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Shipping taxes targeted for harbor maintenance tallies $5 billion surplus
15 July 2009

WASHINGTON (AP) - Officials with the nation's shipping industry say they face a looming crisis, but it is not for a lack of money.

The money is there for much-needed dredging of waterways, they say, if only the government would remove its tight grip.

Only about half of the $1 billion-plus in annual revenue from a 23-year-old federal harbor maintenance tax on the value of cargo is actually used for its intended purpose.

Those dollars -- with interest -- have created a $4.7 billion surplus, with projections that it may reach $8 billion by 2011.

One White House administration after another has, through budgetary maneuvers, allowed the tax surplus to grow. Because the surplus -- which in recent years has been growing by more than $500 annually -- is not spent, it counts toward a reduction in the federal deficit.

Rep. Jim Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, blames the problem on the White House, regardless of the party or president, messing with the people's money.

"We have a $4.7 billion surplus being held in reserve for the sole purpose of making the budget deficit look smaller," he said. "We are collecting a tax to repair vital infrastructure, not to cover up for deficit spending."

President Barack Obama's Office of Management and Budget did not respond to repeated inquiries over the past week about issues related to the harbor maintenance tax.

The money can only be used for harbor maintenance but under the law cannot be spent unless Congress appropriates it. Typically, a surplus amount appears in a president's proposed budget submitted to lawmakers.

On Capitol Hill, a bipartisan group of about 20 senators and 50 House members is pushing to require further revenue from the tax go toward harbor maintenance rather than the surplus. It's akin to what lawmakers did in recent years for aviation and highway trust funds to ensure generated fees are used for their intended purposes.

A leader of the effort, Rep. Charles Boustany Jr., R-La., said the tax brings in $1.1 billion to $1.3 billion in annual revenue, which he said should be enough for harbor maintenance nationwide. If more comes in beyond that, the excess could go toward a new emergency fund for ports.

As for the nearly $5 billion in existing surplus, he and other lawmakers say that can remain as it is as long as all future revenue from the tax is earmarked as it was intended.

Within Congress, there is no organized opposition to the push for the release of more funds for harbor maintenance.

But the General Accountability Office, the investigative arm of lawmakers, had a warning in a 2008 report on the issue. It said that as more funding is tied down for a specific purpose in the budget, the more lawmakers would be limited in their ability to use that money for other spending priorities.

Virtually every group tied to the shipping industry -- from port operators to big retailers to trade unions and vessel owners -- has sought more dollars for dredging and other work from the Great Lakes to Louisiana that would enable vessels to move smoothly and at maximum capacity.

An estimated $230 million is needed for dredging 18 million cubic yards of sediment from the Great Lakes alone.

Shipping industry officials cite the June 26 example of the Great Lakes Trader, a barge that took on 35,457 tons of limestone at Presque Isle, Mich. The barge, they say, could have loaded nearly 37,000 tons if the Great Lakes had been properly dredged.

Regular dredging is required for most ports because they usually do not have naturally deep harbors. If the dredging is not done, ships cannot safely navigate waterways. There is also an increasing need for dredging as ships increase in size.

Advocates urge more dredging even as the economic downturn has forced major decreases in shipping tonnage by as much as 40 percent, according to some year-to-date measurements for the Great Lakes.

Rick Gabrielson, director of international transport for giant retailer Target Inc., said in congressional testimony last month that the depressed shipping volume provides more time to develop needed infrastructure for ports and waterways.

"If we do not capitalize on this grace period, we will not be prepared to meet our nation's infrastructure needs," he said.
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