Cost Overruns in Illinois Prompt Industry Demand for Funding Overhaul

Posted April 15, 2013 at 6:23pm

A quarter-century ago, Congress authorized a $775 million project to replace the antiquated Olmsted Locks on the Ohio River, about 20 miles northeast of the point where it converges with the Mississippi. The project was supposed to be finished in 2000.

Today the project remains unfinished and the latest estimate for completion is 2024. The industry worries that the latest price tag of $3.1 billion may turn out to be a low-ball estimate.

Inland waterways users who fund the Inland Waterways Trust Fund through a 20-cents-per-gallon tax on diesel are on the hook for half the cost, including overruns that have eaten up most of the trust fund’s resources in recent years and precluded spending on other maintenance and upgrade projects.

The industry complains that the current funding structure amounts to a blank check, allowing wasteful spending by the Army Corps of Engineers. Experimentation with new, unproven construction methods is blamed for contributing to the cost overruns at the Olmsted project.

To avoid repeats in the future, the inland shipping industry’s proposal to increase the diesel tax it pays by as much as 9 cents a gallon is linked to a demand that taxpayers — not the trust fund — shoulder the burden for future cost overruns. The corps worries that such a shift could endanger the completion of the Olmsted Locks, as well as future projects that run into unexpected costs.

“Congress must decide whether this experiment will continue or whether traditional construction techniques should be employed to bring costs under control,” Michael Toohey, the president and CEO of Waterways Council Inc., said in a statement. “At a minimum, Congress must act to relieve the Inland Waterways Trust Fund from further obligation to the Olmsted project.”