RALEIGH — Facing a shrinking state budget, the N.C. General Assembly is considering putting various state-owned entities up for sale — including railroads.
A committee on state-owned assets in the N.C. House of Representatives met Tuesday to discuss if the state could benefit from privatizing its railroad industry.
But it encountered opposition from legislators and railroad officials.
The railroad is valued at about $152 million.
“If we sold this railroad, it would be a big mistake,” said Rep. Daniel McComas, R-New Hanover. “It would be short-sighted. We have a huge asset before us.”
Scott Saylor, president of the N.C. Railroad Company, said the railroad runs off revenue produced, and the state receives the railroad’s excess profits, which is about $14 to $16 million annually.
“None of this costs the state a penny,” Saylor said. “The property of the North Carolina railroad is taxable.”
He said 80 to 90 percent of the railroad’s revenue goes toward building bridges, stations and tracks — infrastructure that benefits citizens and the economy.
The railroad’s self-supporting operation has halted legislative plans to sell the industry.
“That drops it low on the priority list to get rid of,” said Rep. Marilyn Avila, R-Wake. “Right now, the railroad is not urgent because it is not taking anything out of the budget.”
Saylor said he is concerned that a company purchasing the railroad would be profit-driven rather than focused on improving the state’s infrastructure.
“We have a healthy railroad because we invest that capital,” Saylor said. “We take the long view. We don’t answer to Wall Street.”
Legislators are still debating the benefits of privatization, and they are requesting a deeper investigation of the industry’s assets in the weeks to follow.
“It sounded like some of the decisions that they make are political decisions, not economic decisions,” said Rep. William Brawley, R-Mecklenburg.
Avila said she wants to look into what the railroad would lose if privatized.
“As the state, they can be less driven by the dollars and the cents and the bottom line, and more of that long-term economic development,” she said.
“Now whether or not that economic development is the most beneficial use to their asset — I don’t know.”
Alaska is the only other state that owns its railroad company, and the N.C. Railroad Company has been controlled by the state since the 1850s, Saylor said.
“The North Carolina railroad is our past, but more importantly, it’s our future,” Saylor said.
Staff writer Brendan Cooley contributed to reporting.
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