House committee hears proposal to expand short-line railroad maintenance tax credit

The Committee on Taxation heard testimony on House Bill 24-69, which would broaden Kansas' short-line railroad maintenance tax credit so unused credits can be transferred to any taxpayer and used against premium taxes, privileged fees and privileged taxes.

Reviser Seabers told the committee the bill removes existing limits on recipients of transferred credits and widens the types of taxes against which the credit may be claimed. The fiscal note, the chair said, shows the Department of Revenue estimates the bill would have no fiscal effect on state general revenues.

Supporters said the change is aimed at making an existing credit more usable rather than enlarging the program. Ross Lane of the Kyle Railroad described short lines as smaller Class 3 operations that still perform critical connections with Class I carriers and customers across the state. "This tax credit is a key piece," Lane said, arguing it will help finance tens of millions of dollars in upgrades that would allow his railroad to carry fully loaded 286,000-pound freight cars at higher speeds.

Lane told the committee Kyle seeks to replace more than 200 miles of rail and highlighted that the credit covers rail, ballast and ties — components he said are needed to raise track classifications and speed limits. When Representative Sanders asked about rail gauge and speed, Lane said moving to 115-pound rail would permit speeds up to 25 miles per hour and higher track classes allow still-faster operations.

Laura McNicholl of WATCO, testifying remotely, said the credit already has supported significant private investment. "Since the tax credit became law in '20 in 2022, it has generated more than $45,000,000 in track maintenance and upgrades on WACO's lines," she said, and added the bill would bring parity to the short-line credit with other Kansas credits that are freely transferable.

Jeff Van Shaikh of Cimarron Valley Railroad described HB 24-69 as "just a technical fix of an existing credit," saying it would not create a new incentive or increase the program's size but would make credit utilization more efficient and help short lines plan and fund needed infrastructure work.

The committee received multiple proponent testimonies and several written submissions; the chair said there was no neutral or opposing testimony on the record. The committee concluded the hearing without taking a formal vote on the bill. Committee members were reminded of upcoming agenda items for future meetings.