1997 Regular Session
To: Transportation; Ways and Means
By: Representatives Stevens, Howell, Manning, Read, Smith (35th), Clark, Smith (27th), Malone, Reynolds, Green (34th), McBride, Bowles, Cameron, Moody, Brown, Simmons (37th), Walker, Ellis, Grist
House Bill 1392
AN ACT TO PROVIDE AN INCOME AND CORPORATE FRANCHISE TAX CREDIT FOR TAXPAYERS THAT PROVIDE FUNDS THROUGH GIFT, GRANT OR DONATION TO A RAILROAD FOR ALL OR ANY PART OF CERTAIN CAPITAL IMPROVEMENT PROJECTS; TO LIMIT THE AMOUNT OF THE INCOME AND CORPORATE FRANCHISE TAX CREDIT; TO PROVIDE THAT A TAXPAYER MUST PROVIDE CERTAIN INFORMATION TO THE STATE TAX COMMISSION TO RECEIVE SUCH CREDIT; TO REQUIRE THE MISSISSIPPI DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT TO REPORT ANNUALLY TO THE LEGISLATURE REGARDING THE IMPACT OF THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The Legislature of the State of Mississippi declares that for the continued industrial and economic development of the state, it is essential that viable rail service for receipt and shipment of the products of business, industry, and agriculture provided by small short line rail carriers be readily available in the smaller communities and areas throughout the state that are not served by the primary rail lines of Class I rail carriers, and where branch lines of major railroads are sought to be abandoned; that the Legislature is cognizant of the fact that some of the short line rail carriers in the state providing essential rail service have difficulty in generating sufficient funds for track rehabilitation, upkeep and repair, and a number of branch lines of Class I railroads which are candidates for abandonment need to be rehabilitated to permit continuation of rail operation thereon by a new short line carrier; that a variety of public and private funding sources need to be provided and encouraged for the construction, reconstruction, rehabilitation, repair, and maintenance of such short line railroads and branch lines; and that the allowance of a tax credit for private funds of shippers and others invested in rehabilitation of the tracks and facilities of needy short line rail carriers is in the best interests of the citizens of the state.
SECTION 2. (1) As used in this act, the following words and phrases shall have the meanings ascribed in this section unless the context clearly requires otherwise:
(a) "Class I track" means railroad track that meets the minimum qualifications for such track under the definition and regulations of the Federal Railroad Administration as set forth in Title 49, Code of Federal Regulations.
(b) "Executive director" means the Executive Director of the Mississippi Department of Economic and Community Development.
(c) "Rail improvement project" and "project" means the construction, reconstruction, rehabilitation, renovation, repair and maintenance of all or any designated segment of the roadbed, tracks, signals, or related facilities of a railroad that is necessary to enhance the rail line and permit continued safe and reliable rail service thereon, to establish, keep and maintain the track at or above the minimum standards for Class I track under the regulations and classification of the Federal Railroad Administration, to prevent the rail line from being abandoned or service thereon reduced or discontinued, or to enable a new railroad to assume rail service on a rail line or branch line scheduled for reduction in service or abandonment.
(d) "Railroad" means a short line railroad corporation organized under the laws of the State of Mississippi and providing rail service therein that is classified as a Class III rail carrier of freight under the regulations of the Surface Transportation Board (successor of the Interstate Commerce Commission), and which has an annual gross freight revenue per mile of leased or mainline track in the State of Mississippi of not more than Forty Thousand Dollars ($40,000.00).
(e) "Taxpayer" means any person, firm, or corporation that pays income or franchise taxes to the State of Mississippi, other than a railroad.
(2) If any railroad in this state has a capital improvement project for which a taxpayer (other than the railroad itself) has agreed to provide funds by gift, grant, or donation for all or part of the project, the railroad shall submit a description and full information on the project and the financing proposed for it, including detailed information relating to its funding by the taxpayer to the executive director. The executive director shall review the plans and determine whether the proposed project qualifies under the provisions of this act and whether its implementation will likely promote, continue or enhance rail service in the service area of the railroad and tend to prevent reduction or discontinuance of service on the rail line or abandonment of the line. If the executive director determines that the proposed project meets the necessary criteria, he shall issue a certificate to that effect to the railroad and to the taxpayer to be involved in the funding. The certificate shall authorize the taxpayer to claim a credit for the amount contributed to financing of the project against income and franchise taxes as provided in subsection (3) of this section.
(3) Any taxpayer that provides funds through gift, grant, or donation to a railroad for all or any part of a capital improvement project certified by the executive director shall be entitled to and allowed a credit equal to the amount paid on the project against income and corporation franchise taxes imposed upon the taxpayer under the laws of this State for the tax year in which the funds are paid, subject to the limitations provided in subsection (4) of this section.
(4) The credit provided for in this section shall not exceed fifty percent (50%) of the amount of income tax and fifty percent (50%) of the corporation franchise tax imposed upon the taxpayer for the taxable year reduced by the sum of all other credits allowable to such taxpayer under the state income and corporation franchise tax laws, except credit for tax payments made by or on behalf of the taxpayer. Any unused portion of the credit may be carried forward for the succeeding four (4) years. The maximum cumulative credit that may be claimed by a taxpayer pursuant to this act and for the period beginning on January 1, 1997, and ending on January 1, 2002, is limited to Five Hundred Thousand Dollars ($500,000.00).
(5) To obtain the credit provided for in this act, the taxpayer must provide to the State Tax Commission proof of the funds paid for the capital improvement project, a copy of the certificate for the project issued by the executive director and any other information required by the State Tax Commission.
SECTION 3. The Mississippi Department of Economic and Community Development shall report annually to the Legislature regarding the impact of the credit granted in Section 2 of this act on short line railroad continuation, development and rail service. The Department of Economic and Community Development shall file a copy of such report with the Governor, the Secretary of the Senate, the Clerk of the House of Representatives, the Chairman of the House Ways and Means Committee and the Chairman of the Senate Finance Committee. The State Tax Commission and the Mississippi Department of Transportation shall cooperate with the Department of Economic and Community Development in providing the information required in the annual reports.
SECTION 4. Sections 1 through 3 of this act shall stand repealed on January 1, 2002.
SECTION 5. This act shall take effect and be in force from and after its passage.