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. În 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. KIRK. 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 year 1964. 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. Governor DEMPSEY. Thank you very much. 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 :) Hon. JOHN O. PASTORE, Member of the Senate, NEW YORK, NEW HAVEN & HARTFORD RAILROAD CO., New Haven, Conn., March 23, 1965. 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.. Total $1,065, 436 48, 574 314, 594 1, 420, 464 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: 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. Schedule A.-State taxes accrued by New Haven Railroad in 19641 New Haven share of Boston Terminal (South Station)3 real estate tax___ Total__. Other States: Miscellaneous___. Total State taxes____. 19, 534 5, 316 178, 126 1,860, 840 18 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. Schedule B.-Statement of unpaid State taxes accrued by New Haven Railroad as of Dec. 31, 1964, and of State tax relief and other assistance, 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. |