SANTA FE (AP) — New Mexico's railroad to nowhere is no more.

Gov. Susana Martinez's administration has reached an agreement for the BNSF Railway Co. to pull the plug on a never-completed purchase of about 180 miles of track and the company will refund $5 million fronted by the state for the line by her predecessor.

The governor made the announcement early Saturday after the Legislature approved a proposal offering a tax break to BNSF on locomotive fuel if the company makes investments to upgrade its rail infrastructure. The measure will extend similar tax treatment that previously was granted to the Union Pacific Corp.

The administration doesn't want the track from Lamy, a small community near Santa Fe, to the Colorado border. The state estimated it would need to spend $8 million a year just for maintenance and routine improvements of the track.

Former Gov. Bill Richardson's administration had paid BNSF about $5 million in 2008 for the rail line as part of a larger deal to obtain track to start the Rail Runner Express commuter service between Santa Fe and Belen.

Martinez said BNSF also will release $50 million in state transportation money that's held in escrow to cover possible liability in case of an accident involving the commuter rail operation.


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"These funds will now be available to meet critical needs such as construction, maintenance, and repair of state highway infrastructure and other vital transportation projects," Martinez said in a statement.

Senate Majority Leader Michael Sanchez, D-Belen, said, "The state does not need track to Raton and we can certainly use the return of the money in these days of tight budgets and economic uncertainty."

Martinez said she had negotiated with BNSF officials during the past two years to obtain the money spent on the rail line. The proposed tax break on locomotive fuel provided New Mexico with leverage in reaching a final agreement.

The Richardson administration had wanted to lease BNSF track for the commuter rail system it started, but eventually agreed to buy track from Belen to the Colorado border in several phases.

"This agreement is long overdue for New Mexico taxpayers who have been on the hook for this money for far too long," Martinez said.

Sanchez said BNSF is considering Belen as a possible site for a refueling depot using natural gas to power its locomotives.

"This may prove to be one of the biggest economic development projects for our state," Sanchez said in a statement. "Hundreds of jobs are at stake in the natural gas fuel depot and we are hopeful Belen is chosen."

BNSF has railyards in Albuquerque, Belen and Clovis, and nearly 1,400 employees in the state.