Port, Waterways Funds May Have Surplus Next Year

Posted March 25, 2015 at 12:55pm

Congress has a self-inflicted problem in funding the nation’s ports and waterways infrastructure: There’s more money available than lawmakers are likely to spend.

Two funds Congress established decades ago — the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund — could spend less next year than the revenue they will collect. In the case of the HMTF, the spending is billions below its balance.

Port and inland waterway advocates say there are plenty of projects that need funding. The U.S. Army Corps of Engineers has reported a backlog of lock and dam construction projects and major repair work. Much of that infrastructure was built in the 1930s, and more than half the locks in the country are past their design life of 50 years.

Ports are also under-maintained: The Corps of Engineers has estimated that full channel dimensions of the nation’s 59 busiest ports are available less than 35 percent of the time.

Yet the Treasury Department’s most recent balance sheet shows the HMTF running a balance of more than $9 billion. Congress appropriated $1.1 billion in fiscal 2015, less than the $1.8 billion in revenue the preceding year. And the president is asking to spend less in fiscal 2016 than Congress appropriated this year.

The Inland Waterways Trust Fund surplus is much smaller, but industry representatives are worried Congress won’t spend the revenue that’s available. Last year, Congress approved a 9 cents per gallon increase in the diesel fuel tax that barge operators pay, in part to replenish a fund that had been drawn down to unsustainable levels over more than a decade.

Lawmakers’ hands are tied by the Budget Control Act that limits discretionary spending. Converting the funds to mandatory programs, a move that would bypass the spending limits, looks unlikely in a Congress inclined to cut spending rather than safeguard it.

Harbor Maintenance

The Harbor Maintenance Trust Fund brought in roughly $1.8 billion in 2014 in taxes on cargo from importers and domestic shippers using coastal and Great Lakes ports. That fund was established by Congress in 1986 to fund operation and maintenance work on coastal navigation channels, including dredging.

Kristin Decas, who chairs the board of the American Association of Port Authorities, said she’s not concerned about the $9 billion right now. She’d be happy just to get what’s raised each year appropriated.

“Our initial goal is just to get full use [of the HMTF revenue collected each year],” Decas said. “The reality is we’ve made a bunch of progress in getting it to this target.”

Rep. Janice Hahn, D-Calif., is leading a push in Congress to make spending from the HMTF mandatory and plans to introduce legislation within months. Her district includes the Port of Los Angeles, one of the nation’s busiest shipping hubs.

“It is really a breach of faith, I believe, with the federal government and those who pay this tax,” she said. “I’d like to see the caps go away, and have it be a part of mandatory spending. If you collect a tax you have to spend it.”

The Congressional Research Service said in a 2011 report the HMTF surplus was effectively lost in the budget, because the fund didn’t have a separate account.

Inland Waterways

Waterways Council President Mike Toohey estimates the barge diesel fuel tax will, at its increased level, put at least $116 million into the Inland Waterways Trust Fund in fiscal 2016.

Toohey said that’s more than the $84.5 million spent from the fund last year. It’s also more than the president’s request to spend $53 million from the fund in fiscal 2016.

“Our major concern is they don’t spend that 9 cents,” Toohey said to reporters earlier this month.

Unlike the HMTF, which pays 100 percent of the cost of dredging operations for most channels, the Inland Waterways Trust Fund pays for 50 percent of the cost of most major rehabilitation or construction projects. The federal government picks up the other 50 percent.

Operations and maintenance costs for inland waterways are funded 100 percent by the federal government.

Previous Commitments

Congress took a stab at making both funds more effective in a piece of legislation last year known as the Water Resources Reform and Development Act.

Navigation groups lauded WRRDA as a plan to gradually increase spending from the HMTF to match what was collected and it established a process to improve project delivery and cost effectiveness of inland waterways projects, in part by limiting how much of the Inland Waterways Trust Fund went to the Olmsted Lock and Dam project on the Ohio River between Illinois and Kentucky. The bill received bipartisan support.

An earlier version of the story misidentified the ports in Janice Hahn?s district.