1

Schedule A.-State taxes accrued by New Haven Railroad in 1964 1

Miscellaneous (registration, etc.)

New Haven share of Boston Terminal (South Station) real

estate tax__.

Total_.

Other States: Miscellaneous___.

12,000

-36, 616 18, 000 2,848

608, 730

387, 190

2, 353, 039

48, 574 23, 362

0

20, 544

308, 357

13, 927

414, 764

314, 594

79, 291

0

4, 617

21, 122

1, 754

421, 378

31, 420, 464 237, 401

19, 534

5, 316

178, 126

1, 860, 840

18

Total State taxes___

5. 050, 039

1 Pursuant to court order, payment of taxes is deferred with the exception of sales taxes, registration fees, taxes payable through joint facility charges or unrejected leases, and other similar taypes of tax.

2 Credit reflects adjustment for back years. Normal annual accrual for this item is $40,000.

3 Reflects abatement of $463,155 for prior years' taxes. Normal annual accrual for this item is $630,000.

Senator LAUSCHE. After your meeting in 1961, where recommendations were made to provide tax relief and three of the other States did not comply, have you had any meetings since to try and get this resolved?

Governor DEMPSEY. Yes, sir, we have, Senator. As chairman of the New England Governors Conference, I have repeatedly met with the Governors, old and new, with the sincere hope that, first of all, we could solve this problem. It is a tough problem because they have legislators; they have legislatures and they have people in the States, of course who feel, like many people, that they are not going to do this. We have tried on many an occasion to talk about a direct cash subsidy, such as we do in Connecticut, the $1 million during the biennium. We have tried to talk about a transportation committee. We have $5 million available today that we can match, or that some of this money, we will probably use with the State of New York.

As Senator Pastore so ably pointed out, there are two problems, the short range, we call the commuter, and the long range, which comprises the four States, and which is the long haul, as it is commonly called.

Senator LAUSCHE. I have one or two more questions. This Connecticut Transportation Authority, is that a unilateral State action? Governor DEMPSEY. It is an authority, Senator Lausche, that I recommended to the general assembly 2 years ago that can operate with one State, can operate within the State, can operate with any of the four States.

It is a very unique authority. It is a design to meet the passage of any one of the bills. This is why we were most interested, Senator.

Senator LAUSCHE. The initial appropriation for the Connecticut Transportation Authority was $1 million, with an additional bond authorization of $2 million.

Governor DEMPSEY. Yes, sir.

Senator LAUSCHE. Did any of the other States do that?

Governor DEMPSEY. It is my understanding, Senator, that they did

not.

Senator LAUSCHE. Now you say that these funds were specifically authorized for the assumption by the State of Connecticut of its fair share of the cost of underwriting the continued operation of the essential industry, rail passenger service. That is the fact?

Governor DEMPSEY. Yes, sir.

Senator LAUSCHE. Is this passenger service of the greatest vitality to Connecticut, or is it equally vital to the other States?

Governor DEMPSEY. I would say, Senator, that it is vital to the whole region of New England.

Senator PASTORE. Members of the committee, this is Governor Volpe of Massachusetts, the Commonwealth of Massachusetts.

Senator LAUSCHE. I think, Mr. Chairman, that is all that I have at this time.

Senator PASTORE. Thank you. Mr. Dominick.

Senator DOMINICK. Mr. Chairman, I want to say, as a person who was born and brought up in Connecticut, welcome to Governor Dempsey. I am a long way from there now and enjoying my new State.

I would like to ask you this, Governor. I share your desire to see something done about this and I share your hope that the equipment and service will be improved extensively.

But if there is a Federal obligation to do something about retaining passenger service on any railroad, why is there more of an obligation to do it with respect to the New Haven than there is on any other railroad in the country?

Governor DEMPSEY. I think the answer, Senator, is this. I hope that the United States of America will recognize this road as perhaps a direct means. If tomorrow-God forbid-we were at war, I would

think that the United States of America would need this vital transportation system. Civil defense, alone, would indicate

Senator DOMINICK. Wait a minute. I am not talking about abandoning the road or the lines or even the cars. What I am talking about is whether or not we should separate in our minds the need to have a governmental support completely of passenger service as opposed to freight service.

