House FY 2012 energy and water development spending bill continues to underfund dredging

19 Jul 2011 - By Dave Sanford - Industry Blog

On July 15, the U.S. House of Representatives passed the Energy and Water Development Appropriations bill which included funding of about USD $750 million for Army Corps of Engineers maintenance dredging and dredged material management facilities associated with federal navigation channels, or about half the required amount. One amendment was proposed to fund the USD $800 million difference from energy programs and was quickly defeated by the Energy and Water Development subcommittee chairman. Another amendment successfully added USD $6.3 million.

While determining the appropriate funding sources to maintain and improve the nation’s surface transportation system is unsettled, the Harbor Maintenance Tax (HMT) ought to be the ideal solution to ensuring that our deep-draft navigation channels are dredged to their authorized and required depths and widths.  The 0.125 percent tax, which is levied on the value of imports and domestic cargo moved between U.S. ports, raises about $1.5 billion annually, while the yearly cost to maintain America’s deep-draft channels is between $1.3 billion and $1.6 billion, depending on which channels are in cycle to be dredged according to the U.S. Army Corps of Engineers.

From a practical standpoint, the tax collections are just about perfectly aligned with the amount that is needed each year to ensure the nation’s harbors and channels are properly dredged of sediment.  However, the President’s budget requests and Congressional appropriations have only been allotting about half of the amount collected from the tax for maintenance dredging, leaving many waterways that are critical to sustaining America’s economy to fall into disrepair.

Inadequately maintained shipping channels impede America’s effort to recover from the global economic downturn, resulting in navigational safety concerns, an economic disadvantage for the nation’s businesses and consumers, and job losses.

More than a quarter of the U.S. GDP is accounted for by international trade. From a jobs standpoint, America’s seaports support the employment of 13.3 million U.S. workers, and seaport-related jobs account for $649 billion in annual personal income. For every $1 billion in exports shipped though seaports, 15,000 U.S. jobs are created.  Yet, for every inch of draft that a typical ship loses when navigation channels aren’t maintained, it must leave behind hundreds of thousands or even millions of dollars worth of cargo, increasing the cost of our exports to overseas buyers and the cost of our imports to American consumers.

In 1986, Congress established the HMTF to fund up to 100 percent of dredging costs at domestic ports and waterways. However, recent administrations have ignored the law –spending as much as half of what was collected on programs that have nothing to do with maintenance dredging.

On July 8, AAPA submitted testimony to the Transportation and Infrastructure Committee’s Subcommittee on Water Resources and the Environment supporting language in the proposed legislation (H.R. 104) by Rep. Charles Boustany (R-La.) and more than 100 co-sponsors that presses for full use of the annual revenue from the HMT for its lawful and intended purpose.  Their argument, and ours, is that when you have a tax that collects the amount necessary for a particular purpose, then use it for that purpose until the need is met, not on other programs.  While this may be common sense, the unfortunate state of America’s budgetary crisis seems to have turned common sense on its head.