January 5, 2012
Sen. Cullen: Railroad Acquisition Bad for Taxpayers, Businesses
State Sen. Tim Cullen (D-Janesville) said the announced acquisition of Wisconsin & Southern Railroad by Kansas-based Watco is a bad deal for Wisconsin. He is asking a federal agency and the Walker Administration to review the transaction. (See attached letters.)
Because Wisconsin & Southern operates on state-owned tracks that the state has spent millions to repair and maintain, the acquisition deserves greater public scrutiny than it is getting, Cullen said.
“The first thing we should ask ourselves is: Is this merger in the best interest of Wisconsin taxpayers and businesses?” Cullen said. “The state has invested nearly $100 million over the past six years to repair aging freight rail track and protect the tracks from abandonment. Wisconsin & Southern is licensed to operate on the state’s rail system. This proposed sale should be reviewed before we risk taxpayer investment in new operators and new ownership.”
Cullen is also concerned that the purchase of the Wisconsin railroad by an out-of-state company will result in higher shipping costs for Wisconsin businesses.
“The purpose of the state’s bonding and financial grants to Wisconsin & Southern has been to help build a high-quality freight rail system that provides efficient and cost-effective service for consumers and businesses,” Cullen said. “There is nothing to stop Watco from increasing shipping fees in order to recoup the money it paid for the railroad. That defeats the purpose of a private-public partnership.”
The purchase price has not even been publicly disclosed, Cullen noted.
“The state has not been privy to the financial details of this sale,” the senator said. “Wisconsin taxpayers paid for the freight rail infrastructure, such as acquiring the Five-Points Terminal in Janesville. As a railroad that has been dependent on the use of a state asset, Wisconsin & Southern should welcome greater public scrutiny of this transaction. I’m calling upon the federal government to delay approval of this acquisition to give the Walker Administration more time to ensure taxpayer interests are protected.”