Who wins and who loses if Tennesse Pass is abandoned?

Article by Ed Quillen And Allen Best

Transportation – January 1995 – Colorado Central Magazine

At present, it appears unlikely that the Southern Pacific would abandon the line that runs west from Cañon City through the Royal Gorge and across Tennessee Pass.

The line is busier than it has been in years, with 20 trains a day passing between Pueblo and Grand Junction. One reason for the increased traffic is that the alternate route is through the Moffat Tunnel, which cannot accomodate double-stacked container cars because the tunnel is too low.

But that situation could change, especially when Wall Street is abuzz with talks of further rail mergers and acquisitions.

If the sitution changed, and the Southern Pacific decided to remove its tracks west of Cañon City, what would it mean to Central Colorado?

For one thing, reduced property tax revenue to local governments and school districts.

According to the state Property Tax Division in Denver, the rail line through Frémont, Chaffee, Lake, and Eagle counties has a total assessed valuation of $5.4 million. For industrial property, assessed value is 29 percent of appraised value, so in theory, the trackage is worth $18.7 million.

Piecing that out gets tricky, because there’s the segment east of Cañon City in Fremont County which hasn’t appeared on anyone’s abandonment rumor yet, and in Eagle County, part of the non-threatened Moffat Tunnel line up the Colorado River from Dotsero. Some abandonment rumors start at Dotsero, and others leave the tracks in place clear to Minturn. Then there are leased locomotives, rolling stock that belongs to car-leasing companies, and a lot of other complications.

So this is only part of the tax picture. You’d think that one could call the Southern Pacific, ask how much the company paid in property taxes to various counties along the route, and get a number, if not right away, within a day or two. Somebody there must keep track of who gets checks and for how much.

But it was probably easier to determine the Soviet order of battle for breaching the Fulda Gap in 1983 than it is to get information from the railroad in 1994. Southern Pacific has a public-relations department in San Francisco, and its main job appears to be insuring that all aspects of the railroad remain a mystery wrapped in an enigma inside a riddle.

STATE NUMBERS say the rail line through Chaffee County has an assessed valuation of $960,000. The total property tax levy in Salida last year was 68.436 mills, which is split to the city, county, school district, hospital district, water district, library district, etc.

The county government’s portion is 13.657 mills, according to the assessor’s office. So the county general fund gets about $13,000 from the railroad, and all told, the railroad probably pays about $55,000 a year to various Chaffee entities.

Lake County’s property tax rates are much higher than Chaffee’s. While a Salidan carries a total burden of less than 70 mills, a Leadvillite is looking at about 300 mills.

There, the county government gets 103.711 mills. The assessed valuation of the Lake County segment is $571,300, which means $59,250 for the county’s general fund, and perhaps $150,000 all told when the school district, city of Leadville and other entities collect theirs.

Add that up, and there’s about $205,000 a year in property-tax revenue for local governments — cities, counties, school districts, and so forth. When local tax revenues in the two counties come to more than $20 million, then $205,000 is not a significant portion — about 1 percent.

It’s better to have it than not have it, of course, but other effects of abandonment would probably matter more.

For instance, there is direct railroad employment. Again, getting a local employment number from the railroad is like getting a plutonium accounting from North Korea.

Further, railroad employees tend to move around, and lay-offs and re-hirings, especially on maintenance crews, come and go. Since the train crews that operate this segment are based in Pueblo, then that city, rather than towns up here, would probably feel more unemployment effects than we would.

But to speculate anyway, in 1990, the 14 Class I line-haul railroads in America employed 216,000 people to operate 144,000 miles of track — 1.5 people per mile.

Figure about 150 miles of track involved here, and there are 225 jobs. These jobs pay well — the industry average was $40,000 in 1990 — so there’s an annual payroll of about $9 million to be lost if the line were abandoned.

MOST OF THIS LOSS would directly hit Pueblo and Minturn — there aren’t a lot of railroad jobs in between — but without some numbers from the Southern Pacific concerning maintenance-of-way employment hereabouts, there’s no way to predict the precise effects of abandonment on direct local employment.

Indirect employment — jobs which rely on the presence of the railroad — is a bigger factor.

The biggest source of local traffic on this side of Dotsero appears to be Eagle-Gypsum Products in Gypsum, where 125 employees work around the clock, seven days a week. They quarry gypsum and produce 400 million square feet of wallboard every year — enough for 50,000 single-family homes.

In a normal month, the plant receives 30 carloads of supplies, and ships out 35 to 50 cars of wallboard. That’s about 10 percent of production; the other 90 percent goes out by truck.

An end to rail service would cost Eagle-Gypsum its markets on the east and west coasts, according to Randy Foster, Eagle-Gypsum president and general manager. Closer markets, within about 800 miles, are served by truck.

