Senate tax bill includes $2 bln for NY rail link

WASHINGTON (Reuters) – A tax relief bill now under
consideration by the U.S. Senate would provide $2 billion in
tax credits to New York City and New York state to be used to
help fund a rail link from John F. Kennedy International
Airport to lower Manhattan, lawmakers said on Thursday.

The bill, which extends provisions of President George W.
Bush’s 2003 tax cut package, also contains key changes to New
York Liberty Zone tax incentives to shift funding to the rail
project.

Under the bill, unused federal tax incentives enacted after
the September 11, 2001 attacks to attract new investment and
jobs to lower Manhattan would be repealed, including expensing
and “bonus” depreciation allowances.

Sen. Charles Schumer, a New York Democrat on the Senate
Finance Committee, negotiated the conversion of this unspent
capacity into tax credits for New York City and New York State.

“Building a rail link to Kennedy Airport and the labor pool
of Long Island, will be especially important to businesses
considering staying or moving to downtown,” Schumer said in a
statement.

The bill grants city and state each an annual $200 million
tax credit against Medicare taxes they pay to the federal
government on behalf of their employees for 10 years. The funds
must be used to help finance the rail link.

Amendments to the tax bill were being debated on the Senate
floor late on Thursday, with a final vote seen by the week’s
end.

The $2 billion tax credit helps to plug a funding gap for
the Kennedy Airport rail link, which is expected to cost around
$6 billion. But even with the federal funds and initial
commitments of $560 million commitment from the Port Authority
of New York and New Jersey and $400 million from the
Metropolitan Transit Authority of the State of New York, the
project still would comes up short.

Most recently, MTA chairman Peter Kalikow left the project
off the list of proposals for spending the $1.044 billion
surplus that the nation’s biggest mass transit agency expects
to collect this year.

Republican Gov. George Pataki, who named Kalikow to run the
MTA, on October 26 urged Kalikow to spend some of the surplus
on the new airport rail link, saying $250 million was needed
for projects to revive lower Manhattan. Pataki has also urged
the Port Authority to contribute an additional $1 billion to
the rail link.