Post by HardTimeTrucker on May 6, 2009 6:30:02 GMT -5
Tax money diverted from port maintenance
By Nathaniel Lukefahr
The Facts
May 06, 2009
FREEPORT — Domestic seaports provide millions of jobs and infuse the economy with billions of dollars, but local and national port officials say constraints placed on the industry at the federal level have them losing ground to foreign competitors.
Occupants of every U.S. port are subject to the Harbor Maintenance Tax, which was created by Congress in 1986 to make money the U.S. Army Corps of Engineers can use to maintain navigation channels. The amount is based on how much tonnage is brought into ports.
The Corps needs the estimated $1.4 billion the tax brings in annually to keep channels at assigned depths, remove silt built up by natural events and start channel widening or deepening projects required for newer, larger vessels, said Kurt Nagle, president and CEO of the American Association of Port Authorities.
While the tax is bringing in enough money to fully fund the Corps, Washington lawmakers are allocating only about $800 million a year to the agency, Nagle said. The remainder is being used in others areas of the federal budget.
Shortchanging harbors from the tax intended to keep them competitive forces the Corps to choose which projects are most important, while foreign ports are being built to handle the largest, widest vessels coming out of boat yards, port advocates say.
“What happens too often in all parts of the system into and out of the port is that they wait until there is a crisis situation,” Nagle said last week while visiting Port Freeport.
THE VALUE OF PORTS
For centuries, seaports have served as a vital economic lifeline by bringing goods and services to people and businesses around the world, Nagle said.
Domestic seaports help buoy the U.S. economy with almost $234 billion of export sales and $73.5 billion of revenue to businesses dependent on maritime travel, according to the American Association of Port Authorities. Also, they are responsible for more than 13.3 million jobs nationwide.
Port Freeport, for example, creates more than 55,100 jobs at the port and through the businesses that use its terminals. It also infuses the local economy with more than $10.21 million annually, according to the port’s records.
“Without a harbor, you don’t have a lot of the industry and economic base that you have here in Brazoria County,” Port Freeport Managing Director Phyllis Saathoff said. “It’s a lifeline to all of that.”
Port Freeport is the nation’s 14th-largest port in terms of tonnage.
A NEED FOR MAINTENANCE
Domestic ports need channels dredged regularly because silt can build up, decreasing the amount of draft allowed by pilots, Nagle said. That forces companies to lighten their loads.
Policymakers’ decisions to allocate less money to the Corps ends up hitting shippers in the pocketbooks twice, he said.
“From a shipper’s perspective, it’s an economic issue because they are not fully able to load their vessels. That’s costing them business,” Nagle said. “But they are also paying that tax to the federal government, so it’s an economic cost to the shippers that’s not being returned.”
U.S. Rep. Ron Paul, R-Lake Jackson, supports full use of the tax.
“This is a pretty good program,” Paul said. “They use the waterways and then you use the funds and that will keep up the ports.”
Dow Texas Operations spokeswoman Tracie Copeland said an accessible channel is vital to operations at the largest petrochemical site in North America.
“That is one of the many great features about doing business here,” she said.
Texas Operations moves 49 percent of its products on the water, using 300 to 400 deep-sea vessels and 1,700 barges annually, she said. The site operates six dock units that combine to have 10 barge and four deepwater berths.
The petrochemical giant moves 29 percent of Texas Operations’ products by rail, 10 percent by truck and 11 percent by pipeline, she said.
Port Freeport has been able to keep its channel maintained in recent years through lobbying trips to Washington and as the Corps responded to silt build-up created by tropical weather, Port Freeport Executive Director A.J. “Pete” Reixach said.
In November, the Corps dredged the Freeport channel’s mouth after a mound of silt caused by Hurricane Ike decreased its depth about 5 feet.
LACK OF GROWTH PROJECTS
Seven years ago, Port Freeport’s braintrust sat around a conference table in its office atop Freeport City Hall and discussed how to expand beyond fruit and rice, Reixach said. One goal was to deepen the channel to 55 feet.
“We had all the necessary attributes to be a major player, with the 8,000 acres we have and being close to the Gulf of Mexico, but the one thing we didn’t have that we needed was the 55 feet of water,” Reixach said.
Today, Port Freeport still is waiting for the green light on that project, Reixach said. The port has, however, been approved for a project that will widen the channel by 200 feet.
Nagle said delayed growth projects, like deepening Port Freeport’s channel, are common because of lawmakers’ decisions not to release money.
“Other countries are making huge investments in their infrastructure, and we need to move forward and do that or that trade is ultimately going to pass us by,” Nagle said. “Right now, the larger vessels that are in international trade are primarily transiting directly between Asia and Europe because the European ports are more able to handle the deeper vessels, and the Asian ports certainly are.”
