The Great Lakes-Seaway News Monday Memo
Monday, April 23, 2012 at 07:43AM Washington Shell Game: The Harbor Maintenance "Trust Fund"
by Collister Johnson, Jr.
As a person who has spent most of his career in the private sector, I tend to view events from a private sector perspective. In the private sector, if you enter into a contract with someone to provide you with services and you pay the contractor for those services, in advance, and the contractor fails to provide the services, but instead absconds with the money, that is called fraud. The contractor has committed a felony.
For that, the contractor winds up going to jail.
How is that different from the 2013 budget proposed by President Obama with respect to the Harbor Maintenance “Trust Fund”?
The HMTF was established by law in 1987 to fund harbor maintenance dredging through a fee charged to shippers who use ships to import goods into the United Sates. This “user fee” replaced the prior system which relied on general fund appropriations. So shippers pay in advance for a service - dredging – which is vital to the U.S. economy and especially that of the Great Lakes–St. Lawrence Seaway System. How vital? A recent, peer-reviewed economic impact analysis established that the System directly supports over 128,000 well-paying U.S. jobs, and generates annually over $9.6 billion in wages and salaries, $18.1 billion in business revenue, and $2.7 billion in federal, state, and local taxes.
Why is dredging so important to support this economic activity? Let’s do the math.
Cargo carried by commercial shipping in the System is dominated by heavy, relatively low-value, dry-bulk products, such as iron ore, coal, limestone, salt and grain. It is a high-fixed cost, low-margin business. Every inch of draft that is lost means the loss of 100 to 300 tons of cargo capacity. So, for a standard “Laker” carrying 25,000 tons of cargo, the loss of even 5” of draft means the loss of up to 1,500 tons of cargo, or more than 5% of its capacity.
Bye, bye profit margin.
What does the Obama budget propose for the Great Lakes? It proposes to spend an amount that falls short – by $61.4 million – of the amount necessary to keep the System’s harbors dredged to their necessary depth. And it’s not as if more money needs to be raised. The money is already there, lying in the Federal Treasury. -
Out of 51 major U.S. commercial ports in the System, a total of 33, or 65% of them, get no money at all. Zero. Nada. Bupkus. And these are not just ports nobody has heard of. They include Waukegan, Burns Harbor, Buffalo, Erie, Milwaukee, Presque Isle, and Muskegon.
I guess the President’s priorities lie elsewhere. Maybe all those System jobs that will be lost for lack of dredging can be replaced with “green” jobs, like the ones at Solyndra, and all the other taxpayer-funded solar panel makers which have gone belly-up.
Shipper’s money – deposited in good faith in the HMTF – is being stolen from them. My question is, when are the voters going to throw those politicians who are responsible in jail?
The author, Collister Johnson, Jr. is the Administrator of the Saint Lawrence Seaway Develpment Corporation. The views expressed by our guests are entirely their own.