SALT LAKE CITY — Union Pacific lobbyists are clashing with two top legislators over a bill that would remove railroads’ state fuel tax exemption and use the resulting millions to build overpasses at chronically blocked rail crossings.
Ambulances, fire trucks and police cars stopped on the wrong side of the tracks, unable to get to life-threatening emergencies, and residents trapped in their neighborhoods with trains blocking both exits are among the dangerous scenarios cited by supporters of House Bill 356.
The bill, sponsored by Rep. Joel Ferry, R-Brigham City, would repeal the fuel tax exemption that Union Pacific has enjoyed since lawmakers created it in 2009. The added tax revenue would be routed into a dedicated fund for projects to solve problems at crossings.
Ferry and Brigham City Mayor Tyler Vincent related years of frustration in trying to get Union Pacific to do something about the backups. In a Feb. 26 House Revenue and Taxation Committee hearing, witnesses cited chronic crossing blockages at Forest Street in Brigham City and several places in the Ogden area.
“I have big concerns about safety,” Vincent said.
The mayor recalled he once was waiting at the Forest Street crossing with numerous other vehicles — including an ambulance and a police car with their lights flashing.
“They sat there waiting but finally turned around to find another way,” Vincent said.
Utah Taxpayers Association lobbyist Rusty Cannon urged the committee to kill the bill, saying it treats Union Pacific unfairly and goes against years of tax policy supporting businesses.
“Rail customers will pay this tax,” he said. “This will be passed on to our miners, our manufacturers and all those that ship goods on the railroads.”
Cannon said only California and Illinois tax locomotive fuel.
But Rep. Mike Schultz, R-Hooper, the House Republican majority whip, challenged Cannon, saying railroads share responsibility for resolving the crossing troubles.
“You’re asking someone other than Union Pacific and their customers to pay for the effect they are having on those roads,” Schultz said.
Schultz and Cannon went back and forth for several minutes, with committee chairman Robert Spendlove at one point advising them to “keep it civil.”
Cannon said Union Pacific, a member of the Taxpayers Association, is Utah’s fourth largest centrally assessed taxpayer, paying property taxes and sales taxes on rail materials and the like.
Schultz quoted research showing that 1 gallon of locomotive fuel will move a ton of cargo 500 miles. It would cost Union Pacific just 12 cents per gallon if the exemption is removed, he said.
Union Pacific posted a $6 billion profit in 2019, Schultz noted, telling Cannon, “So I disagree with you in regards to passing the buck on to somebody else.”
Doug Foxley, Union Pacific’s lobbyist, said the railroad pays tens of millions of dollars a year in state taxes, and he defended the railroad’s stance on crossings.
“I think the world is changing and we all need to reevaluate where we are,” Foxley said. “Before there was a Forest Street crossing there was a railroad.”
A legislative fiscal note estimated that without the exemption, Union Pacific would pay about $3.5 million annually in state fuel tax.
That would be a “very modest” contribution considering that Union Pacific had $22 billion in revenue last year, including the $6 billion profit, said House Speaker Brad Wilson, R-Kaysville, who attended the committee meeting.
Wilson asked Foxley why the Legislature meanwhile is being urged to subsidize the railroad’s diesel freight switchers to mitigate air quality concerns.
“Why is it that we are being asked as taxpayers to help offset Union Pacific’s impact on our air quality,” Wilson asked.
Foxley said the freight switchers last for decades and the Utah Department of Environmental Quality has proposed the subsidy as a “carrot and stick” incentive for the railroad to field less-polluting switchers.
“To many folks, it would appear we don’t have a willing partner anymore in Union Pacific to help offset some of the costs that this state sees in our future,” Wilson said.
The House committee approved Ferry’s bill on a 13-0 vote and the House passed it 69-0 on Feb. 28. The Senate Transportation Committee endorsed it 7-0 Thursday, sending it along for final legislative consideration.