CSX puts brakes on annexation proposal

A plan to annex most of CSX railroad property into the city of Corbin has been put on hold as the company withdrew an annexation request in order to study the issue further.
Corbin City Manager Bill Ed Cannon said Tuesday he recently received a letter from CSX Real Property Regional Manager Mark Friedlin asking city leaders to stop annexation procedures.
“Last time I talked to them, they said they needed to check out their tax obligation a little further,” Cannon said. “I think they’ve been given some inaccurate information on taxes by someone … somebody said their tax obligation to the city would cost them $1.5 million more [if annexed].”
Cannon said he thinks annexation would cost the railroad company little more than it pays now. CSX pays a special “franchise fee,” in the place of normal property taxes. The fee is determined by the Kentucky Revenue Cabinet using a formula based on property tax assessments and other factors. That fee is then distributed to county governments, city governments and school districts in which CSX property is located.
In 2005, the company paid a $251,127.62 franchise fee. The city of Corbin actually received only about $2,744 of that fee.
During a special meeting in late 2006, city leaders officially voted to begin annexation of CSX after the company requested the move. Cannon said the biggest boon to the city would be increased collection of payroll tax revenues. All employees in Whitley County pay a one percent tax on their gross pay, and employers pay one percent on net profits. An agreement in place between Williamsburg, Corbin and the Whitley County Fiscal Court allows both cities to keep 75 percent of all tax revenue collected within their limits. According to Whitley County Treasure Jeff Gray, about $80,000 in taxes was collected from CSX employees last year. Local leaders say the company is exempt from taxes on its gross profits.
In the letter to Cannon from Friedlin dated Feb. 5, the company asks to “rescind” its request for annexation and promises to contact city officials when a “further evaluation of the proposal is complete.”
Friedlen could not be reached Tuesday for comment.
CSX would likely pay more if annexed because of a nine percent municipal insurance tax in Corbin, but said he thinks it would be offset by cheaper utility rates.
Corbin Mayor Willard McBurney said he was disappointed by the setback, but said he hopes future meetings with company officials can get things back on track again.
“They are our neighbors and we want to treat them like neighbors,” he said. “I’m still cautiously optimistic about them wanting to come in. We’d like to meet with them and pursue this some more and hopefully clear the air on a lot of things.”