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Senate tax bill includes $2 bln for NY rail link

Posted on: Thursday, 17 November 2005, 19:24 CST

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incentives enacted after the September 11, 2001 attacks to attract new investment and jobs to lower Manhattan would be repealed, including expensing and "bonus" depreciation allowances.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.

Source: REUTERS

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