Bright spots emerge for port infrastructure finance

By: | at 08:00 PM | Channel(s): Ports & Terminals  Logistics  

Ports remain shortchanged on harbor maintenance funding

By Peter A. Buxbaum, AJOTWhen it comes to the continuing struggle of American seaports to find funding for dredging and other maintenance and improvements, there is good news and there is bad news.
The bad news is that Congress is as unlikely as ever to take the Harbor Maintenance Trust Fund off-budget, allowing receipts from the Harbor Maintenance Tax to be used for their intended purpose, to pay for maintenance dredging at US ports.
The good news is that some new avenues for port project funding have opened up, thanks to the federal economic stimulus legislation enacted earlier this year.
The Harbor Maintenance Tax was imposed in 1986 and mandated that users of federal navigation channels pay 0.125% on the value of goods moved. Prior to 1986, maintenance of the channels was picked up by the federal government. In 1998, the tax as applied to exports was held to be unconstitutional; now, the tax is levied only on imports and domestic shipments.
HMT funds collected were supposed to be placed in a trust find and designated for the specific purpose of paying for maintenance of shipping channels. The US Treasury collects between $1.3 billion and $1.6 billion per year in HMT, enough to cover the costs of required maintenance dredging. But actual expenditures for channel maintenance over the last five years have averaged less than $800 million, leaving a “surplus” in the “trust fund” of over $4 billion.
In fact, both the surplus and the so-called trust fund are imaginary, since HMT receipts are amalgamated in general US government funds, leaving any discrepancy between receipts and expenditures to offset budget deficits.
“We are seeking to have the fund paid down to complete the maintenance dredging that is necessary,” said Mike Leone, Port Director of the Massachusetts Port Authority and the incoming chairman of the American Association of Port Authorities.
As a result of federal under-investment, Leone explained, the 59 most utilized channels have authorized depths available less than 40% of the time, thus limiting efficient use of waterways and increasing transportation costs.
There are two related strategies available to ports to remedy this situation: advocating for removal of the Harbor Maintenance Trust Fund from the budget, thus requiring receipts to be used for their intended purposes, and to persuade the administration and Congress to appropriate more money annually for maintenance dredging.
“We are seeking as an individual port and through the AAPA, to increase the amount of appropriations, so that we can get more dredging completed,” said Leone. “We received some positive news this year when some of the economic stimulus money went to the Army Corps of Engineers and made available for maintenance dredging. We are working through the administration to get more appropriations for maintenance dredging and we are also seeking legislation that would require the amount collected in the Harbor Maintenance Trust Fund to be expended on maintenance dredging.”
The economic stimulus legislation known as the American Recovery and Reinvestment Act of 2009 also provides some potential benefits for port dredging and other projects, Leone noted. Secretary of Transportation Ray LaHood created the Transportation Investments Generating Economic Recovery (TIGER) team to oversee the implementation of the TIGER funds, as they are known in shorthand, are “one of the few stimulus funding available for ports and infrastructure,” said Leone.
The TIGER funds fall into a number of packages and one of them, the ARRA Multimodal Discretionary Program, could be of benefit to ports, explained Robert Tuccillo, the chief financial officer of the Federal Transit Administration.
“A $1.5 billion competitive grant program will make awards of $20 million to $300 million,” he said, “to highway and bridge projects, public transportation projects, passenger and freight rail projects, and port infrastructure investmen

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Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as [em]Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly[/em]. He was educated at Columbia University.