A Swiss rail car manufacturer that had already won $10 million in state tax incentives, plus a $9.6 million deal with Salt Lake City to help build roads, utilities, a test track and a rail spur likely won’t get yet a third tax break.
A bill proposing to exempt Stadler Rail from paying sales tax on materials it buys to build rail cars stalled on a 3-3 vote earlier this week in the Senate Revenue and Taxation Committee.
Sen. Jake Anderegg, R-Lehi, proposed SB153 to benefit Stadler, which was at the center of past political controversies in Utah. He told the committee his plan would be similar to tax breaks now given to aerospace manufacturers here.
But other members asked Anderegg why they should approve the new exemptions when lawmakers are studying — and Gov. Gary Herbert is pushing — broadening the sales tax to cover industries now untaxed in order to allow lowering overall tax rates.
“Mainly because it will help this new company in the state to be able to afford more employees for their production assembly lines,” Anderegg said. “It will help them to expand and grow and hire more people.”
(Rick Egan | Tribune file photo) Sen. Jacob Anderegg, R-Lehi.
He said Stadler now employs nearly 200 workers locally, and plans to have 1,000 after it completes its new plant in Salt Lake City.
His bill did not yet have a fiscal note to estimate how much the proposed tax exemption would cost the state, which is required before final passage. Anderegg said the State Tax Commission was working on those estimates.
With little further debate, the committee blocked the bill on a tie vote — ending the tax break unless Anderegg finds enough support to revive and reconsider it.
The Lehi Republican was among those who went on a controversial trip to Switzerland in 2015 that included meetings with Stadler to try to attract the company to Utah. Several then-current and former members of the Utah Transit Authority arranged private donations — much of them from UTA contractors — to finance the trip and to keep it from being disclosed initially to the UTA board after a series of agency-funded trips to Switzerland generated controversy.
It happened at the same time Stadler was one of two bidders for unused space at UTA’s Warm Springs maintenance facility for a temporary manufacturing center. When information about the Switzerland trip emerged, UTA officials had to restart the bidding process, although Stadler ultimately was selected.
The trip would lead to the resignation of several UTA board members who went on it.
Stadler was involved in more controversy when UTA took steps to help it obtain land the agency owned around a Clearfield FrontRunner station for the company’s permanent plant. Stadler at the time said it wanted its plant built by former Senate Majority Leader Sheldon Killpack, one of the UTA board members who resigned in the wake of the Switzerland trip.
UTA was trying to break its ties with Killpack and other developers over conflicts of interests and ended up giving away part of its Clearfield land to achieve that distance. Ultimately, Stadler ended up settling on a Salt Lake City plant site rather than the Clearfield property.
Stadler was awarded $10 million in tax incentives from the Governor’s Office of Economic Development to help bring it to the state. Salt Lake City also gave the company incentives.
The Utah Inland Port Authority later took control of the area where the Stadler plant is being built. It is unclear whether it will keep promises the city made to Stadler, but it has taken steps toward making it possible to give the company a tax deal in the future.
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