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But it is my firm belief that unless there is some cash contribution on the part of the States, all of this legislation that we are talking about here will fall flat on its face, no question about it.
Governor DEMPSEY. Yes, sir.
Senator PASTORE. Unless the States that are concerned show some effort by putting up some cash, I don't see how you can expect the Federal Government, which consists of 50 States, and many of them, of course, not concerned with this immediate problem, to come in and fill in this gap; and, definitely, we are going to have a gap.
A petition has already been filed for a discontinuance of the commuter service. The railroad and the people have already been placed on notice that this thing is going to be followed up by a discontinuance of the entire passenger service.
Now, that constitutes a very immediate problem, and I understand that you, together with the Governor of New York, are already beginning to work out a plan on the commuter service, either in conjunction with the New Haven running it, or the New York Central run
Now I would like to interrogate you a little bit on that. Where does that stand as of the moment?
Governor DEMPSEY. We had hoped to have a report for you today. A meeting was held in New York City last night. The demonstration project, as you know, is almost ready to go. We feel the States of New York and Connecticut working together, at least, will qualify for help under HHFA. We feel now that, at long last, we are eligible. We have been work on this plan for over 2 years.
I would say to you, Senator, that within the next 2 weeks, perhapsI hope within the next week—we will be making our first application for the money on this demonstration grant.
Senator PĂSTORE. That is only for modernization and improvement of equipment.
Governor DEMPSEY. The approval of this plan, Senator Pastore, is almost contingent, if this plan is approved, on the fact that we can move immediately into our second phase of it, which we hope that we could accomplish within the next 2 months.
Senator PASTORE. In the second phase of your plan, does that template Federal contribution? In other words, after you have received your $20 million and spent your $20 million, $10 million of which will be contributed by the States, as I understand from your testimony, and $10 million will be from the Federal Government for modernization and new equipment. Then you are going to undertake to take over the commuter service?
Governor DEMPSEY, Yes, sir.
Senator PASTORE. In that operation, do you expct any Federal contribution?
Governor DEMPSEY. Senator, if you will change the word "contribution" to "help," we need help.
Senator PASTORE. You need cash. Do you expect any Federal cash? Governor DEMPSEY. We would be very glad to accept it.
Senator PASTORE. Do you expect it in your plan? Is that envisioned in the agreement you are reaching with the Governor of New York?
Governor DEMPSEY. Now, the commuter service would primarily be a matter for Connecticut and New York, itself. We have recognized this problem, Senator, but we hope, sir, that the Senator from California, that you mentioned, will realize that a problem in his State have asked for help and pray now that, somehow, these bills before you backing, as one of our great New England Senators, just as much as
Senator, the difference here is time is running out. If ever the Congress had an emergency bill before it, it has it today, and I pray God that you recognize that it is an emergency.
We have been fighting this since 1960. We fought it alone. We have askd for help and pray now that, somehow, these bills before you can be condensed, if you will, digested, if you will, Senator Pastore, and that, somehow, we can cut through this long wait, because I am afraid if we wait too long, Senator, we will have no railroad at all to assist any of us.
Senator PASTORE. May I ask you a question? On the question of emergency relief, which one of the three bills do you prefer?
Governor DEMPSEY. The Ribicoff bill is very essential to us because it gives us immediate help. The Ribicoff bill we like. The Ribicoff bill, we feel, gives us the immediate help. We feel, Senator, in order to look at the long-range plan, we have got to make this short-haul plan immediately available.
Senator PASTORE. And you say that the State of Connecticut is ready to match dollar for dollar any Federal contribution?
Governor DEMPSEY. Providing we get the same help from the other States.
Senator PASTORE. We are going to come to Governor Chafee and the other Governors.
Governor DEMPSEY. But I want it in on this statement that we will match dollar for dollar providing we get help from the other States, Senator, absolutely.
I have never said this. I have said Connecticut cannot do this job alone. Let me tell you, Senator Pastore, I am getting to the stage where I am willing to go before my general assembly, if everyone leaves us alone, and I am going to ask that we do it alone.
