Dredging Coastal Ports An Assessment of the Issues (1985) / Chapter Skim
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6. Funding Issues
6. Funding Issues
Pages 59-76
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From page 59... ...
Four factors, however, are repeatedly identified as contributing to the erosion of the legislative consensus that funding should come from general revenues: · the federal budget deficit the high cost of new construction dredging (and possibly increased maintenance dredging) problems of initiation after a long stalemate changing social values and attitudes These four factors are discussed in the succeeding section.
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From page 60... ...
With arrival in the early 1980s of projected budget deficits of $200 billion per year and more, the prospects for finding majority support in Congress for major new water resources projects became even more doubtful. In this context, the second factor contributing to the funding stalemate -- the high cost of many proposed construction dredging projects, takes on increased importance.
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From page 61... ...
Where it does not appear feasible to transfer activities completely to the private sector, proposals are made to introduce market-like control mechanisms into the public sector. These views are summarized in a letter from five prominent economists to the chairman of the Senate Environment and Public Works Committee (October 18, 1983~: "new or increased user fees for ports and inland waterways, market-based pricing for hydroelectric power..., and increased cost sharing and financing by non-federal entities for all federal water resources" would "lead to a more rational federal water resources
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From page 62... ...
Shared responsibility ("cost sharing") implies that some portion of the revenues will be raised by the federal government and some portion by the individual ports, with an obviously important issue being what the relative portions are.
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From page 63... ...
Army Corps of Engineers operations and maintenance dredging at ports. Based on the transportation precedent and the fact that, with the exception of the Reagan Administration's, all of the legislative proposals aimed at breaking the funding deadlock have included general fund revenues, it appears likely that any new consensus on funding will involve general tax revenues covering a portion of dredging costs.
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From page 64... ...
A review of public statements by ports indicates that with very limited exceptions, some ports are either unwilling or incapable of paying for either routine maintenance dredging or new construction dredging until some new consensus has been formalized by legislative action. Considerable variation exists concerning the ability of ports to pay all or some share of routine maintenance dredging and new construction dredging.
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From page 65... ...
Revenues in the trust fund are for new construction and major rehabilitation -- e.g., of locks -- on the inland waterways, but not for routine operation or maintenance.) In its 1982 budget submission, the Reagan Administration sought to eliminate the use of general fund revenues for dredging and replace them with funds raised through new user fees.
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From page 66... ...
In a similar vein, user fees are said to provide public managers with information which will allow them to evaluate both the quantity and the quality of the goods and services they provide. In theory, then, appropriately formulated user fees would ensure adequate port capacity while at the same time protect against excessive capacity.
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From page 67... ...
estimates that a system of full cost recovery from user fees for small ports (less than 100,000 tons per year) would require those ports to charge a user fee of $90 per ton to recover all the costs associated with operations and maintenance dredging now provided by the Corps of Engineers, but for large ports (over 10 million tons per year)
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From page 68... ...
increased coal exports would reduce our balance of trade deficit, lower unemployment (and with that, the need for federally funded social services) , and so on, to the end that new construction dredging of ports should be paid for from general fund revenues since the nation benefits.
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From page 69... ...
Where the ports have substantial political leverage, it is reasonable to assume that general tax revenues from either the state or the city might well be used to subsidize dredging costs. In the cases of those ports run by authorities that also manage airports and other commercial facilities, the possibility exists that profits from these non-port activities will be used to subsidize dredging and therefore potentially give those ports the ability to charge lower user fees with the associated competitive advantage.
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From page 70... ...
Collection, analysis, and management of this kind of data is, in and of itself, high cost, and a management system with this kind of flexibility also requires that governing bodies give a great deal of discretion to administrators to allow them to act quickly. The general pattern in the United States, however, is to resist building the kinds of large administrative systems necessary to manage user fees that are responsive to marginal costs and benefits, and similarly, legislative bodies generally resist giving broad discretionary authority to administrative organizations.
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From page 71... ...
Cost sharing, then, may be attractive to the individual ports as a vehicle for prying loose additional federal dollars to pay for new construction dredging, or increased maintenance dredging, or for both. It must be emphasized that the cost-sharing concept does not inherently provide any answers to the question of who will pay.
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From page 72... ...
What is clear is that if cost sharing is to be one of the elements of a new funding consensus, it will require the establishment of a formula that is broadly acceptable, and achieving acceptability will involve a complex set of political compromises. Most of the legislative proposals calling for some kind of cost sharing have sought to build consensus on port funding by establishing some kind of ceiling on how much money individual ports would have to pay in an effort to protect ports against excessive costs.
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From page 73... ...
An alternative Senate bill proposed the adoption of a port-specific tonnage fee for maintenance dredging but set a maximum tonnage fee so that no port would have to pay an excessive amount. This bill, however, retained the port-specific cost recovery scheme for any new construction dredging.
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From page 74... ...
MANAGEMENT AND IMPLEMENTATION OF PORT DREDGING So long as general fund revenues provided the monies for both maintenance and new construction dredging, the Corps of Engineers managed all major dredging projects. Such projects now require congressional authorization and are funded on an annual basis similar to other federally authorized programs.
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From page 75... ...
Discussions pursuant to finding a new consensus have ranged from escaping the requirement for congressional authorization for new construction dredging to substantially accelerated permit approval for locally funded dredging and filling projects by the involved federal and state agencies. Fast-tracking -- that is, reducing the lead times either for congressional project authorizations or for agency permit approvals-becomes increasingly important with progressively lower federal funding for port dredging.
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From page 76... ...
the integration into this process of some kind of modification in approval processes that allows more expeditious initiation and completion of port dredging to occur. It is essential that the political process address all of these issues if a new consensus on port funding is to be found that allows the nation to overcome the funding barrier.
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