North Carolina asks railroad for annual dividends

Since 1854, the state of North Carolina has owned a majority of the stock in the private N.C. Railroad Company.

Now the state is the sole shareholder in the company — and it wants to make a profit from its investment.

The Program Evaluation Division, a nonpartisan oversight group in the state’s legislature, recommended in a recent report that the company should begin paying annual dividends, equivalent to 25 percent of its total revenue, to the state, in addition to giving 14 unused properties to the state to be sold.

The annual 25 percent dividend would equal about $3.7 million. The report recommends that the company also pay a one-time $15.5 million dividend to the state.

Jim Horne, senior program evaluator at the division, said the company last paid a dividend in 2005, and past dividends were required to be used only for improving railroads.

The report also recommends that the dividends be allocated to the state’s general fund.

“That way it can be used for any other purpose,” Horne said.

But Scott Saylor, railroad company president, said if the dividend was collected, some projects might not be completely funded, including bridge replacements and track improvements.

Saylor said the company is self-supporting and does not receive any state appropriation. He said it is a revenue generator for the state.

“We pay property taxes and some income taxes,” he said.

He said the company invests 80 percent of its revenue in track improvements, including wider bridges, new tracks and new underpasses, as well as making tracks available for passenger rail services such as Amtrak.

The other 20 percent is spent on operating costs and surveys, Saylor said.

“We do think these are recommendations we can work with,” he said. “We’re working with the General Assembly because we realize these are difficult budget times.”

Rep. Marcus Brandon, D-Guilford and a member of the N.C. House of Representatives Transportation Committee, said the railroad company’s unused properties were originally bought to expand the railroad, but were never used.

“Now what we have is a situation where we have a lot of land we don’t use,” he said.

For now, Brandon said he is not interested in the other parts of the division’s proposal, which he said could leave the private business with less money to improve the railroad lines.

But as a train rider himself, Brandon said he knows many people use the railroads for passenger travel, and even more will as the rail system develops and improves.

“If we can get there, then I think everyone will see the usefulness of it,” he said.

Contact the desk editor at state@dailytarheel.com.