Deal reached in historic railroad funding dispute

AUSTIN (AP) - Texas House Speaker Tom Craddick announced an agreement Thursday to allow the use of $2 million in taxpayer money for the beleaguered Texas State Railroad, a historic tourist train in East Texas.

The century-old railroad between Rusk and Palestine had such financial difficulty that its continued operation was in jeopardy.

Legislators allocated $2 million this year for railroad repairs and to leverage an additional $10 million in federal matching funds.

The Legislative Budget Board was slow with final approval of the funding, prompting claims that Craddick, who holds a key spot on the board, was engaging in political payback against some who challenged his leadership. The railroad funding's sponsor, state Rep. Byron Cook of Corsicana, was one of Craddick's most outspoken critics during the session.

Craddick, however, said concerns were raised that a contract between the railroad authority and a private contractor did not reflect the intent of the Legislature and might leave state funds at risk. Negotiations over the funding resulted in the agreement announced Thursday.

"I am pleased that we were able to find a solution that satisfies the Railroad Authority, the private contractor and legislators who were concerned about the use of these public funds," Craddick said in a prepared statement.

The American Heritage Railroad Company is the new operator of the train.

The original contract allowed state funds to be loaned to the private operator to cover everyday operating expenses, while the new contract restricts the use of the $2 million in state money to capital improvements and facilities repairs, Craddick said.

The new agreement also includes a provision that permits the railroad authority to buy back all railroad ownership interests in the event of a contract termination.

Steve Presley, president of the Texas State Railroad Authority, said the authority thanks legislators who helped finalize the contract and "appreciates Speaker Craddick's willingness to work with us to preserve this historical treasure for future generations."