Published: June 22, 2009 10:25 pm      

Rail company enters tax fray

Workers claim shops not in Raceland

RACELAND — A company employing rail workers at the Raceland Car Shops has entered the legal fight against Raceland’s payroll tax and claims the shops are not inside the city.

Progress Rail Raceland Corp. filed papers in Greenup Circuit Court this month to add itself as a plaintiff in a lawsuit challenging the tax.

The company claims its engineers have reviewed city records and found that boundary maps and survey information show most or all of the car shop is outside city limits.

The outcome of the suit could involve more than the payroll tax.

The company wants the court to decide whether its property is in the city or not. If not, it wants the court to award it repayment of real estate, intangible and other taxes the city has collected since the company bought the property in 2006.

Progress Rail is joining other plaintiffs who are workers there and at CSX and the Raceland Independent School District, the three largest employers in the city.

The original suit, filed in April, claims the payroll tax violates Constitutional due process and equal protection guarantees. The plaintiffs want the court to prohibit the city from collecting the tax and force it to refund what it already has collected.

The payroll tax has been under siege since it was enacted in February. At first it was to be a 2 percent levy. The city council scaled it back to 1 percent after it drew heavy opposition and started collecting May 1.

The city contends Progress Rail is in city limits, city attorney James W. Lyon Jr. said. “And maps we have show they’re in city limits.”

Further, Lyon said, the ordinance addresses employers not based in the city but do business there. In such a case the employer and the city are to negotiate the amount to be withheld.

Lyon said neither Progress Rail nor CSX has been withholding the tax from their employees’ paychecks.

MIKE JAMES can be reached at mjames@dailyindependent.com or at (606) 326-2652.