Senate File 1046, introduced by Senator Weber, would modify provisions of the short-line improvement modernization (SLIM) tax credit, including establishing a certification process by the Minnesota Department of Transportation and clarifying rules for transfer of the credit certificate. The Taxes Committee passed the bill and referred it to the Transportation Committee on Feb. 19.

Senator Weber said the changes are intended to define the credit certificate, authorize a Department of Transportation certification, and set limits and procedures for transferring credits when the taxpayer who made the railroad investment does not need the credit in the year the project is completed. “One of the things that's important to note is that any type of an upgrade of railroad is an extremely expensive project,” Weber said, and transferability improves cash flow for short-line railroads that operate on thin margins.

Ms. Pollock (department staff) and Joanna Bares (Department of Revenue) described implementation considerations. The bill is effective retroactively to tax year 2023, raising administrative issues because 2023 returns have already been filed. Ms. Pollock noted potential fixes—bifurcated effective dates or allowing carryforwards retroactively—and an issue for pass-through entities that needs statutory adjustment so qualifying railroad partners can claim the credit. Bares said the department supports the bill and will work with the sponsor and Transportation Committee to resolve outstanding items.

Senator Weber moved the committee recommendation to pass and refer the bill to Transportation; the chair called the voice vote and announced the motion prevailed. The committee record notes Department of Revenue support and follow-up work to resolve administrability issues before Transportation Committee consideration.