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February 5, 2002

Good news, bad news in Bush budget proposals
Shipbuilders and ship operators alike will find things to dislike in President Bush's Budget proposals for Fiscal Year 2003 for the Department of Transportation. It again includes an attempt to zero out the Title XI Ship Mortgage Guarantee program. And it proposes a commercial navigational user fee to pay for increased port security.

OMB hardliners who have a long standing institutional grudge against Title XI tried eliminate it in the last budget, but the program was eventually funded at a moderate level by the Congress. This time round, shipbuilders may find it a little tougher to win support for Title XI because of the yet-to-be-resolved problems of the uncompleted Project America cruise ships at Ingalls.

The Administration has, however, backed away from another assault on the Maritime Administration that was made in its first budget. This time, the Maritime Security Program is funded at $99 million--and there's no footnote about switching it to the Department of Defense.

Overall, the DOT budget request seeks $59.3 billion in funding for FY 2003.

In a briefing for reporters, U.S. Transportation Deputy Secretary Michael P. Jackson said that the fiscal 2003 budget for transportation includes $4.8 billion for the first full year of funding for the Transportation Security Administration (TSA) and $7.1 billion for the U.S. Coast Guard, representing the largest increase in the nation’s history for the Coast Guard. The Coast Guard request includes more than $400 million for increased port security; $90 million to modernize the maritime “911” system to eliminate radio coverage gaps along the coast and improve the Coast Guard’s ability to find those in distress; and $500 million for the Coast Guard’s Deepwater project, the long term process of replacing its aging fleet of boats, planes, helicopters, and cutters with state-of-the-art equipment.

The new Transportation Security Administration is clearly going to be of increasing importance to the maritime community. According to the Budget proposal the TSA and the Coast Guard will "jointly develop and execute the maritime component of homeland security... The budget provides $5.7 billion in discretionary funding for the Coast Guard, including $406 million for increased port security. The budget also proposes a commercial navigational user fee for increased port security needs.

The budget for the TSA includes $93,3 million for the "Under Secretary of Transportation for Security to award competitive grants to critical national seaports to finance the costs of enhancingfacility and operational security: Provided further, That such grants shall be awarded based on the need for security assessments and enhancements as determined by the Under Secretary of Transportation for Security, the Administrator of the Maritime Administration, and the Commandant of the U.S. Coast Guard."