy, and to reduce congestion, greenhouse gas emissions and highway maintenance costs.”
The task force unanimously recommended five potential options:
  • Special district:  A special district could be formed to fund passenger rail capital projects and operating costs. The district should include the counties of Multnomah, Clackamas, Washington, Marion, Linn, and Lane, which encompass the region passenger rail serves between Eugene and Portland.
  • Lottery proceeds: To meet expected freight rail needs, $20 million annually in Lottery funds could be allocated specifically for freight rail needs. This amount is similar to the rail investments made through the ConnectOregon program to date, annualized over six years.
  • Railroad property tax reallocation:  Current and future property taxes that freight railroads pay in Oregon could be reallocated from local taxing districts to the state for freight rail improvements. To backfill diminished county revenues, a telephone access fee (discussed below) is recommended for implementation. At the outset, the reallocation of property taxes would result in $10 million to $15 million in annual revenues for freight rail improvements.
  • Telephone access fee:  A monthly fee of 17-26 cents could be applied to telecommunications lines and devices, including land lines and cellular phones. Estimated revenues of $10 to $15 million from this fee would be used to backfill county funding gaps as a result of the railroad property tax reallocation option the task force recommended.
  • Rail investment tax credit:  The major long-haul railroads make infrastructure investment decisions based primarily on the return on investment (ROI) of a project. One way to increase the ROI of potential rail projects and encourage major private infrastructure investments by the freight railroads in Oregon is to offer investment incentives. The task force recommended an Oregon rail investment tax credit focused on supporting major projects, including important rail capacity enhancement projects.
These sources could generate $75-80 million annually for rail and are intended to encourage further private investment by the freight railroads.
The Non-Roadway Transportation Funding Working Group will consider the Rail Funding Task Force report in its discussion of providing adequate funding for non-highway modes.