U.S. ports have long seen their efforts to stop the government from diverting half of the collected Harbor Maintenance Tax to fill budget holes fizzle, or at best become strongly worded language without bite. Political will has grown in recent years as Congress realizes the economic importance of ports and their growing financial needs, but that awareness hasn’t yet brought meaningful reform.
Giving ports, particularly those on the West Coast, more flexibility in how they can use HMT dollars could be one way to drum up the political support needed to reach the tipping point on reform, said Ray Bucheger, a federal policy and legislative consultant with FBB Federal Relations. The reason more equitable use is needed to accomplish broader HMT reform is simple: Ports that get less than their “fair share” of HMT dollars would get more money back, and ports that get more than their share would see total available dollars increase as appropriators could no longer use the funding to plug budget holes. About $700 million annually is diverted from the Harbor Maintenance Trust Fund, leaving about $800 million for ports.
“This has gone on in every administration,” said Sen. Barbara Boxer, D-Calif. “They don’t spend the money in the trust fund as it's meant to be spent. “
The HMT, a 0.125 percent tax on the value of imported cargo, can only be used for jetty maintenance and dredging, but the Senate is considering allowing ports to use the funding for dredging of adjacent berths and dealing with contaminated sediment. Such a change is attractive to naturally deep-water West Coast ports because they would be poised to gain more HMT dollars back. The ports of Los Angeles and Long Beach, for example, generate 28 percent of the total HMT revenue but only get back about 6 percent. And the Port of Seattle gets “about a penny on each dollar” it contributes, spokesman Peter McGraw said.
Although West Coast ports have been lobbying for a change in how HMT is dispersed for years, there are two signs that a more “equitable” method is finally gaining traction. First, Congress appears to be taking the idea seriously. Boxer pitched the idea Jan. 31 during a hearing on the Water Resources Development Act, a long-delayed bill key to authorizing port and inland waterway project. “It gives a little flexibility to the program,” said Boxer, who chairs the Environment and Public Works committee. The second reason for optimism is that the American Association of Port Authorities now supports “more equity for HMT donors,” despite that many of its member authorities prefer the system as is.
The proposal is far from a reality, though, Many states still need some convincing, as reflected by Sen. John Boozman’s plea that the E&PW committee take a “balanced approach” when changing how HMT dollars are sent back to ports. The Arkansas senator said a rigid approach “would abandon Arkansas,” which gets a small taste of HMT. There is also the question of whether the HMT dollars should go to point of entry or to destinations, such as Atlanta and Chicago.
Pulling off the tricky congressional mechanics will be just as challenging. Legislation urging full use of HMT helps rally the troops but won’t likely have weight needed to keep appropriators’ mitts off the trust fund. The recently introduced Harbor Maintenance Act, the Senate version of The Realize America’s Maritime Promise Act, or RAMP Act, appears to have the same limitation.
Requiring collected taxes to go directly to the Army Corps of Engineers, instead of allowing the Obama administration budget for port projects, could be one way to ensure all HMT goes to ports. Despite the administration’s vocal support of ports, it continues to allow the siphoning of HMT from maritime projects. The administration budgeted $895 million in fiscal 2013 for port dredging, a $90 million increase from the prior year, and that is “appropriate given the fiscal atmosphere,” said Jo-Ellen Darcy, assistant secretary of the Army for Civil Works, who commands the corps.
Port proponents see the sum as far from appropriate, pointing to a American Society of Civil Engineers study suggesting ports will face a $28 billion shortfall by 2040. Congress also likely needs to require a financial score that would estimate how much using all HMT funding for ports would cost over the next 10 years. Through this process, other corps programs would be protected from losing their funding to the HMTF, and appropriators would be forced to cut spending in other non-corps programs to plug the budget holes.
That’s a steep order. But the odds of passing a bold WRDA are improved by Sen. David Vitter’s drive to reform the corps through the bill, Bucheger said. The Louisiana Republican and E&PW ranking member has long lambasted the agency for taking too long to complete waterway projects in his state. Meanwhile, the House has yet to begin work on WRDA, although Rep. Bill Shuster, R-Pa., the new Transportation and Infrastructure committee chair, said it’s a priority this year.
With an earmark ban intact in both chambers, the promise of more HMT for their homeports across the board could focus legislators’ attention on passing the bill by the end of the year.