2012 Position Paper
Restoration of Adequate Funding for Dredging Great Lakes Deep-Draft Ports and Waterways
GOAL: The Administration's proposed budget for FY12 allocates so little money for Great Lakes dredging that only 11 of the 63 Federally maintained U.S ports will be dredged. Yet the Harbor Maintenance Trust Fund ("HMTF"), which funds the Corps' dredging budget with a tax levied on waterborne commerce, has a surplus that has swelled to almost $6 billion. The Administration must stop using the surplus to paper balance the budget. At a minimum, the HMTF must spend as much as it takes in each year, or approximately $1.6 billion. Legislation to that effect has been introduced in the House (H.R. 104) and Senate (S. 412).
BACKGROUND: The Corps is responsible for dredging the nation's ports and waterways to meet the needs of commerce. Its dredging budget is funded by a tax on cargo. Appropriations have been declining for decades, and while reduced funding has had nationwide impacts, the Lakes have fared far worse than other segments of the marine transportation system. For example, in FY05, the Ohio River System's dredging appropriation equated to $1.10 per ton of cargo handled, while Lakes received the equivalent of $0.52 per ton of cargo. As a result, vessels are forced to "light load" (i.e., carry less cargo), which means every industry that uses Great Lakes shipping is denied the most efficient service vessels can provide. This inability to fully utilize vessels' carrying capacity makes industries such as steel and manufacturing less competitive and affects the cost of power generation and raw materials for the construction industry..
REGIONAL BENEFITS: There are 63 Federally-maintained deep-draft ports and six connecting channels the Corps of Engineers must dredge on the Great Lakes, including 25 of the nation's largest ports. The twin ports of Duluth, Minnesota/Superior, Wisconsin, alone will handle, on average, approximately 40 million tons per year.
Cargo movement on the Great Lakes drives both the region's and the nation's economies. Iron ore for the steel industry tops 60 million tons. Limestone and coal collectively total more than 80 million tons. Grain and general cargo shipments via the St. Lawrence Seaway contribute another 20 million tons.
A recent study, The Economic Impacts of the Great Lakes St. Lawrence Seaway System, has determined that waterborne commerce on these waters generates 227,000 jobs, $54 billion in annual personal income, business revenue, and local purchases; and $4.6 billion in Federal, state/provincial, and local taxes in the U.S. and Canada. The cargos carried by U.S.-flag lakers alone create and sustain 103,000 jobs and economic output valued at more than $20 billion.
Dredging is key to the efficiency of Great Lakes shipping. The largest U.S.-flag "lakers" forfeit nearly 270 tons of cargo for each 1-inch reduction in loaded draft. Ocean-going vessels lose roughly 115 tons of cargo for each 1-inch loss of draft.
Lack of Federal dollars is not the problem. Cargo is taxed to pay for dredging of deep-draft ports and waterways and the revenue is deposited in the HMTF. In a typical year, the HMTF will take in about $1.6 billion, but spend only $800,000 or so. That's why the HMTF has a surplus approaching $6 billion. Simply put, the HMTF is being used to help paper balance the budget instead of keeping the nation's deep-draft ports and waterways efficient and key drivers of the economy.
ACTION: Work with Great Lakes delegation to pass H.R. 104 and S. 412 so the HMTF will be required to spend as much as it takes in each year and stop amassing a surplus that is used to help camouflage the size of the Federal deficit.
