Port Security Conference

June 12, 2003

Senators oppose raid on Waterways fund

In a June 3 letter to Office of Management and Budget Director Mitch Daniels, 23 members of the United States Senate, two of whom chair key committees, have expressed their strong opposition to a proposal in the FY 2004 budget to assess between 25 and 50 percent of the Inland Waterways Trust Fund to cover not only the currently mandated costs of new capital improvements and major rehabilitation on the inland system, but also the costs of operating and maintaining the nation's inland waterways.

The senators signing the letter are: John Breaux (D-LA); Arlen Specter (R-PA); Mary Landrieu (D-LA); John Warner (R-VA, Chairman, Senate Armed Services Committee); Jim Bunning (R-KY); Jim Inhofe (R-OK, Chairman, Senate Committee on Environment and Public Works); Kitt Bond (R-MO); Mark Pryor (D-AR); George Allen (R-VA); George Voinovich (R-OH); Rick Santorum (R-PA); Mitch McConnell (R-KY); Patty Murray (D-WA); Peter Fitzgerald (R-IL); Richard Shelby (R-AL); Dick Durbin (D-IL); Jeff Sessions (R-AL); Mike DeWine (R-OH); Jim Talent (R-MO); Maria Cantwell (D-WA); John Rockefeller (D-WV); Trent Lott (R-MS) and Blanche Lincoln (D-AR) .

Barge and towing operators currently pay more than $100 million annually into the Inland Waterways Trust Fund through a fuel tax of 20 cents-per- gallon. These funds, after being matched by general revenue funds from the federal government, have been dedicated by law to underwrite the cost of constructing locks and dams on the inland waterway system and major rehabilitation.

But, despite the need for work on many locks and dams, more than $400 million in inland Trust Fund receipts has been allowed to accumulate and remain unspent in the Fund. The Bush Administration's FY 2004 budget request wants to raid the Trust Fund and use it for not only construction and major rehabilitation but also for operating and maintaining the waterways system--historically a federal government responsibility since the founding of the nation.

"This proposal breaks faith with port and waterways users in that it would vacate an historic agreement between these users and the federal government that affirmed a shared responsibility for the future of the Nation's ports and waterways," the letter states.

"In addition, we believe that the proposal will have a definite adverse impact on trade and commerce, international competitiveness, and our economic security. The inland waterways system annually moves some $30 billion worth of agricultural products, petroleum, coal, salt, chemicals and other bulk commodities which are generally described as the 'building blocks' of the U.S. economy," the letter continued.

While not the sole user of the waterways, the barge and towing industry is the only segment of users that pays for the modernization of the waterways' infrastructure. In addition to the 20 cents-per-gallon paid into the Trust Fund, barge companies also pay an additional 4.3 cents per gallon diesel fuel tax, which is deposited into general revenues.

As slated under the new budget request, for the first time a portion of the Harbor Maintenance Trust Fund would also be used for waterways improvements as well as for operations and maintenance of the nation's coastal ports.

"Ports handle 95 percent of the nation's overseas commerce by volume and facilitate the rapid mobilization of U.S. forces. The proposal will eventually lead to a new or increased tax rates, large transportation cost increases for the movement of agricultural and energy products, and a freight shift from waterborne transportation to congested highways and rail lines. The resultant damage to river-dependent communities and ports will hurt the Nation's economy and negatively impact U.S. competitiveness," the letter said.

"We are very encouraged by this letter from key members of the U.S. Senate opposing the President's budget proposal," said Barry Palmer, President of Waterways Work!, a national campaign backed by American Waterways Operators, National Waterways Conference, and other regional waterway organizations, such as Gulf Intracoastal Canal Association.

"Our nation's barge and towing industry, and ports, use the nation's waterways to transport 16 percent of the nation's freight for just two percent of the freight transportation cost," noted Palmer. "This saves shippers and consumers more than $7 billion annually compared to alternate transportation modes and keeps our great nation competitive. In this time of economic uncertainty, this proposal is misguided."

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