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February 5, 2004

Budget kisses and hisses
As might be expected, the Bush Administration's FY05 Budget request is getting mixed reviews from industry associations. Thus proposed spending for modernization of locks and dams is drawing praise, while failure to fund the dredging of vital navigational channels is being slammed.

"President Bush's FY 2005 budget request demonstrates the Administration's continued understanding of the myriad benefits of the nation's inland waterways system and the need to nurture, not neglect, this critically important transportation system," gushes Waterways Council, Inc., which describes itself as "the national public policy organization advocating a modern and well-maintained national system of ports and inland waterways."

The group is supported by more than 250 waterways carriers, shippers, port authorities, shipping associations and waterways advocacy groups from all regions of the country.

Waterways Council, Inc. notes that the budget request proposes FY '05 spending between $115 and $133 million from the dedicated Inland Waterways Trust Fund for the modernization of priority, Congressionally-approved locks and dams on the inland system.

"While still short of Waterways Council, Inc.'s recommended $150 million per year allocation for 10 years from the Trust Fund, the President's budget request is the highest funding recommendation over the last decade," says the Council. "As required under current law, these Trust Fund expenditures will be matched by general revenue treasury funds."

Another positive feature of the budget request, according to Waterways Council, is that it does not call for the use of the Harbor Maintenance Trust Fund or Inland Waterways Trust Fund dollars for purposes other than their currently authorized purposes.

In a U.S. Army Corps of Engineers press conference held Monday, Assistant Secretary of the Army for Civil Works John P. Woodley said the President's budget request was "a frugal budget that reflects the priorities of a nation at war." He added that the Corps should be recognized as a unique national asset which contributes toward the achievement of our nation's war-time objectives.

Waterways Council, Inc. says it agrees with those statements by the Secretary, but believes that the Corps' Civil Works Program should be funded at a level closer to $5 billion annually than what is being proposed in this budget to meet the water resources needs of the nation, including those of navigation.

"While we are pleased with the President's increasing recognition of the importance of the inland and coastal waterways and ports as a national transportation and economic engine, we will continue to push hard toward full and efficient funding for all of our nation's priority lock and dam projects," said Barry Palmer, President/CEO of Waterways Council, Inc.

"One portion of the Corps budget that Waterways Council, Inc. is extremely concerned about is the proposed reduction in the budget's Operations & Maintenance (O&M) account," Palmer noted. "The O&M account is seriously under-funded and must be significantly increased," he continued.

"Another area of concern is the ballooning surplus accumulating in the Harbor Maintenance Trust Fund, projected to exceed $2.6 billion in FY '05, which must be used, not hoarded, to address the pressing navigation needs of the nation's coastal ports," according to Palmer.

That is an issue that has drawn the ire of the American Association of Port Authorities (AAPA).

It has expressed "alarm" that the FY ’05 budget for the U.S. Army Corps of Engineers’ Civil Works projects "fails to adequately fund critical deep-draft navigation projects. This is an ongoing problem for the nation’s maritime transport system, which is facing imminent crisis as a result of continued insufficient federal funding for the Corps of Engineers to perform channel maintenance dredging."

Especially troubling, says AAPA, is misuse of the Harbor Maintenance Trust Fund (HMTF), which receives ad valorem taxes paid on imports and coastwise movements. The HMTF was established by Congress in 1986 to recover costs of maintaining the nation’s deep-draft navigation channels. Rather than releasing the funds for their intended purpose, however, a significant portion remains idle. In fact, surplus funds in the HMTF have grown from year to year. Based on the FY ’05 budget just announced, the fund surplus is expected to grow by an additional $377 million between FY ’04 and FY ’05, to over $2.6 billion.

"While denied access to these much needed funds, our nation’s waterways are suffering the effects of inattention," said AAPA President Kurt Nagle. "Unless this situation is rectified, America will soon face dire consequences as our system of transport for global trade is seriously compromised."

As a case in point, AAPA cites the fact that a major channel connecting east New Orleans to the Gulf of Mexico is filling with silt due to insufficient funds to dredge it. As a result, some deep-draft ships are no longer able to make it into the port. The Louisiana shipping industry estimates that the U.S. Army Corps of Engineers needs to invest $23 million into dredging the state’s three main shipping routes or face losing business--or even worse, ships running aground and spilling their cargo. The scenario is mirrored throughout the nation, says AAPA, with dredging needs going alarmingly unaddressed.

"Channel maintenance needs are increasingly mounting to crisis proportions with each year that passes without sufficient funds for dredging," Nagle said. "We strongly urge the Administration and Congress to release the HMTF funds in 2005, or face the prospect of crippling America’s waterways and rendering them unable to support the nation’s projected growth in international trade."

AAPA has also criticized the Administration's FY05 budget for inadequately funding port facility security.

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