Twin Ports shipping interests join effort to free up federal dredging dollarsOfficials with the nation’s shipping industry say they face a looming crisis, but it is not for a lack of money.
By: Peter Passi and Dennis Conrad, Duluth News Tribune and Associated Press
Officials with the nation’s shipping industry say they face a looming crisis, but it is not for a lack of money.
The money is there for much-needed dredging of waterways, including the Great Lakes system, they say, if only the government would loose its tight grip.
Only about half of the $1 billion-plus in annual revenue from a 23-year-old federal harbor maintenance tax on the value of cargo is actually used for its intended purpose.
That money — with interest — has created a $4.7 billion surplus, and it is projected to reach as much as $8 billion by 2011.
One White House administration after another has, through budgetary maneuvers, allowed the tax surplus to grow. Because the surplus — which now easily tops $500 million a year — is not spent, it counts toward a reduction in the federal deficit.
Rep. Jim Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, blames the problem on the White House, regardless of the party or president, messing with the people’s money.
“We have a $4.7 billion surplus being held in reserve for the sole purpose of making the budget deficit look smaller,” he said. “We are collecting a tax to repair vital infrastructure, not to cover up for deficit spending.”
President Obama’s Office of Management and Budget did not respond to repeated inquiries about issues related to the harbor maintenance tax.
The money can be used only for harbor maintenance but cannot be spent without a congressional appropriation. When lawmakers fail to spend the money, presidents have historically treated any unclaimed funds as a budget surplus.
“There’s no way we’re going to get back any of the money we didn’t get before,” said Ted Smith, president of Marine Tech LLC, a dredging contractor in Duluth. “Going back after old money is not going to happen.”
Nevertheless, on Capitol Hill, a bipartisan group of about 20 senators and 50 House members is pushing to require further revenue from the tax go toward harbor maintenance rather than the surplus. It’s akin to what lawmakers did in recent years for aviation and highway trust funds to ensure generated fees are used for their intended purposes.
A leader of the effort, Rep. Charles Boustany Jr., R-La., said the tax brings in $1.1 billion to $1.3 billion in annual revenue, which he said should be enough for harbor maintenance nationwide. If more comes in beyond that, the excess could go toward a new emergency fund for ports.
As for the nearly $5 billion in existing surplus, he and other lawmakers say that can remain as it is as long as all future revenue from the tax is earmarked as it was intended.
“I think the idea is finally picking up traction,” said James Weakley, president of the Lake Carriers’ Association, a trade group that represents the operators of U.S.-flagged commercial ships on the Great Lakes.
Weakley and others in the Great Lakes maritime community have been pushing hard to fully tap funding from the Harbor Maintenance Trust for some time now, but he said that it is only in the past few years that it has begun working closely with interests in the Gulf Coast, East Coast and West Coast regions.
“We’re all lacking sufficient funding, and we’re all undermaintained,” Weakley said, noting how the needs of port cities across the nation align.
But he noted that building a coalition was surprisingly difficult, as ports are used to competing with one another for funding.
“Until now, we probably spent more time fighting with each other than fighting for the greater good,” Weakley said.
Advocates of harbor maintenance tax reform have formed an umbrella group called RAMP — Realize America’s Maritime Promise.
Smith said he’s encouraged by RAMP’s efforts and predicts they will meet with greater success than a Great Lakes coalition has had.
“We don’t have the political horsepower to get anything done by ourselves,” he said. “We needed a national effort.”
Within Congress, there is no organized opposition to the push for the release of more funds for harbor maintenance.
But the General Accountability Office, the investigative arm of lawmakers, had a warning in a 2008 report on the issue. It said that as more funding is tied down for a specific purpose in the budget, the more lawmakers would be limited in their ability to use that money for other spending priorities.
Virtually every group tied to the shipping industry — from port operators to big retailers to trade unions and vessel owners — has sought more money for dredging and other work from the Great Lakes to Louisiana that would enable vessels to move smoothly and at maximum capacity.
An estimated $230 million is needed for dredging 18 million cubic yards of sediment from the Great Lakes alone.
Shipping industry officials cite the June 26 example of the Great Lakes Trader, a barge that took on 35,457 tons of limestone at Presque Isle, Mich. The barge, they say, could have loaded nearly 37,000 tons if the Great Lakes had been properly dredged.
The Twin Ports has fared relatively well, in terms of having its needs met, said Adolph Ojard, executive director of the Duluth Seaway Port Authority.
“As the biggest port on the Great Lakes, we’ve always been able to get money for critical dredging,” he said.
But other portions of the Great Lakes have suffered from greater neglect, Ojard said.
“It’s important for our port to support the dredging of other ports, because they are our trading partners,” Ojard said. “If they lose the ability to operate efficiently, we will lose business and tonnage. The viability of every port adds to the value of the whole.”
Regular dredging is required for most ports because they usually do not have naturally deep harbors. If the dredging is not done, ships cannot safely navigate waterways. There is also an increasing need for dredging as ships increase in size.
Advocates urge more dredging even as the economic downturn has forced major decreases in shipping tonnage by as much as 40 percent, according to some year-to-date measurements for the Great Lakes.
Rick Gabrielson, director of international transport for giant retailer Target Inc., said in congressional testimony last month that the depressed shipping volume provides more time to develop needed infrastructure for ports and waterways.
“If we do not capitalize on this grace period, we will not be prepared to meet our nation’s infrastructure needs,” he said.