Senator PASTORE. This would really be a very unfair situation. Governor DEMPSEY. We think so.
Senator PASTORE. If either one or two States are willing to put up their share and the other States just sit back and say, "Well, the thing is running, let's forget it,” naturally, this is bad, and I think there is enough integrity in each of the States concerned here to meet their responsibility.
But, insofar as your State is concerned, if this Congress sees fit to pass a bill in the form of the Ribicoff bill, which provides that the Federal Government will make available $100 million, nationally, and that whatever is given to any railroad will have to be matched by the States, you say that your State is willing to assume its responsibility and put up its share of the cash?
Governor DEMPSEY. Yes, sir, I do, Senator Pastore, and I was so delighted with what you said yesterday, sir, when you said we cannot expect the Congress to do it alone. We cannot come down and ask you people to do this for us. You are so right, whatever help you give us, we should be ready to match it.
Senator PASTORE. Thank you very much. Senator Lausche.
Senator LAUSCHE. Governor Dempsey, is this a correct statement that Connecticut is not now collecting any taxes from the New Haven, either on the State, county, or municipal level ?
Governor DEMPSEY. Yes, sir; this was in my statement, Senator Lausche.
Senator LAUSCHE. That was in your statement?
Governor DEMPSEY. I cannot speak, nor would I try to speak, for the State.
Senator LAUSCHE. What about New York? I will find out later. Do you know what the situation is in New York, Massachusetts? Governor DEMPSEY. I do not, Senator. Senator LAUSCHE. You don't ?
Governor DEMPSEY. I do not. In my State, we feel that we are the only one that is doing this, if this will help you. We think Connecticut is the only State doing it. We are not sure.
Senator LAUSCHE. You think it is the only one ?
Senator LAUSCHE. That is, you removed all taxation against the railroad because you believed that it needed help and you wanted to do it on a local level ?
Governor DEMPSEY. That is correct, Senator, and on top of that, I would call your attention to the fact that we have every biennium, since 1961, we have given the railroad $1 million to take care of crossings and to relieve them of taking care of the bridges, and this, we thought, would be the best help, upon the recommendations of the trustees, themselves. They asked us for this and we gave it to them; yes, sir.
Senator LAUSCHE. I commend you for your effort to give help because these recommendations have been made for the last 6 or 8 years to the different States.
Now, with regard to the Federal help. Senator Pastore pointed out the other day that to the New Haven, the Government of the United States guaranteed obligations in an aggregate of $51,600,000 and $28,300,000 of those obligations were defaulted and the Federal Government had to pay them. I merely point that out because it shows the Federal Government has been trying to help.
Governor DEMPSEY. Yes, sir; they sure have.
Senator LAUSCHE. And the probability is that they will have to pay additional obligations which it guaranteed.
Has there been any money thus far allocated under the Mass Transportation Act to help solve this problem?
Governor DEMPSEY. Not as far as Connecticut and New York are concerned, Senator Lausche. The application that we will make and hope to have ready next week, that Senator Pastore asked about, we hope that this will be the first opening here under the Mass Transportation Act. This is Connecticut and New York, together.
Senator LAUSCHE. Why isn't Massachusetts in on that and why isn't Rhode Island ?
Governor DEMPSEY. Senator, not meaning to be impertinent, I wouldn't dare talk for the State of Massachusetts or the State of Rhode Island. They are both here, and I know you will ask them that question.
Senator PASTORE. Massachusetts is a participant under the urban mass transportation program. Rhode Island is not, because this is more or less a commuter problem.
Governor DEMPSEY. In this particular program; yes, sir.
Senator LAUSCHE. Has there been agreement among the four States, which are involved through the service of the New Haven, to get this problem solved, or has there been one State going in one direction and another State in another direction?
Governor DEMPSEY. Senator Lausche, when each Governor went back to his legislature to recommend relief for the New Haven, in Connecticut, as I said to you, we adopted the recommendations intact. Other States did not; did not do it.
