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Senate OKs tax exemption for East Palestine train derailment aid

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(The Center Square) – Federal and state aid paid to Pennsylvanians living near the East Palestine, Ohio, train derailment site may soon be exempt from personal income taxes.

On Tuesday, the state Senate unanimously approved a bill that would make payments issued after Dec. 31, 2022, untaxable, though it still awaits consideration in the House.

Sen. Doug Mastriano, R-Chambersburg, said doing so keeps more settlement money in the hands of residents and small businesses harmed most.

“I want them to be able to use that money for medical bills and personal expenses rather than paying the state income tax,” he said.

No one was injured or killed when a Norfolk Southern train carrying vinyl chloride jumped the track just outside of East Palestine, a rural town just miles from the Ohio-Pennsylvania border, during the early morning hours of Feb. 3, 2023. It was the railroad’s clandestine decision – just two days later – to set five derailed cars on fire that’s drawn the most criticism.

The controlled burn sent a plume of toxic chemicals into the air and, as repeated tests have indicated, contaminated the surrounding communities.

At the time, Norfolk Southern officials said doing so prevented a more catastrophic explosion. The head of the National Transportation Safety Board contradicted that claim during a congressional hearing in March, noting that the necessary conditions for a volatile reaction were never met.

In Pennsylvania, much of the discussion has centered around the railroad’s caginess and elected officials’ silence as residents fight for more medical and environmental support.

Sen. Elder Vogel, R-Rochester, said Tuesday the bill recognizes the community’s suffering and “long-standing negative effects of this tragedy.”

“This bill would enable the people affected by the train wreck to use more of the relief payments and settlements to pay their bills and rebuild their lives,” he said.

In May, Norfolk Southern agreed to pay $310 million for the derailment after reaching a settlement with the Justice Department and the Environmental Protection Agency. The money will cover past and future cleanup costs, of which the railroad expects to spend more than $1 billion in total.

Likewise, in April, the railroad agreed to settle a $600 million class action suit to resolve claims within a 20-mile radius of the accident site.

And in the weeks after the derailment, Gov. Josh Shapiro negotiated a $7.4 million aid package for Beaver and Lawrence counties.

“I would rather see these families and businesses keep their relief and settlement payments than see part of it taken by the state through the income tax,” said Sen. Michele Brooks, R-Greenville. “Many of these businesses are struggling and families are suffering long-term medical conditions, and they need all the financial resources they’re receiving.”

Brooks added that although the exemption would have a “relatively small” effect on the state’s finances, it “can mean a lot for these families in the aftermath of this tragedy.”