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American Shipper

HMT like taxing ‘McDonalds to build bigger Burger Kings’

   Dissatisfaction with the way funds are collected and distributed for port and waterway projects bubbled to the surface during a House Water Resources and Environment Subcommittee hearing Tuesday on the proposed 2013 budget for the Army Corps of Engineers.
   Rep. Grace Napolitano, D-Calif., complained the budget was unfair to the Port of Los Angeles and Long Beach, stating that the two ports receive only $265,000 from the Harbor Maintenance Trust Fund (HMTF), but that cargo moving through the two ports results in contributions of $220 million to the fund, which is used for maintaining the nation’s ports and waterways. She said other ports receiving funds may divert cargo from southern California.
   She said it was as if “the government taxed McDonalds to build bigger Burger Kings. We must correct and fix this inequity.”
   Napolitano said a minimum amount should be appropriated to the port where shippers pay into the HMTF and the uses of the fund should be expanded. She also said the fund should pay 100 percent of the cost of maintaining harbors deeper than 45 feet. Today, while the government provides 100 percent of the cost of maintenance for harbors shallower than 45 feet, local governments or port authorities must fund deepening beyond that depth.
   The 2013 budget provides for $848 million from the Harbor Maintenance Trust Fund to be used for waterway maintenance, 12 percent more than in the current year, said Jo-Ellen Darcy, assistant secretary of the Army for civil works.
   Darcy said funds are distributed to “high performance” ports with the greatest need for maintenance dredging.
   Napolitano asked why those funds, which under the law are to be used for maintenance, could not be used for construction and berth deepening.
   Rep. Chip Cravaack, R-Minn., also expressed concern about the large surplus in the HMTF, which he estimated to be $7.1 billion. (Darcy gave the figure $6 billion.)
   “Why are we having such difficulties getting our harbors to the widths and depths that are needed, that are supposed to be?” asked Cravaack. “Every inch of silt in the harbor in Duluth, for example, that’s taconite left on the shore.”
   Maj. Gen. Meredith “Bo” Temple said the Corps of Engineers was restrained by both the need to prioritize dredging projects and the limited amount of money that is appropriated.
   “There is no question that constrains us in most cases from providing the authorized dimensions of the channels,” he said. “It is our purpose to ensure that the channels are of sufficient dimensions to ensure the safety and economic success of that particular harbor.”
   Rep. Bob Gibbs, R-Ohio, chairman of the subcommittee, complained about the level of withdrawals from the Harbor Maintenance Trust Fund, saying President Obama is only proposing to spend only half the money collected for the HMTF, which is funded by the Harbor Maintenance Tax, a .125 percent tax on the value of imports.
   “Only if our ports and waterways are at their authorized depths and widths will products be able to move to their overseas destinations in an efficient and economical manner,” Gibbs added. “Once again, only two of the nation’s 10 largest ports are at their authorized depths and widths. The president’s budget does nothing to ensure the competitiveness of American products in world markets. That hurts businesses and costs us jobs.”
   The president asked for $4.7 billion for the Corps of Engineers, which Gibbs said was 5.5 percent less than what Congress enacted in 2012.
   He said while he was a supporter of efforts to control federal spending, many of the Corp of Engineers’ activities were “true investments in America because they provide economic return and jobs.”
   Gibbs added “for too long, this administration has short-changed and mis-prioritized the projects and programs of this agency.”
   “In 2011, we had some of the worst flooding on record in this country. In 2014, it is likely an expanded Panama Canal will become operational. Yet, the president proposes to cut approximately $20 million from flood damage reduction activities and once again short-changes the navigation budget.
   “Given the fact that the navigation projects and the flood damage reduction projects provide economic benefits to the nation, I would like to see the administration place a higher priority on these types of water resources investment,” Gibbs said.
   Gibbs displayed pictures of several thick binders holding the still ongoing report for the proposed Savannah Harbor Expansion Project, which he noted was authorized in 1999 and noted 40 percent of the cost of the deepening project will be for fish and wildlife mitigation.
   “I don’t necessarily want to repeal any environmental or coordination requirement, but all of us have to make the whole process more efficient. In today’s economy, delaying a project is synonymous with killing it. And killing a project in this way means lost economic opportunity and lost jobs,” he said.
   Rep. Timothy H. Bishop, D-N.Y., said “historically, this committee has provided direct guidance to the Corps of Engineers identifying specific projects that we felt should be a priority for the agency.
   “Today, with our ability limited, we are dependent upon the Corps internal decision-making process to determine for us where the priorities are. I for one am more than a little uncomfortable with this and hope today that we can get information from our witnesses on how priorities in work load are made.”
   Bishop said the subcommittee “has a fiduciary and administrative responsibility to oversee and review the federal agencies that are under our jurisdiction. Without this oversight, the Corps priorities, focus and resulting budgets are not put through the rigor of review that the American public expects us to perform.”
   He also said he was unhappy that the Corps of Engineers budget was being reduced.
   “In my estimation, we are now at a critical threshold where these reductions are jeopardizing the ability to sustain our infrastructure and protect our citizens. We are either going to have to step up and have the conversation about investing for the future or we need to de-authorize certain projects and programs, or otherwise transfer programs to project beneficiaries.
   “The current approach of ‘fix as it fails’ is costing us more money and is very inefficient from an engineering perspective.”
   Bishop said 37 percent of the Corps of Engineers budget is going towards navigation, 30 percent to flood risk reduction, and 33 percent to environmental, hydropower and regulatory programs.
   “The backlog of authorized, but unconstructed, Corps’ project is, rightly-or-wrongly restricting our ability to focus on new projects,” Bishop said. “It was used as a pretext to former-President Bush’s veto of the Water Resources Development Act of 2007, as well as a reason for not moving forward on a new WRDA in the last Congress. The Corps calculates that prior to WRDA 2007; there was an unconstructed backlog of $60 billion worth of previously authorized projects, some of them dating back to the 1960s and earlier. This backlog needs to be meticulously reviewed and appropriate actions implemented.”
   Darcy noted that last year the president proposed a user fee to supplement the existing fuel tax to fund inland waterway projects. — Chris Dupin

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