Senator LAUSCHE. It was testified yesterday that one State-I believe it was Massachusetts-said, "We will give you tax relief providing you do not remove anybody from the payroll except by first going to a public agency to get approval.” Are you familiar with that?
Governor DEMPSEY. Yes, sir; I am, Senator. This was not the condition in Connecticut, and this was the condition we faced in 1961. We had hoped that all of the States would agree with our so-called agreement plan. You are absolutely right. In Massachusetts, this was the condition.
Senator LAUSCHE. Did any of the other States fail to follow on the recommendations of the four that were made?
Governor DEMPSEY. New York did for a while, Senator. They had also a condition which, for a while, they claimed was not met, but that condition has now been, I understand, rectified so that, as of today, I think Massachusetts, perhaps, is the only State that does not grant tax relief.
Senator LAUSCHE. The financial statement that was submitted shows that the New Haven is paying an annual tax obligation-may I ask the trustee how much that is? I don't have the paper available.
. Senator PASTORE. We will now hear from Mr. Kirk.
Mr. Kırk. Well, Senator Lausche, I think the figures indicated that our taxes paid and accrued in 1964 were something in excess of $9 million. It was brought out in testimony yesterday that of that figure, $5 million-plus represented Federal payroll taxes.
More specifically, that taxes accruing on real estate on the New Haven system today were in the total amount of $2,850,000 in the
Senator LAUSCHE. What States are you paying them to, or being obligated?
Mr. KIRK. We are paying them to Massachusetts, Rhode Island, and New York.
Senator LAUSCHE. None to Connecticut!
Mr. KIRK. That is correct.
Senator PASTORE. Could you break that down further, how much, or put it in the record ?
Mr. KIRK. I don't have the figures, but I will see that they are furnished for the record.
Senator PASTORE. Fine. We would appreciate that.
(The following information was submitted subsequently for the record :)
NEW YORK, NEW HAVEN & HARTFORD RAILROAD Co.,
New Haven, Conn., March 23, 1965. Hon. John O. PASTORE, Member of the Senate, New Senate Office Building, Washington, D.C.
DEAR SENATOR PASTORE: At the recently concluded hearings of the Senate Commerce Committee, the trustees agreed to give you a breakdown by State of the State railway taxes accrued in 1964. They are as follows: New York: Real estate taxes_
$1,065, 436 Connecticut: Real estate taxes..
48, 574 Rhode Island: Real estate taxes
314, 594 Massachusetts: Real estate taxes.
1, 420, 464 Total_.
2, 849, 068 I should like to point out that the term “railway taxes” is an accounting item relating only to assessments on transportation property. Actually, the New Haven accrues a substantially higher amount of State taxes, which are accounted for according to ICC rules under various headings. In 1964, the total of such taxes was $5,050,039; a detail may be found on the attached schedule A.
We have made preliminary estimates of State railway tax accruals for 1965. Such estimates of course vary with the assumptions made concerning tax relief legislation. The following estimate is based on the New Haven's not qualifying for tax relief in New York on July 1, 1965 (which would be the case under existing legislation), on no renewal of Rhode Island tax relief legislation which expired in 1964, and on Connecticut and Massachusetts retaining present legislation. Based on the foregoing, the following accruals would be made in calendar 1965: New York: Real estate taxes ?
$1,000,000 Connecticut: Real estate taxes.
50,000 Rhode Island: Real estate taxes_
1, 000, 000 Gross earnings--
150,000 Massachusetts : Real estate taxes_
1, 800, 000
4,000,000 1 Reflects eligibility for tax relief Jan. 1-June 30, 1965.
Taxes other than the foregoing would be approximately the same as appears in Schedule A for 1964.
I have taken the liberty to attach a schedule which summarizes the impact of the New Haven's financial distress on the region which the road serves. Schedule B indicates that at the end of 1964, payment of some $17,393,000 in State taxes had been deferred. In addition, over $18,669,000 in tax relief and direct assistance has been granted the New Haven by the States since 1959. Thus, the States and the local communities have had to make up over $36 million in tax dollars from other sources during this period. Very truly yours,
H. W. DORIGAN.