Jim Thorpe, Reading & Northern at odds over amusement fee
Hundreds of cycling enthusiast boarded a bike train in Jim Thorpe for a scenic 25 mile train ride on the Lehigh Gorge Scenic Railway to White Haven where they disembarked for a bike ride back down the gorge to their starting point in the town.
A question over Reading and Northern Railroad’s legal obligation to pay an amusement tax for its rides along the Lehigh Gorge Scenic Railway in Jim Thorpe has hit the courtroom.
Berkheimer Tax Administrator, the collections agent for Jim Thorpe Borough and Jim Thorpe Area School District filed a civil lawsuit in Carbon County Court on Sept. 11 against the Lehigh Gorge Scenic Railway, a sister company of Reading and Northern. In the complaint, Berkheimer states it is seeking amusement taxes from the railroad for 2016, 2017 and 2018, totaling an estimated $95,971.39.
The borough collects a 5% amusement tax from businesses that provide “any manner or form of entertainment,” like the Mauch Chunk Opera House, for example. Jim Thorpe Area School District also collects a 2.5% amusement tax.
The tax is generally added to the ticket or admission price of the event or activity.
“(Lehigh Gorge) has failed to adequately file property tax returns as required for each tax year,” the complaint states. “The estimate of taxes owed is based upon an approximation of ticket sales and price per ticket sold per month for the tax year 2016.”
If Reading and Northern paid the tax, it would generate around $20,000 for the borough, council members estimated on Thursday.
Council President Greg Strubinger said the decision for Reading and Northern CEO Andy Muller should be an easy one: comply with the law.
“It’s a pass through tax,” he said. “I’m not quite sure what the issue is. Other businesses pay it and don’t question it.”
Rumors have spread on social media over the past few weeks that Muller would consider stopping the scenic train rides in Jim Thorpe over the amusement tax issue. Railroad representatives did not immediately respond to questions on the issue Friday.
Jason Mosher, a High Street resident in Jim Thorpe, said it would be catastrophic if Muller pulled the train rides out of Jim Thorpe.
Plenty of people come to the town just to see the train, let alone ride it, he said.
“I think $20,000 is a drop in the bucket compared to the revenue this town would lose if it were gone,” Mosher said.
Broadway resident Lisa Gaugler concurred, calling the train rides an integral part of the community.
Council members said they are trying to get Muller to come to the table and talk about the issue, but he hasn’t responded.
“He has to pay the tax,” Jay Miller, council vice-president, said. “That’s my position. The town will not collapse because of this train station. This is unfair to the businesses who do pay the tax.”
The loss of scenic train rides in Jim Thorpe would undoubtedly send ripples throughout the local business community, but Jim Thorpe Tourism Agency acting president Michael Rivkin said a two-sided conversation does need to happen.
“There are folks here on council trying to get (Muller) to the table,” Rivkin said. “They are willing to sit down and talk about a solution. He needs to come to the table.”
During Jim Thorpe’s recent upgrades to its sewer plant and the construction of a Delaware and Lehigh National Heritage Corridor pedestrian bridge downtown, the borough paid Reading and Northern a collective $603,170 for a flagger to be present at the rail crossing to comply with federal regulations. On many of those days, borough officials said, the track sat empty. Norfolk Southern, the other rail company in Jim Thorpe, waived the flagger fees.
“Nobody here and nobody at the D & L argued with that,” Jim Thorpe Mayor Mike Sofranko said. “We just paid it, and it was essentially a tax, because it was for the betterment of the borough. That grant money could have been spent anywhere else but it was given to a railroad to cross cars as tankers just sat there. The other railroad charged this borough nothing. At $20,000 a year of amusement tax, the money he just got would pay that tax for a long time. I like Andy, but it’s time to man up.”
Borough officials said they would continue to reach out to Muller in the hopes a conversation on the issue could take place.
“We have been able to meet over the years on various occasions over different issues with the railroad,” Strubinger said. “We’re certainly hoping for a resolution.”