The administration is eyeing the Inland Waterways Trust Fund and the Harbor Maintenance Trust Fund, both of which have built up substantial unused balances. The administration has proposed a fiscal 2004 budget that would expand the authorized uses of those funds.
Currently the waterways fund, financed through a fuel tax, is used to pay for half of the costs of new capital improvements and major rehabilitation of the inland system. Under the administration’s proposal, these funds could also be used to pay for 25 to 50 percent of the costs of operating and maintaining inland waterways.
The harbor maintenance fund, financed through a tax on imports, is now used to pay for the federal share of dredging port access channels. Under the administration proposal, this money could also be used to finance the federal share of construction costs.
The waterways fund has a surplus of $388 million. The harbor maintenance fund has a surplus of about $1.9 billion.
Some industry insiders suspect there is only limited support on Capitol Hill for the proposals.
A total of 120 organizations, ports and a variety of water-related businesses signed off on National Waterways Alliance letters telling each congress member and senator that they “strongly oppose this raid on the maritime trust funds and urge the Congress to reject it.” The National Waterways Alliance is a coalition of waterway-related businesses.
Jean Godwin, vice president of the American Association of Port Authorities, said she did not think the administration proposals to expand use of trust-fund deposits would fly. “I don’t think there’s a lot of support for it on the Hill. That’s my gut feeling. However, it’s up to Congress to decide whether they’ll approve it or not.”
Andrew Riester, executive vice president of the National Waterways Conference (which serves as secretariat for the National Waterways Alliance), said the proposals sent “shock waves throughout America’s waterway system.” Riester said that use of the waterways trust fund to cover operations and maintenance costs would not be permitted without new legislation.
Daniel P. Mecklenborg, senior vice president and chief legal officer of the Ingram Barge Co., Nashville, Tenn., said the Inland Waterways Users Board, which he chairs, is “unalterably opposed” to using waterways trust-fund money for operations and maintenance.
Mecklenborg noted that commercial users of the waterways already pay 20 cents per gallon in fuel taxes to the waterways fund and 4.3 cents per gallon to the General Treasury for deficit reduction.
Tom Allegretti, president of the American Waterways Operators, saw the proposals as “an abdication of the traditional federal role in maintaining the U.S. waterways infrastructure.” Historically, Allegretti said, waterway maintenance has been seen as a federal responsibility, and no one group of beneficiaries has been singled out for a user tax such as the Bush Administration proposes.
“This operation and maintenance tax proposal has been rejected by Congress on a number of previous occasions,” said AWO Vice Chairman Craig Philip, president and CEO of Ingram Barge. “The idea of funding operation and maintenance through the trust fund was rejected then and should be rejected now.”
The National Waterways Conference said in its May 5 newsletter Washington Watch that while the next fiscal year appears to be a gloomy one for waterways programs — the civil works appropriations are expected to drop below the current $4.6 billion budget — there is some good news: “Neither the House nor Senate (Energy and Water Development Appropriations) subcommittees plans to divert any monies from the navigation trust funds, as the president had sought.”
Dennis Kirwin, president of Waterways Work!, a national campaign to promote the contributions that ports and waterways make to the nation, said that news of the president’s budget request “stunned” the waterborne transportation industry.
“In an economy that is still trying to recover from staggering losses,” Kirwin said, “this news to further add costs to the industry that transports our essential commodities will wreak havoc on our farmers and energy providers, as well as consumers, who will surely pay more for their food, air conditioning and heating if this proposal is allowed to go forward.”
Kirwin said that despite industry opposition, he did not know whether the administration would be successful in pushing its proposals.
“We’re hopeful that the administration is not going to be successful,” Kirwin said. “We spent quite a bit of effort to make sure people are aware that this thing should be defeated, and we think that we’re making headway … we seem to be gathering a lot of support, but obviously it’s not over till it’s over.”
A letter opposing the proposal has been signed by Sen. John B. Breaux, D-La., and Sen. Arlen Specter, R-Pa., and sent to Mitch Daniels, the director of the Office of Management and Budget.
“We’re hopeful,” Kirwin said. “But we want to make sure that this thing really doesn’t have a leg to stand on when it actually gets presented.”
On the House side, Rep. John J. Duncan Jr., R-Tenn., sounded what administration critics hope will turn out to be the death knell for the proposals.
Duncan is chair of the House Water Resources and Environment Subcommittee and a vigorous opponent of waterway user fees. During a hearing, he declared that “these funds should be spent on the original purposes for which the fees were collected. The users … of waterways have paid these fees in good faith for … improvements. It is wrong for the administration to now suggest that the money should be used for other purposes.”
Lending further support to opponents of the administration’s proposals is a recent “views and estimates” report in which the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee recommended that proposals to expand use of the money in the two trust funds be rejected. The report said the trust funds are “urgently needed and should be used only for the purpose for which they were originally established.”