St. Anthony: Niche short-haul railroads say they need state money to keep tracks updated

Railroads are big business in Minnesota, hauling millions of tons of forest products, farm produce and industrial equipment.

Most tracks are covered by the big interstate players such as BNSF and Canadian Pacific.

However, an association of 15 short-haul railroads, each with less than $35 million in revenue, cover tracks that range from 2 to 25 miles.

The private railroads say they pay for most of their own infrastructure repairs. Since 1976, however, they also have received about $40 million in state general funds and bond proceeds to help with capital improvements that otherwise would mean no spur lines, jeopardizing commercial customers, according to the railroads and the Minnesota Department of Transportation.

Minnesota Commercial Railway in January completed $250,000 in repairs on a deteriorated freight rail bridge on 31st Avenue S. in Minneapolis' Longfellow neighborhood. The track serves the Hiawatha Avenue industrial district, including operations of General Mills, ADM, Leder Brothers and Metro Transit.

State money covered most of the modest cost of the repairs that precluded millions downstream to rebuild the bridge.

"Our repairs extended the life of the bridge by 30 years by addressing the damage done by corrosion," said Minnesota Commercial CEO Wayne Hall.

The bridge, built in 1913, carried in 2021 more than 5,000 rail cars totaling more than half a million tons of freight. Hall said it was the equivalent of 16,000-plus semitrailer-truck loads "that would otherwise travel on city streets through local neighborhoods."

The short-haul railroads are lobbying hard this year, like many other entities interested in a piece of the $9 billion state surplus. The Legislature provided $13 million last year and has yet to set this year's allocation. The regional railroads also are asking for a tax credit totaling $6.5 million annually that would require $2 of private investment for every $1 in state money. That involves last-minute talks this week in the final weeks of the Legislature.

MnDOT and the Minnesota Regional Railroads Association estimate deferred maintenance and pressing capital replacement needs, including heavier track and loading facilities, require up to $250 million over the next several years.

Minnesota Commercial and the other short-haul railroads cover a total of 1,300 miles of track, assuming them years ago from the big railroads that abandoned them to cut costs.

The short-haulers assert that they can't afford the capital costs and note that they contribute fewer emissions than trucks, which would be the alternative for the freight. Upgrading their tracks, they say, also will save $20.4 million annually in pavement upgrades that would be needed if trucks took over the hauls.

The trucking industry has its own legislative agenda.

John Hausladen, president of the Minnesota Trucking Association, said the group does not battle the railroads over legislative wants because they are not overly competitive. Roads go everywhere and they are popular with legislators throughout the state.

"Our association is not seeking anything specific or fighting the rails," Hausladen said.

However, nearly two dozen Minnesota industries, supported by trucking firms, have successfully won legislative approval in recent years to raise weight limits on roads. The heavier loads in the long run cause more highway deterioration.

The railroads' lawyer, Sarah Erickson, pointed to the potential for road damage in March testimony to the Senate Transportation Committee about the growing list of allowances for heavier loads, from logs to sugar beats, corn, dairy products and cement.

"With every exemption, the damage to Minnesota's roads and bridges increases ... as do the demands on your budget," Erickson said.

Standard 80,000-pound trucks cover through fuel taxes and fees about 80% of the damage they do to roads and bridges, Erickson said, pointing to a study by the Federal Highway Commission. If weight limits increase, the truckers cover less of the damage, she said.

The trucking industry notes it serves far more customers in every corner of the state, which generate billions in economic activity, than the small railroads.

The railroads point to the millions in economic activity it supports.

Truckers do, too, but the industry association, while lobbying for more state spending on roads and bridges, also wants the state to balance the budget through spending cuts, not tax and fee increases.

Especially with the large surplus, both the railroads and truckers are in a long line of groups making their case why state aid to their industries benefits the Minnesota economy.