WASHINGTON — The federal government is on track to free up trust fund dollars for inland waterway improvements other than a long-delayed, grossly over-budget project that has soaked up much needed funding.
Freeing up money for work other than the Olmsted locks and dam project would help shippers and barge companies get their goods to market faster. Recent droughts that have slowed and even halted barge traffic have been a wake-up call to some in Congress on how much the nation’s agricultural exporting edge rests on the inland waterway network.
About 60 percent of U.S. farm exports move along the lower Mississippi River, while 20 percent of U.S. coal and 22 percent of petroleum traverse the larger inland waterway network. The expansion of the Panama Canal in 2015 is expected to provide U.S. agricultural exporters large economies of scale via the ability to load their products on larger vessels. Those expected gains will be lost if the nation’s aging network can’t handle the volume.
About half of the 238 locks in the system are more than 50 years old, and a third are 75 years old. There are an average of 52 service interruptions on the network daily. Because of this, the American Society of Civil Engineers gave the network a “D-” grade last year.
The question is how much of a share of the Olmsted project Congress will require the federal government to take on through a finalized water resources development act. The Senate version would require Uncle Sam to take on the entire cost of the project, which has ballooned from $775 million to nearly $3.1 billion.
Such a move would free up about $84.5 million annually from the Inland Waterways Trust Fund, and with a federal match would provide inland waterway projects with roughly $169 million a year. If Congress decides to send President Obama a version of the bill reflecting the House’s preference for the federal cost-share, inland waterways projects other than Olmsted would only get about $94 million annually.
Waterways Council President and CEO Mike Toohey said on March 18 that he expects the House and Senate to hash out a finalized water resources development act by the end of May and for President Obama to sign the bill into law later in the spring. But he doesn’t have any idea which way Congress will go in relation to freeing up the trust fund for non-Olmsted projects.
“This is one of the best kept secrets in Washington in my career,” he said.
It’s also unclear whether Congress will answer inland waterway shippers and barge operators’ plea to raise the 20-cent-per-gallon fuels tax by six to nine cents, boosting the trust fund.
A one-cent hike would generate about $4.1 million in construction funding annually, Toohey said. It will be up to the House Ways and Means Committee and the Senate Finance Committee to decide whether to hike the taxes, a politically unpopular move even when the industry it affects is calling for the increase.
Inland waterway shippers and carriers were encouraged that the tax reform proposal made by Rep. Dave Camp, R-Mich., calls for a six cent fuels tax hike. It’s highly unlikely, however, that the House Ways and Means chairman will get his package passed this year, as Senate leaders Harry Reid, D-Nev., and Mitch McConnell, R-Ky., have severely downplayed the chances of tax code reform in 2014.
Fearing criticism that it supported a tax hike, the Obama administration has called for user fees to expand the trust fund. But user fees disproportionately affect shippers and carriers, as some water ways have more locks than others, the industry argues.
Meanwhile, work on the Olmsted project on the Ohio River continues, with an estimated $1.5 billion more needed to wrap up the work by 2020. How much of that funding comes from the federal government or the inland waterway trust fund will help determine how U.S. exports fare in the coming years.