In-Depth: House Committee on Transportation and Infrastructure Chair Rep. Peter DeFazio (D-OR) introduced this bill to unlock billions in already collected fees to maintain federal ports and harbors:
“As someone who represents a coastal district, I’ve heard from countless fishermen, ship, tug and barge operators about the critical need for safe and well-maintained ports and harbors that allow them to do their jobs and keep our economy moving. And I agree. The Federal government should be using the fees it collects at our ports for their intended purpose -- harbor maintenance. By merely spending what is already being collected we can ensure our Nation’s ports and harbors remain open for business and can continue to sustain our local, regional, and national economies. Ultimately it is taxpayers and consumers who pay the cost of the HMT, as a pass through on the price of goods shipped through ports. However, when harbors are inefficiently dredged and maintained it leads to delays and increased prices. So, taxpayers are paying for a service that is not being done, and as a result, have to pay MORE for the goods they buy because of the lack of maintenance. It’s time Congress fully funds the operation and maintenance of our commercial harbors, including critical jetty and breakwater work. I urge my colleagues to support this critical, bipartisan legislation.”
In remarks at this bill’s committee markup, Rep. DeFazio argued that consumers and taxpayers pay the cost of poor harbor maintenance:
“Ultimately it is taxpayers and consumers who pay the cost of the Harbor Maintenance Tax, as a pass through on the price of goods shipped through ports. However, when harbors are inefficiently dredged and maintained it leads to delays and increased prices,” he said. “So, taxpayers are paying for a service that is not being done, and as a result, have to pay more for the goods they buy because of the lack of maintenance. [That’s why] it’s time Congress fully funds the operation and maintenance of our commercial harbors, including critical jetty and breakwater work.”
Original cosponsor Mike Kelly (R-PA) adds:
“Our nation’s ports and harbors, like the Port of Erie, are supposed to receive funding for dredging and other maintenance from the Harbor Maintenance Trust Fund. Unfortunately, a significant portion of the revenue dedicated in the fund is not being used for that purpose. This has resulted in the deterioration of ports across our nation, from the Great Lakes to the Gulf Coast. Erie and our nation as a whole have felt the negative impact of neglecting our ports. I am a proud sponsor of this bill, which will ensure that America’s ports and harbors are once again fully maintained for both commercial and recreational activities. American businesses need us to properly maintain our ports so they can stay competitive on the global stage and create more jobs for American workers. Let’s meet the needs of the 21st century economy by passing this legislation.”
Louisiana Department of Transportation and Development Secretary Shawn Wilson says that state departments of transportation “have long supported full use of HMTF money to address the delayed, deferred, and desperately needed harbor infrastructure.” He adds, “Not addressing these needs further compromise our nation’s economic competitiveness.”
The National Taxpayers Union Foundation (NTU) opposes this bill, which it derides as a “gimmick” that’s intentionally deceptive about its real budgetary impact:
“The legislation would exclude harbor maintenance funding from discretionary spending limits, creating a significant loophole through which to drive higher spending. CBO published a cost estimate of the bill which concluded that it would have zero impact on budgetary outlays or the deficit. This defies common-sense assumptions about the spending that would occur if the bill is enacted… After running into a scoring hurdle to their efforts to boost spending through the Harbor Maintenance Trust Fund, the sponsors of this legislation drafted a new bill to better game the system. CBO’s score gave them the result they hoped for: a zero score despite the bill facilitating billions in new spending. Unless Congress and the CBO work to fix this problem, it could lead to the creation of new and even bigger loopholes to hide the deficit impact of its fiscal policy decisions.”
This legislation passed the Committee on Transportation and Infrastructure by a voice vote and was discharged by the Committee on the Budget. It has 21 bipartisan House cosponsors, including 12 Republicans and nine Democrats.
The American Soybean Association, National Grain and Feed Association, and Dredging Contractors of America support this bill. The National Taxpayers Union Foundation (NTU) opposes it.
Of Note: Congress established the Harbor Maintenance Tax (HMT) in 1981. This tax seeks to recover the operation and maintenance dredging costs for federally-authorized ports from maritime shippers, and is directly levied on importers and domestic shippers using coastal or inland ports as a 0.125% ad valorem tax on the value of imported cargo (e.g., $1.25 per $1,000 value). It’s typically passed on to taxpayers as part of the purchase price for imported goods and services.
HMT revenue is deposited into the Harbor Maintenance Trust Fund (HMTF). Over the past 10 years, deposits into the HMTF from tax revenues and interest credited to the fund averaged $1.5 billion annually. Amounts appropriated from the fund averaged $1 billion annually. Current law authorizes the appropriation of whatever amounts are necessary from the fund. The HMTF currently has a $9 billion unappropriated balance. Consequently, although shippers continue paying into the Trust Fund for maintenance activities, the federal government hasn’t carried out these activities.
The Army Corps of Engineers reports that navigation channels in the 59 busiest ports in the U.S. are available less than 35% of the time, and the conditions at midsize and emerging harbors are far worse. In 2016, the Corps estimated the total cost to dredge and maintain authorized widths and depths of all federal navigation projects would be $20.5 billion over the next decade (in 2019 dollars). This estimate includes $11.5 billion to achieve authorized dimensions in the next five years (at $2.3 billion annually) and $9 billion to achieve authorized dimensions for an additional five years (at $1.8 billion annually). The American Society of Civil Engineers estimates U.S. ports and harbors will also need an additional $15.8 billion investment between now and 2020 just to meet the demands of larger and heavier ships that will use the Panama Canal.
By enabling the expenditure of approximately $34 billion over the next decade, this legislation would allow the U.S. Army Corps of Engineers (Corps) to dredge all federal harbors to their constructed widths and depths over the next decade.
Summary by Lorelei Yang(Photo Credit: iStockphoto.com / eAlisa)