I want to make a strategy suggestion, this coming from a guy who's fought the occasional political battle which I've always come out on top of (mostly because I picked my battles wisely).
The CMRR site should have a blog on it. The weekly updates that are posted here should be posted there as well. Don't get me wrong - this thread and forum are awesome for connecting with the general railfan community. It has clearly helped in generating significant interest in CMRR amongst railfans. Clearly though there needs to be a very large public outreach as well, beyond railfans.
Posting this content to the website regularly will also show how truly active the railroad is. Any reporter worth their salt would find it. Think of it also as have a long list of documentation on how active the railroad is, because from the sounds of it these politicians are trying to take your tracks by saying there isn't anything happening with them (or anything good, either). It's also the perfect place to post press releases on this sort of political fiasco. Immediate public statements to this sort of thing are required. Don't be blindsided and let leave a blank for others to fill in.
That article where there is 'no comment' from the railroad, other than shock? That looks terrible. It is a lost opportunity to connect with the public that may have no idea CMRR even exists. Something like this would do: "The mayor's actions have directly blocked our volunteer efforts to remove an eyesore from the 209 crossing and remediate the lead paint issue. The mayors actions are only perpetuating a longstanding issue and are in fact illegal under state law. The mayor has in fact committed a felony with his misguided, ill advised blockage of the tracks. We have safety removed lead paint from our equipment in the past. By blocking our efforts to do so he has only perpetuated the issue and the public health issue"
I guarantee you that the average citizen of kingston is 100% ignorant of the fact that their mayor has broken the law.
You need to solicit the story to a competing, sympathetic news outlet. If one doesn't exist locally, look beyond them. huffington post, aol patch, ny times, tv news outlets. News organizations love two things: scandals and free content. You are handing a reporter a story they can make money off of. If it blows up in scandal, that reporter can do repeated stories on it, selling them around and making more money. It is in that reporters best interest to start digging into these corrupt politicians.
Example: Many years ago my brother stepped in and took over a local humane society which was being mismanaged and mired in scandal. he cleaned up the bookkeeping and the shelter (with the aid of awesome volunteers of course). He found a reporter willing to listen, and got a story run on all of the improvements made to the shelter, etc. The adoption rates went up quickly from there. It took around 6 months for all of this to happen if I recall right. The 'no comment' story was a battle lost for CMRR in the court of public opinion, but it is by no means the war. You've now witnessed the insane lengths that they will act against you, and you need to be ready for future battles because this is by no means over or a one time thing that can be ignored.
If CMRR doesn't have a lawyer on staff, you should find one. Maybe they can do some pro bono. I know the idea of paying legal fees to address this situation is a drain on resources and a distraction from the day to day work of rebuilding the railroad, but unless this is fought hard in the courts and in the court of public opinion, there will be no railroad. (a spokesperson should do the 'court of public opinion' work - not the lawyer. No one likes lawyers and it'd look like you're hiding behind one - there is no need to hide).
You might want to consider parking one of your work cars or something right next to the dump truck with a huge sign on it that reads 'this truck is parked here illegally' with a big arrow pointing at it. A URL underneath to a web page explaining the facts to the public would be nice to place right under it (see where that website blog might be handy?). It's a childish level to drop down to but guess what? This is war. These politicians for some completely insane reason want CMRR out of business. They want you gone. It is high time to bring some serious fight back against them. The facts and the law are on your side at the end of the day.
I apologize if anything said above is insulting. That's clearly not my intent. It's just clear to me from this trail talk and the mayors actions that you guys have some serious enemies who absolutely will try to destroy you. The withholding of FEMA funds, the trail funding, etc. This is war. This isn't them being inept. This is a calculated effort on their behalf to destroy CMRR. I don't know why they've chosen this course of action, but much like the Japanese in WW2, it doesn't matter why: it only matters that they have attacked. That attack must be matched and overwelmed in both the court of law and the court of public opinion. Otherwise, you loose everything.
I keep an eye on this thread all the time because I love the work you guys are doing. If more people worked as hard as you guys do, the world would be a much better place. You're great at rebuilding a railroad, but now you have to be great at waging a public relations war against these idiots.
Enough talk from me. I can help with any website related work if you guys decide to take up that suggestion. I can set it up, show you how it works (super easy), etc. Free of charge. It's only a weapon in the battle though. You need a lawyer and someone to do your PR work - someone that can respond to the press or anyone else on a moments notice, 24/7/365. It's a job that is just as important as spiking new ties.