As for Foster’s service from the Southern Pacific: “Very frankly, it’s poor. It’s something we have to deal with day in and day out.”

The SP is last on the list of reliability compared to the railroads — Santa Fe, Burlington Northern, Union Pacific — that his competitors ship on, he said. It can take up to 30 days to get a car to West Virginia, and up to two weeks for Kansas or Missouri.

This means the Eagle-Gypsum has to spend a lot of time following up on shipments, and occasionally sending a long-distance load by truck, just to honor its commitments. And Foster has seen no evidence that SP is becoming any more reliable.

EAGLE-GYPSUM Would probably survive without rail service, but rail transportation is essential to the Asarco Black Cloud Mine east of Leadville, which employs 135 people.

Every month, it produces 700 tons of lead concentrates and 2,500 tons of zinc concentrates. The resulting 30 cars of freight are loaded at Malta for shipment to smelters for further refining.

“If we had to pay the increased costs of trucking the concentrates to railheads at Pueblo or Dotsero,” mine manager Sid Lloyd said, “it would probably be the death knell for this operation. We’re already fairly marginal.”

Across the valley and sixty miles south, there’s the Lily Mine above Garfield, which provides marble that is trucked down to Salida and crushed at Butala Construction’s gravel pit in Smeltertown. The marble chips are used for landscaping (those bags of white chips at garden centers) and for aggregates, such as the white sheen on the new Colorado Convention Center in Denver.

Trucks supply markets within a 300-mile radius, according to Joe Lionelle. Farther than that, and most of the marble goes 1,300 miles to Chicago, it goes by rail — about 80 carloads a year, Lionelle said. Rail might be slower than truck, but it’s considerably cheaper, and since rock won’t rot on the way, shipping time is not a major factor.

“It costs $10 a ton to truck a load of marble to Pueblo,” Lionelle said, “and only $21 a ton to send it by rail all the way to Chicago.

“I don’t know that losing the railroad would put us out of business,” he added, “but it would certainly force us to cut back substantially. We’d be limited to markets we could serve by truck, and that’s not much. Production would have to be scaled way back, and that would certainly mean fewer jobs.”

Other Salida rail users include Cozinco and Calco.

Conzinco, a limestone processor in Salida’s old railroad shop building, receives some supplies by rail, said Ann Smith, office manager. “We get coal for our kilns, and sometimes quicklime when we run short of our own, by rail,” she said. Volume varies considerably, “but in 1993 we received 84 carloads.”

Cozinco, which processes zinc at a plant in Smeltertown north of Salida, received some supplies, such as sulfuric acid, by rail, as recently as two years ago.

“Now that comes in by truck,” explained Joe Tischer, assistant manager, “but we do ship out a tank car or two of zinc sulfate every month. It goes to California, to treat fields where they grow pecans, avocados, and rice.”

Not being able to ship by rail “would increase our shipping costs and probably put us at a competitive disadvantage with other suppliers,” he said.

However, rail isn’t easy, Tischer said. “Service has always been terribly slow, either picking up a car or returning the empty, and it didn’t improve any with the Southern Pacific merger. The Southern Pacific people are more congenial, but they’re not any more prompt.”

NEITHER VENTURED ANY PREDICTIONS as to what could happen to their enterprises if they lost their rail connection, but it certainly wouldn’t be an improvement.

Another shipper is Butala Construction, which, in addition to crushing and loading Lionelle’s Lily marble, crushe s some of its own granite for the same markets.

Jack Watkins — the Jack Watkins who used to manage the Monarch Ski Area — now works for Butala, and he said they’re getting good service from the Southern Pacific.

Like Lionelle, he worries about losing markets if the railroad abandoned the line. He couldn’t estimate consequent job losses, but “there would probably be some. And as a community, we need the rail connection if we’re going to have other industries here in the future.”

Thus several hundred jobs would be threatened or lost if the railroad completed its long policy of disinvesting in this corridor.

The loss would continue a social and cultural change. In the resort industry, a ski-lift attendant gets fired for making a wisecrack about Sylvester Stallone at Telluride. No miner has ever lost his job because he failed to smile at a rock.

It would be another step in the transformation that is occurring all over the Mountain West, from an industrial-resource economy to a resort-service economy, from a meat-and-potatoes lunch-bucket environment to a smoke-free white wine and tofu world, from a house-owning blue-collar middle class to a commuting servant class.

These days, they tell us that it’s important to preserve “cultural and economic diversity.” If that’s so, then it’s important that we strive to keep the rails in place, and apply whatever pressure we can toward getting Southern Pacific to improve its service to local shippers.

Allen Best is managing editor of the Vail Valley Times in Avon and Ed Quillen is a principal in Colorado Central. They have worked together at newspapers in Kremmling and Winter Park.