Editor’s note: Today we conclude our look at stories that shaped 2020 and we’ll start looking ahead to projects in 2021.

By Jarrad Hedes

jmhedes@tnonline.com

Years of debate over Jim Thorpe borough’s ability to collect an amusement tax from Reading and Northern Railroad came to an end when a new state law was passed in 2020.

Part of Senate Bill 1188, passed in July, says the amusement tax doesn’t apply to primarily freight railroads such as Reading and Northern, which runs scenic train rides out of Jim Thorpe.

Lehigh Gorge Scenic Railway stopped its rides out of Jim Thorpe on Nov. 25, 2019, as it went back-and-forth with Jim Thorpe borough over amusement tax money the municipality felt the train company owed.

The dispute goes back to 2011 when Jim Thorpe’s tax collector notified the railroad it was subject to the amusement tax. The railroad, however, claimed it was exempt under a federal transportation statute.

“Despite insistence, the railroad has never provided that statute to either the tax collector or the borough,” the borough stated at the time.

The railroad was added to the delinquent tax roles in 2017. A complaint was filed with the local district justice, who determined the railroad had failed to comply with the amusement tax ordinance. The railroad appealed the decision to the Carbon County Court of Common Pleas in 2019.

Berkheimer, the tax collection agency representing Jim Thorpe borough, sought nearly $100,000 in unpaid amusement taxes for the past three years, leading to train’s decision to stop the rides in late 2019, including the popular Santa trains in December.

Soon after the train made its announcement, the two sides met on multiple occasions, with the borough eventually agreeing to drop the lawsuit.

Railroad conditions

According to Jim Thorpe’s council, when a meeting was held in late January 2020, the railroad said it would continue passenger service in the borough under three conditions. The conditions were that the railroad would not make any contribution to the borough toward the amusement tax or any similar contribution; that the borough amend its ordinance to exempt the railroad from the amusement tax; and that the borough agree not to reinstitute the lawsuit against the railroad.

“The borough received input from the Jim Thorpe Tourism Agency and from several businesses, and decided to accept the terms of the railroad,” council said. “Based on this, the railroad did run its passenger service during the Winter Festival in February 2020.

The railroad, however, said it never got an actual agreement with the current borough council that there will be a permanent cessation of legal actions seeking to recover any form of amusement tax and rides ceased again.

“Contrary to your attorney’s suggestion,” the railroad said in a letter to the borough, “we are not asking this council to bind future councils. We are asking this Council to bind itself and to make clear that the prior lawsuit is dropped with prejudice, meaning it cannot be refilled.”

“Basically, we needed additional clarification because our services are not fixed and regulated by the Public Utilities Commission and Federal Railroad Administration, but rather our operations and facilities are regulated,” Reading and Northern Railroad President Wayne Michel said in an email. “This is an important distinction under the law. The changes we proposed would have modified the description of the class of excluded businesses, but would not have singled out our railroads.”

State Sen. John Blake introduced a bill to clarify that local taxes authorized by Act 47, Act 205, or home rule powers shall not be included in the calculation of Act 511 aggregate tax limits.

State Sen. Dave Argall offered an amendment dealing with amusement tax.

The amendment prohibits a local taxing authority such as Jim Thorpe from levying, assessing or collecting an amusement or admission tax based on a charge imposed for the movement of passengers by a for-profit railroad that operates as a common carrier of freight. Conditions are that t the railroad is under jurisdiction of the United States Surface Transportation Board, the freight constitutes a majority of the movement handled by the railroad measured by both income and volume, and the for-profit railroad transports more than 20,000 revenue carloads annually.

“I’ve been reading for months in our local newspapers that communities are faced with conflicting legal opinions about whether or not each individual borough, city and township along a railroad can enact a separate tax on the railroad,” Argall, who represents all of Schuylkill County and parts of Berks, said of his amendment. “Obviously, if this were to happen, it would kill any chance of attracting tourists in the future. This legislation, which was approved unanimously by the House, the Senate and the governor, was designed to clarify the situation and end the long and expensive legal disputes.”

Nobody voted against the bill in either the state House or Senate.

“It addressed a major issue and I’m happy it passed,” state Rep. Doyle Heffley said. “I’m happy this is resolved.”

Heffley said the return of the train would improve the tourist experience in Jim Thorpe.

“I think we’ll look at this 10 to 20 years from now and realize how important it was to keep the trains here,” he said. “I hope going forward the relationship between the community and railroad continues to prosper.”

The railroad resumed the scenic rides in August.

State Sen. John Yudichak welcomed the news that the Reading and Northern Railroad is bringing passenger trains back to Jim Thorpe.

“Pennsylvania has some of the finest scenic train rides in the country, and we are fortunate to have many of these scenic railroad operators, like the Reading & Northern, within a short drive of northeastern Pennsylvania,” Yudichak said. “My support of Senate Bill 1188 is an acknowledgment of the tremendous economic value Pennsylvania’s scenic railroads add to our local communities in terms of supporting local businesses, generating tax revenue, and creating new jobs.”

Jim Thorpe Council President Greg Strubinger said the borough had no comment on the bill.