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First publish date: 2004-04-21

Railroads Join in Trying to Block IL Fuel Taxes

The nation's top railroads joined a growing effort Monday to derail Illinois Governor Rod Blagojevich's budget plan.

Executives at the six largest railroads sent a letter to the governor arguing that his proposal to end a tax break on the purchase of diesel fuel would lead them to fill their tanks in other, cheaper states.

"If enacted, this proposed tax would cost the railroad industry more than $40 million annually -- an increase of more than 50 percent of our total tax bill," the letter noted.

Signing the letter were the chief officers of Burlington Northern & Sante Fe Railway, CN, Canadian Pacific Railway, CSX, Norfolk Southern and Union Pacific.

Under the governor's proposal, the state's 21.5-cent per gallon tax on motor fuel would be expanded to include non-highway vehicles. The move would raise about $74 million.

In addition to trains, construction companies would pay higher fuel taxes. For example, Bloomington-based Stark Excavating Co. estimates it would have to pay about $183,000 in additional gas taxes.

Becky Carroll, spokeswoman for the governor's budget office, said she had not seen the letter. But, she said the state's $1.7 billion budget deficit has made it necessary to look for ways to generate revenue.

"This is a budget filled with tough choices," Carroll said.

She added, however, that the governor is willing to listen to the industry's concerns.

Joseph Ciaccio, president of the Illinois Railroad Association, said Illinois is a key national transportation hub.

"Illinois is the crossroads of the nation and Chicago has long been its transportation center, starting with the railroads and expanding with the growth of the airline industry and interstate highway system in the past century," Ciaccio said. "Governor Blagojevich's proposal threatens this great tradition and can only inhibit economic development in Illinois."

The complaining is notable because most railroad companies are large campaign contributors. In his campaign for governor, for example, Blagojevich received more than $35,000 from railroad interests.

The letter is just the latest from special interest groups worried about the governor's budget plan, which relies heavily on fee increases and the end of tax breaks for certain kinds of businesses.

Last week, Chicago-based R.R. Donnelly & Sons Co. sent a letter to the governor saying Illinois is no longer a favorable state for business. The company noted that higher taxes on printing equipment, imposed last year, could stall possible expansion plans in Dwight and Pontiac.

Farm groups also are fighting the governor, who wants to generate $27 million by taxing agricultural chemicals, seed and other farm products purchased by a small percentage of wealthy farmers.

State Farm Insurance Cos. and Country Insurance and Financial Services, both of Bloomington, also could face higher taxes on computer software purchases.

Although Republican lawmakers and business groups have vowed to fight the proposals, Carroll said the governor is pressing forward.

"In order to get this state back on track fiscally -- so that we don't have to increase the sales or income tax and still fund our commitments -- we need to hold true to employing additional fiscal discipline through our budget. And that includes closing corporate loopholes," she said.


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