School districts and municipalities in Western New York are terrified an effort to cut railroad property taxes in this state will smash a hole through their finances. They should be. Railroads pay a hefty share of taxes in many parts of this region and the reduction they seek will put a hurt on many of those entities.
But railroad taxes are not just exorbitant here, they appear to be illegal. The railroads say they will sue to have their taxes lowered unless Albany acts.
There is no real choice. If the railroads go to court, they will almost certainly win and municipalities and school districts will be cut loose without a life raft. But if the matter is handled politically, as the railroads prefer, the loss is likely to be less severe and less sudden.
Albany and the railroads say that path will result in a smaller reduction in taxes, and one the state will help to make up, at least for a time.
It's still going to hurt, but in the end, this is a penalty New Yorkers will pay for maintaining a state government that has too often acted as though it was immune to the laws of economics. New York raised and added so many taxes for so many years that it produced the nation's highest cumulative tax burden, a distinction that cannot help but work against its hopes for economic development.
Consider this: In 1997, now-defunct Conrail paid 55 percent of its total property tax bill in New York, even though only 18 percent of its track is in this state. In 1999, it paid $5.1 million in Erie County alone, more than it paid in the entire state of Pennsylvania.
How can this state expect to compete for jobs with policies like that? The implied arrogance -- people will pay anything to locate in New York -- has threatened to turn the Empire State into an empty state.
Indeed, the railroads say their problem with taxes is so great that future development in New York is at risk.
More than political foolishness is in play here, though. A federal law prohibits tax policies that discriminate against railroads, but New York taxes those entities in a different and more costly way than it does other landowners. Few observers disagree that CSX and Norfolk Southern, the successors to Conrail, will win this case if they go to court.
As financially painful as the outcome might be to New Yorkers, it is unfair to blame the railroads. Everyone has the right to demand fair treatment, and the railroads are not getting it.
Gov. George E. Pataki has expressed interest in resolving this matter. So has the Assembly's No. 2 man, Majority Leader Paul Tokasz of Cheektowaga. That bodes well for making the best of what is sure to be a bad situation. This is a problem that can no longer be ignored.