BUDGET BENEFITS MARITIME INTERESTS

BUDGET BENEFITS MARITIME INTERESTS

President Reagan's fiscal 1989 budget contains some good news for the Department of Transportation's Maritime Administration, the Coast Guard and the shipping industry.

The budget sent to Congress Thursday indicates Marad has come out the winner in its dispute with the Navy over control of ships in the ready-reserve fleet. Those ships are kept at various ports on standby, available for quick activation in emergencies.According to the budget, the administration will consult with Congress about changing the funding classification for the reserve force from defense- related activities to water transportation.

That means money for reserve force maintenance and operations eventually will be shifted from the Defense Department to Marad. The budget shows Marad spending over $53 million on the reserve force in fiscal 1989.

Another feature in Marad's budget that may please the agency, but is sure to pique the industry's interest, is the administration's first request for

funds for its proposed reform of the operating-differential subsidy program.

Operating differential subsidy helps make up the difference between wage costs of U.S.-and foreign-flag crews. Shipping lines say the trade-route system on which the program is based is outdated.

Under the administration estimate, if subsidy reform legislation is enacted, Marad will spend $26 million in 1989 on the new subsidy program, and use $46 million to liquidate current subsidy contracts switched over to the new program.

The administration is pursuing legislation that would reform the operating subsidy program by expanding carriers' operating flexibility, reducing the cost of subsidy per ship, and allowing additional carriers into the program, the budget says.

Other facets of the Marad budget include:

* $249 million to meet the government's current operating subsidy obligations. That figure is about $35 million more than the fiscal 1988 outlay.

* $62 million - nearly $2 million less than in fiscal 1988 - in the so- called ocean freight differential, used to offset the cost of using U.S.-flag carriers to carry agricultural preference cargoes.

* Once again, no money for the construction subsidy program. That program, which was designed to make up the difference between U.S. and foreign shipyard costs, hasn't been funded in several years.

The administration continues its opposition to the program that guarantees loans for ship construction. The administration proposes no new loan guarantee commitments under that program after 1987.

But it appears to have relented somewhat on its opposition to funding the six state maritime academies. It proposes that the state schools share federally supplied training vessels. As a condition of federal assistance, the state maritime schools will have to require their graduates to accept a Naval Reserve commitment.

For the Coast Guard, the administration's request for $2.9 billion in outlays in fiscal 1989 is nearly $200 million more than estimated outlays for fiscal 1988, and almost $400 million more than actual fiscal 1987 spending.

The program level for the Coast Guard in 1989 represents a significant increase of 17.4 percent over Coast Guard's 1988 appropriation. The agency's acquisition, construction, and improvements account is being increased by $101 million over the fiscal 1988 $247 million appropriation, but estimated outlays for that account will be about $93 million less than the fiscal 1988 estimate.

According to the administration, the extra money for the Coast Guard will come from a redistribution of funds within the Department of Transportation to ensure the continuation of critical Coast Guard services, which were cut by Congress in 1988.

For the first time in several years, the budget is silent on Coast Guard user fees.

The Federal Maritime Commission budget will increase from just under $14 million to nearly $15 million in fiscal 1989.

Other elements of the budget include:

* A return of the St. Lawrence Seaway Development Corp. to direct financing from tolls and other revenue rather than from the harbor maintenance trust fund, a move requiring legislation.

* A pilot project to turn Coast Guard buoy maintenance over to private enterprise.

* A proposal to provide $334 million for the Strategic Petroleum Reserve, thus enabling the fill rate to remain at 50,000 barrels a day. If a plan to sell the Naval petroleum reserve is approved, the administration said it will propose an additional $700 million to increase the reserve fill rate to 100,000 barrels a day.