Some projects are put on hold because the Corps has to work on projects that generate the “greatest benefit,” Corps spokesman Gene Pawlik said.
“You can only take the dollars that you get and apply them to the areas of the greatest need that have the greatest need and have the greatest return,” he said. “There’s more needs for all the agencies out there than the appropriations or the funds to support all those needs.”
Freeport LNG Vice President Bill Henry said it is important to expand channels as bigger ships are put into service. LNG wants to bring in vessels carrying liquefied natural gas that are upward of 1,000 feet long. Currently, they receive 900-foot-long ships.
“To be competitive worldwide, I think the United States needs to do that so that we can bring in worldwide trade and so that we can ship out our projects on the larger ships, too,” Henry said.
Lawmakers do not release more money for growth projects because “cargo doesn’t vote,” Reixach said.
But growth projects for ports are not all on the water, Nagle said. Without a good road system, big rigs exiting ports cannot reach their destination on time.
State transportation departments nationwide are expanding roads less as populations grow, Nagle said. That leads to congested roadways and long delivery times for truckers.
And, historically, freight routes are the last to receive funding because people vote, not cargo, Nagle said. But that leads to more expensive products on the storeshelves because costs increase.
SOLUTION
Because lawmakers are not releasing the full amount of money earned by the Harbor Maintenance Tax, its trust has ballooned to more than $5 billion, Nagle said.
While the money in the trust can not be used for anything other than maintaining channels, the nation’s leaders are using it to offset other expenditures.
“Just like Social Security, that money is not really there,” Nagle said. “There’s sort of an IOU there. … The reality is they are using that money in the immediate term to offset other areas of the federal budget.”
But there is a way to ensure the Corps gets all the money it needs to start projects to keep American ports viable in the global market, Nagle said.
Officials could create legislation that would require the government to hand out the amount of money earned by the Harbor Maintenance Tax for the betterment of the nation’s port system.
“The bottom line is the system needs that level of funding,” Nagle said. “The users of the system are paying that and they need to be able to utilize that money to allow that system to be maintained.”
For the past year, Paul has been working to build a coalition in Washington, D.C., that supports use of the tax on harbors.
“This is a very important subject to deal with,” Paul said. “It would solve a lot of our problems if the congressmen would just live within the rules.”
Nathaniel Lukefahr covers industry for The Facts. Contact him at (979) 237-0151.
By Nathaniel Lukefahr
The Facts
May 06, 2009
FREEPORT — Domestic seaports provide millions of jobs and infuse the economy with billions of dollars, but local and national port officials say constraints placed on the industry at the federal level have them losing ground to foreign competitors.
Occupants of every U.S. port are subject to the Harbor Maintenance Tax, which was created by Congress in 1986 to make money the U.S. Army Corps of Engineers can use to maintain navigation channels. The amount is based on how much tonnage is brought into ports.
The Corps needs the estimated $1.4 billion the tax brings in annually to keep channels at assigned depths, remove silt built up by natural events and start channel widening or deepening projects required for newer, larger vessels, said Kurt Nagle, president and CEO of the American Association of Port Authorities.
While the tax is bringing in enough money to fully fund the Corps, Washington lawmakers are allocating only about $800 million a year to the agency, Nagle said. The remainder is being used in others areas of the federal budget.
Shortchanging harbors from the tax intended to keep them competitive forces the Corps to choose which projects are most important, while foreign ports are being built to handle the largest, widest vessels coming out of boat yards, port advocates say.
“What happens too often in all parts of the system into and out of the port is that they wait until there is a crisis situation,” Nagle said last week while visiting Port Freeport.
THE VALUE OF PORTS
For centuries, seaports have served as a vital economic lifeline by bringing goods and services to people and businesses around the world, Nagle said.
Domestic seaports help buoy the U.S. economy with almost $234 billion of export sales and $73.5 billion of revenue to businesses dependent on maritime travel, according to the American Association of Port Authorities. Also, they are responsible for more than 13.3 million jobs nationwide.
Port Freeport, for example, creates more than 55,100 jobs at the port and through the businesses that use its terminals. It also infuses the local economy with more than $10.21 million annually, according to the port’s records.
“Without a harbor, you don’t have a lot of the industry and economic base that you have here in Brazoria County,” Port Freeport Managing Director Phyllis Saathoff said. “It’s a lifeline to all of that.”
Port Freeport is the nation’s 14th-largest port in terms of tonnage.
A NEED FOR MAINTENANCE
Domestic ports need channels dredged regularly because silt can build up, decreasing the amount of draft allowed by pilots, Nagle said. That forces companies to lighten their loads.
