Local News

Report: NC not benefitting from railroad profits

Posted October 19, 2012

— A report released this week by the North Carolina General Assembly's Program Evaluation Division found that the state is not profiting financially from a relationship it has with the North Carolina Railroad Company.

The General Assembly created the railroad company in 1849 to manage the now-317 miles of track stretching from Charlotte to Morehead City.

The company brings in about $17 million in revenue each year by leasing the rails to train companies.

But Jim Horne of the state division, which evaluates whether public services are delivered in accordance with the law, says the state isn't seeing any of the revenue.

"The state has contributed to the financial health of NCCR, but the state has not profited financially," Horne said.

In 1998, the state committed more than $70 million to take sole stock ownership from the private company.

The railroad company paid dividends for capital rail improvements until 2006, when tax rules changed, and the railroad was no longer required to pay dividends to the state.

Railroad Report: NC not benefitting from railroad profits

The division now recommends that lawmakers recoup that money from the railroad with a $15.5 million one-time payment and an annual payment of $3.7 million.

Although the division found no mismanagement, it suggested more oversight.

Railroad company President Scott Saylor said Friday that the company has been committing  lease money to pay for a long list of needed projects along the line.

"If it became necessary for the railroad to pay for all the cost of that, that would be a problem without new partners," Saylor said. "We recognize these are tough state budget years and that is simply a policy question (that) lawmakers will have to decide."

His assertion is that the railroad company has been following the law, which requires any generated revenue to go back into railroad capital improvements.

Although the division recommend selling some property near the rails to bring in 46 million for the state, it advised against selling the railroad company or the railroad corridor, saying that "valuable rail assets" and their long-term earnings potentials would be lost.

"It's like the golden goose," Horne said. "You don't want to kill the golden goose."

State lawmakers are considering draft legislation based on the report.


This story is closed for comments.

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  • btneast Oct 22, 2012

    Governments can't run a business.

    Heck, they can't even run a goverment.

  • BernsteinIII Oct 22, 2012

    Governments can't run a business.

  • btneast Oct 22, 2012

    If NC has sole ownership, as the article states, and is not collecting any revenue, then the issue is within the state's management, or lack thereof. To me, this is just one of many instances where the state misses opportunities financially because of "bureacratic ineptitude".

  • nighthunter Oct 22, 2012

    The article is inaccurate. The State has benefited from the maintenance of the rail system, even though the State did not directly receive funds that it then had to allocate to the maintenance of the system. And absolutely, maintaining the rail routes is vital to the transportation of a large amount of freight - including fertilizer, coal, chemicals, wood, and wood products. This enhances our state. This may not be the cash generator some would want it to be, but it is not "not benefiting" NC.

  • Tax Man Oct 19, 2012

    We need to toll the railroad - just collect about $10,000 per mile and we should be paid back in about 50 years.

  • superman Oct 19, 2012

    It is hardly a "golden goose" when the state is not getting any money. The goose likes to eat but cant lay a profit to the state.

  • dollibug Oct 19, 2012

    This article is interesting....either NC should be benefitting from the profits or not, according to the law...sounds like someone is/has been mismanaging the money....it is kind of like the NC Laws for worker's compensation...employers are required to carry the insurance but that does not mean that an employee will be covered IF it is needed....they can decide to wrongfully deny the employee to get benefits, if they choose to do so....most laws cover a really *GRAY* AREA....and it just depends on what someone decides....the same goes with disability insurance as well....just because you have it...does not mean that you are entitled to draw it....this is how everything works....in other words...you are required to pay for something that IF you need it, it will be there...but you will not neccessarily be entitled to it....it is quite *STRANGE* how some things work/or NOT....