JFK Rail Link Could Become Victim of Estate Tax Battle

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The New York Sun

Senators Clinton and Schumer this week are likely to vote against the transfer of federal funding to be used for the proposed $6 billion rail link between John F. Kennedy Airport and Lower Manhattan, congressional staffers say.

The senators would vote that way to avoid crossing party lines on a reduction of the estate tax, which they oppose.

Proponents of the rail link project, including Mr. Schumer, have sought to transfer about $2 billion of unused federal tax benefits related to the terrorist attacks of September 11, 2001, into money the city and state could use for downtown transportation projects.The transfer now requires Senate approval after the House passed a provision last week that would send $1.75 billion to the city and state between 2007 and 2021.

The provision for rail link funding is embedded in the monstrous “trifecta bill” that could go before the Senate this week that would cut a tax on inheritances, hike the minimum wage, and extend some popular tax breaks to businesses and the middle class.

Capitol Hill sources say the bill is unlikely to reach the floor of the Senate because the body’s Democratic leadership has vowed to kill it, based on the inclusion of the estate tax cut.

The offices of Mr. Schumer and Mrs. Clinton did not respond to inquiries about the bill and the rail link.

The rail link project is aimed at improving “one-seat” train access to downtown Manhattan from the airport and Long Island, which advocates say would boost the redevelopment of Lower Manhattan. Millions of square feet of office space is set to come online at the former World Trade Center site as soon as 2011.

By the end of the year, one of the rail link’s biggest champions, Governor Pataki, will be out of office, leaving the project with one less powerful backer.

Critics of the rail link, including the Regional Plan Association, say it is not as beneficial as some other prospective infrastructure improvements, including the Trans-Hudson Express, another rail tunnel to New Jersey from Midtown; the creation of a Long Island Rail Road link to Grand Central Terminal from Penn Station, and the Second Avenue subway line.

A spokesman for the Regional Plan Association, Jeremy Soffin, said the rail link has many formidable hurdles to clear. He noted that the transfer of funds could be used for other projects in Lower Manhattan if the rail link falters.

“The next governor will be the one to decide whether this project happens or doesn’t happen,” Mr. Soffin said,”and the front-runner is not so excited about it.”

“As long as the money heads to Lower Manhattan eventually, that is what matters,” he added.

In a speech in May, Attorney General Eliot Spitzer, the leading candidate for governor, said some other infrastructure projects should have priority over the rail link. He advocated completing a draft environmental impact statement to better evaluate the cost and benefit of the project.

Last week, a number of New York politicians, including Mr. Schumer and Reps. Peter King and Thomas Reynolds, lobbied to put the provision before a House vote. Advocates said they wanted the bill to be part of the tax extension bill that contains some of the tax breaks that were popular on both sides of the aisle. But the provision was lumped together with the more controversial estate tax cut.

A source on Capitol Hill said the new secretary of the treasury, Henry Paulson, the former chairman of Goldman Sachs, intervened to push the provision forward in the House. Goldman Sachs is located downtown and is building its world headquarters near ground zero.

The Senate majority leader, William Frist, a Republican of Tennessee, has threatened to make the “trifecta bill” disappear until next year if the Democrats vote it down now or block its passage.

A congressional staffer said the rail link and other tax breaks could be pulled out of the “trifecta bill” and still be salvaged later this year.

Project advocates say they will continue to push for the proposal and transfer of funds after Mr. Pataki leaves office and when a new Congress convenes in 2007.

The executive director of the Association for a Better New York, Michelle Adams, said the challenge thus far in transferring the money is not opposition to the measure, but finding the right legislative vehicle to pass it through both houses of Congress.

She said it has come close to passing before, and could be attached to another bill this year if the “trifecta bill” is killed.

“Should it not reappear this year, Ms. Adams said, “We will still be part of the coalition fighting for it in ’07.”

The New York Sun

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