Policymakers’ decisions to allocate less money to the Corps ends up hitting shippers in the pocketbooks twice, he said.
“From a shipper’s perspective, it’s an economic issue because they are not fully able to load their vessels. That’s costing them business,” Nagle said. “But they are also paying that tax to the federal government, so it’s an economic cost to the shippers that’s not being returned.”
U.S. Rep. Ron Paul, R-Lake Jackson, supports full use of the tax.
“This is a pretty good program,” Paul said. “They use the waterways and then you use the funds and that will keep up the ports.”
Dow Texas Operations spokeswoman Tracie Copeland said an accessible channel is vital to operations at the largest petrochemical site in North America.
“That is one of the many great features about doing business here,” she said.
Texas Operations moves 49 percent of its products on the water, using 300 to 400 deep-sea vessels and 1,700 barges annually, she said. The site operates six dock units that combine to have 10 barge and four deepwater berths.
The petrochemical giant moves 29 percent of Texas Operations’ products by rail, 10 percent by truck and 11 percent by pipeline, she said.
Port Freeport has been able to keep its channel maintained in recent years through lobbying trips to Washington and as the Corps responded to silt build-up created by tropical weather, Port Freeport Executive Director A.J. “Pete” Reixach said.
In November, the Corps dredged the Freeport channel’s mouth after a mound of silt caused by Hurricane Ike decreased its depth about 5 feet.
LACK OF GROWTH PROJECTS
Seven years ago, Port Freeport’s braintrust sat around a conference table in its office atop Freeport City Hall and discussed how to expand beyond fruit and rice, Reixach said. One goal was to deepen the channel to 55 feet.
“We had all the necessary attributes to be a major player, with the 8,000 acres we have and being close to the Gulf of Mexico, but the one thing we didn’t have that we needed was the 55 feet of water,” Reixach said.
Today, Port Freeport still is waiting for the green light on that project, Reixach said. The port has, however, been approved for a project that will widen the channel by 200 feet.
Nagle said delayed growth projects, like deepening Port Freeport’s channel, are common because of lawmakers’ decisions not to release money.
“Other countries are making huge investments in their infrastructure, and we need to move forward and do that or that trade is ultimately going to pass us by,” Nagle said. “Right now, the larger vessels that are in international trade are primarily transiting directly between Asia and Europe because the European ports are more able to handle the deeper vessels, and the Asian ports certainly are.”
Some projects are put on hold because the Corps has to work on projects that generate the “greatest benefit,” Corps spokesman Gene Pawlik said.
“You can only take the dollars that you get and apply them to the areas of the greatest need that have the greatest need and have the greatest return,” he said. “There’s more needs for all the agencies out there than the appropriations or the funds to support all those needs.”
Freeport LNG Vice President Bill Henry said it is important to expand channels as bigger ships are put into service. LNG wants to bring in vessels carrying liquefied natural gas that are upward of 1,000 feet long. Currently, they receive 900-foot-long ships.
“To be competitive worldwide, I think the United States needs to do that so that we can bring in worldwide trade and so that we can ship out our projects on the larger ships, too,” Henry said.
Lawmakers do not release more money for growth projects because “cargo doesn’t vote,” Reixach said.
But growth projects for ports are not all on the water, Nagle said. Without a good road system, big rigs exiting ports cannot reach their destination on time.
State transportation departments nationwide are expanding roads less as populations grow, Nagle said. That leads to congested roadways and long delivery times for truckers.
And, historically, freight routes are the last to receive funding because people vote, not cargo, Nagle said. But that leads to more expensive products on the storeshelves because costs increase.
SOLUTION
Because lawmakers are not releasing the full amount of money earned by the Harbor Maintenance Tax, its trust has ballooned to more than $5 billion, Nagle said.
While the money in the trust can not be used for anything other than maintaining channels, the nation’s leaders are using it to offset other expenditures.
“Just like Social Security, that money is not really there,” Nagle said. “There’s sort of an IOU there. … The reality is they are using that money in the immediate term to offset other areas of the federal budget.”
But there is a way to ensure the Corps gets all the money it needs to start projects to keep American ports viable in the global market, Nagle said.
Officials could create legislation that would require the government to hand out the amount of money earned by the Harbor Maintenance Tax for the betterment of the nation’s port system.
“The bottom line is the system needs that level of funding,” Nagle said. “The users of the system are paying that and they need to be able to utilize that money to allow that system to be maintained.”
For the past year, Paul has been working to build a coalition in Washington, D.C., that supports use of the tax on harbors.
“This is a very important subject to deal with,” Paul said. “It would solve a lot of our problems if the congressmen would just live within the rules.”
Nathaniel Lukefahr covers industry for The Facts. Contact him at (979) 237-0151.