A barge carrying parts of the spire of the Freedom Tower travels from Port Newark to lower Manhattan. The Waterways Council Inc., which represents inland waterways users, says its plan to boost the diesel tax by 9 cents per gallon would spread costs more fairly than a White House budget proposal to institute a per-vessel fee.
It isn’t often in Washington that an interest group asks Congress to raise its taxes — but that’s exactly what inland barge operators are urging.
And that proposal, to raise the 20-cents-per-gallon diesel tax they pay by 9 cents a gallon, threatens to pre-empt a White House budget proposal to impose a new per-vessel user fee instead.
Both plans would generate more revenue to repair, maintain and upgrade the inland channels and locks that allow shipments to move by water, but the White House plan would generate more revenue.
Groups such as the Waterways Council Inc., which represents inland waterways users, say their plan to boost the diesel tax is more equitable because it would assess fees based on usage. Because some vessel operators use the system more frequently, the operators argue that assessing a per-vessel levy would spread the costs unfairly. Raising the current diesel tax would assess the fee based on how far each vessel actually travels and how much tonnage it carries.
Industry advocates say they were perplexed when President Barack Obama’s budget ignored their proposal and instead reprised the idea of a per-vessel fee, which the administration has been recommending since its fiscal 2011 budget. Proposals for new user fees have been offered since the George W. Bush administration, which recommended charging a toll on shipping for transiting locks.
“It seems to rear its head in each and every budget,” an inland waterways industry lobbyist complained. “It’s very similar to earlier proposals that have been around since the Bush administration, and I can assure you they’re no more popular now than they were then.”
The Army Corps of Engineers budget request does not spell out an actual per-vessel charge but says it would be set at a level that would raise about $80 million in new revenue next year. That’s about twice the new revenue that the industry-backed diesel tax increase would generate. And the barge operators also want taxpayers to assume a greater burden in the long run.
The industry plan would maintain the current 50-50 cost sharing between users and taxpayers for new lock construction and rehabilitation projects worth $100 million or more. But general tax revenue would pay for lock rehabilitation projects that cost less than $100 million, as well as all dam-related costs and — perhaps most significant — all cost overruns.
One project, the Olmsted Locks project in Illinois, is on track to run more than $3 billion over budget and has eaten up much of the Inland Waterways Trust Fund revenue in recent years. Barge operators want to avoid covering overruns at Olmsted and other future projects. The Army Corps of Engineers worries that shifting the burden to taxpayers could put the Olmsted Locks and future waterways projects at risk.
While it’s unusual for an industry to ask for a tax increase as the barge operators are doing, it’s not completely unheard of — especially in the transportation realm.
For example, the American Trucking Associations and other highway user groups have urged Congress to increase federal fuel taxes or other fees dedicated to the Highway Trust Fund, partly to head off a rush by states to impose tolls on new roads or bridges. And the U.S. Chamber of Commerce supports raising highway user taxes to lock in more dedicated revenue, saying its member companies depend on a smooth-functioning transportation system to bring in workers and materials to their factories and ship finished goods out to their customers.
Senate aides say the proposal by inland waterways users has gotten serious attention from lawmakers. Inland waterways legislation (S 407) introduced by Democrat Bob Casey of Pennsylvania and Republican Lamar Alexander of Tennessee includes the industry-requested diesel tax increase. The senators hope to roll their plan into a water resources authorization bill (S 601) that the Senate is expected to take up on the floor this month.
While inland waterways operators are unhappy about the administration’s proposal for the new per-vessel fee, operators and users of coastal ports are disappointed that the budget would spend just $900 million from the Harbor Maintenance Trust Fund next year on dredging and other port projects. The balance of the $1.6 billion in user fee revenue would be held back as in previous years to offset spending elsewhere.
Kurt Nagle, president and CEO of the American Association of Port Authorities, said the proposal ignores “sense of Congress” language in last year’s surface transportation authorization (PL 112-141) that called for spending all Harbor Maintenance Trust Fund receipts annually on related port projects. The fund is supported by a tax on imported and domestic cargo.
“On the one hand, we’re pleased the administration has bumped up its budget request for vital navigation channel maintenance projects,” Nagle said in a statement. “On the other hand, we’re disappointed the president’s budget is still hundreds of millions shy of what Congress called for.”