Swatara Township forced to refund hundreds of thousands of dollars in tax revenue to Norfolk Southern Railway

SWATARA TOWNSHIP, DAUPHIN COUNTY, Pa. -- A railroad tax dispute in Dauphin County is costing a municipality hundreds of thousands of dollars.

Swatara Township is losing $150,000 in tax revenue from Norfolk Southern Railway as part of a court ruling and will also be forced to refund the tax revenue its collected.

The ruling found Norfolk Southern didn't need to be paying local taxes to Swatara Township, and yet the railway paid roughly $300,000 in local property taxes to the township.

"It's concerning to to all of us that tax revenues are suddenly going to be reduced," explained Tom Connolly, president of Swatara Township Board of Commissioners.

It's having a trickle down effect on the township; an estimated $37,000 will be taken from the township's fire budget.

"Basically, when you know we operate off around $1.4 million a year, and when you're taking your $37,000 out of that, it's a pretty big impact. Especially when you know we're trying to do things for volunteers like your paid incentives and things like that," explained Mike Ibberson, chief of Swatara Fire Rescue.

Officials say the loss could be greater, though, and they're lucky to not be in a worse financial situation.

"Right now, we're looking at numbers. We're looking to see where we can kind of move things around. But you know we're in a pretty good position," explained Ibberson.

"We haven't raised taxes for 5 years in the township. We're fiscally responsible. I don't see that this is getting us so we don't think it's going to cause a tax increase, but it's going to cause some pressure and some strain on services that we provide," explained Connolly.

Connolly says the county and Central Dauphin School District are also impacted by the ruling and forced to pay a refund, although its unclear right now how much. A spokeswoman for Central Dauphin School District told FOX43, "We are still waiting to hear from the County. There is some uncertainty about how far back the refund will go. That will affect the dollar amount. However, there will be a refund and it will be substantial."

A spokesman for Norfolk Southern Railway says freight railroad property must pay taxes to the state - not local municipalities.

He sent FOX43 this statement, "In Pennsylvania, freight railroad property is subject to taxation by the state, not local government. In a recent court case involving another railroad in Northampton County, the Commonwealth Court of Pennsylvania ruled that a rail yard was not subject to local taxation. Norfolk Southern faced a similar situation at a rail yard the railroad operates in Dauphin County. Norfolk Southern had been paying a locally assessed tax under protest. After the court ruling in the Northampton County case, Norfolk Southern asked Dauphin County to reclassify the rail yard property and refund the taxes the railroad had paid to the county."

Norfolk Southern will still pay a utility tax to Swatara Township, but township officials say it's pennies in comparison though to what they were receiving from the local property tax.