Therefore, we would subsidize in one form or another, through the Federal Government and the States, all passenger operations and let the railroads take care of their own freight operations.

Governor DEMPSEY. You would be helping; you would be joining with the States to keep the passenger service alive if the Federal Government, if you see fit, passes any of these bills. You may not.

The freight service, as you know, arrangements or agreements are now, I understand, being conducted by the trustees with other railroads. I am not familiar with the negotiations one bit.

But it would seem to me, Senator Dominick, that the Congress of the United States must have an interest in this particular plant. Just because it is New England, or New York, I feel you are interested in the whole country.

Senator DOMINICK. Let me ask one more question, if I may. Let's suppose that the railroad, unencumbered by the passenger service, can make a going enterprise out of the freight service. Let's just suppose that for a minute.

Do you then feel-I will put it this way-that it is the function of the States to maintain passenger service where they feel that passenger service is needed, or do you feel that it is the function of the Federal Government to do it because of a national principle involved, or would you insist on a joint effort?

Governor DEMPSEY. I would not insist. I would like to eliminate that word. I would hope for a joint effort of the continuation of the essential passenger service to New York and to New England.

Senator DOMINICK. Would you feel the same way on a passenger service in New Mexico?

Governor DEMPSEY. If it was as vital to the State of New Mexico as this problem is to New England, if I were a Member of the Congress, sir, not only would I support it, but I would vote for it.

Senator DOMINICK. Thank you. That is all.

Senator PASTORE. Mrs. Neuberger.

Senator NEUBERGER. I don't like to be parochial about this problem. I think I am familiar with it, although to a great difference of degree, because we have had exactly the same problem with the Southern Pacific Railroad and its so-called commuter service between Portland and San Francisco and Los Angeles. The utility commissioners of the two States allowed the Southern Pacific to discontinue the only really good passenger line we had, namely the Daylight. It inter

ested me, in looking into it, to notice that trustees or owners of these railroads love to separate, for bookkeeping purposes, the passenger service and the freight service. Senator Dominick indicated the freight service is lucrative.

With the Southern Pacific, they have absolutely no competition. They have the whole way to themselves. Yet you would think they had to build separate tracks to run the passenger cars from the freight cars, for they charge up the whole running of the passenger service separately. This gets kind of annoying.

I must say you have given a marvelous argument for nationalization of the railroads. As I reread your testimony, you say over and over again that this is a national rail transportation problem, a national policy, and it is essentially national in character, and the national policy occurs over and over again.

So maybe if it is of benefit to the Nation, whether it is New England or in time of war, we have a really good argument for this industry that is having such a rough time, and I am a railroad buff.

I commute from Oregon to Washington by railroad. I do it because I like it and because I like to give them some business. But it is a really rough problem, I think, as Senator Dominick indicated, for use, from the Far West, where we have need to wonder about this, unless it is so much in the national interest that the U.S. Government take over this ailing business. You have given a good argument for it.

Specifically, I thought there was a certain suggestion of great criticism when you said that heavy subsidy by the Federal and State governments of competing methods of transportation and Federal regulatory restrictions of the railroad's ability to compete are important factors in the New Haven's distress.

Now, I suppose you mean subsidy to the airline and building airports. Is that what you meant?

Governor DEMPSEY. One of them.

Senator NEUBERGER. Did you mean the trucking industry, too, receiving heavy subsidy as competition?

Governor DEMPSEY. You could consider that, I suppose. This would take us, if we went into this, Senator, it would take a little time.

Senator NEUBERGER. I recognize that the trucking industry is subsidized because the taxpayers of this country build the roads. But I also remember, where I only know railroads in the West, where the railroads were subsidized by giving them some valuable land in alternate sections to build the things.

So would you mind taking time to tell me what Federal regulatory restrictions you think have brought about part of the New Haven's distress?

Governor DEMPSEY. Of course, they have real problems on their freight. As you know, many years ago when the ICC came into being, it was brought into being, of course, to cure what we call, today, a monopoly.

Certain rates were set; certain freight rates were set. Of course, you almost answered the question, yourself, Senator, when you said the roads are a case in point.

There isn't any question, and the trustees keep saying this over and over again, but that we do have to build roads. We certainly do because factories build their plants on these roads.