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Conservation and Watchdog Groups Oppose Barge Industry's Plan To Shift Costs to Taxpayers (6/21/10)

American Rivers * Institute for Agriculture and Trade Policy * Izaak Walton League of America * Missouri Coalition for the Environment * National Wildlife Federation * Prairie Rivers Network * River Alliance of Wisconsin * Sierra Club * Taxpayers for Common Sense

Groups call on Congress to reject the barge industry-promoted proposal that will increase the taxpayer burden for constructing barge transportation network

NEWS RELEASE

June 21, 2010

Conservation and watchdog groups sent a letter to members of the U.S. House Transportation and Infrastructure Committee late last week detailing problems in a proposal from the barge industry to eliminate existing industry financial responsibilities for the inland barge system. The industry proposal would re-write a long-standing policy established between the users of the system and the federal Treasury for sharing the cost of navigation construction.

“We strongly oppose all changes that will shift responsibility for the marine transportation system’s problems onto taxpayers. The recommendations resolve the shortfall in industry contributions by simply moving cost share obligations from the users of the inland waterways to taxpayers; and thereby further removing any incentive to contain project costs,” said Brad Walker, the Upper Mississippi River Coordinator for the Izaak Walton League of America.

The Inland Waterways Trust Fund—created as a fuel tax to pay for half of the new and rehabilitation construction on the barge navigation system—is depleted due to major increases in project spending, project cost overruns as high as double original estimates, and flat and declining navigation traffic levels yielding less revenue to the fund. There also has not been an increase in the fuel tax used to provide revenue to the fund for 15 years.

The proposed changes are contained in the report, Inland Marine Transportation Systems (IMTS) Capital Projects Business Model, Final Report, Revision 1 dated April 13, 2010 – Final Recommendations. This report prepared for the Inland Waterways Users Board, which consists primarily of representatives of the nation’s barge companies, recommends shifting the Congressionally-mandated cost share requirements for construction and rehabilitation of locks and dams on the inland waterways system from the Inland Waterways Trust Fund to the U.S. Treasury.

“This proposal represents a major retreat from long and strenuous negotiations for cost-sharing reforms dating to 1986 and would effectively off-load financial obligations for the waterways system from its local industry beneficiaries onto private citizens. And we urge Senators Durbin and Burris to oppose this misguided proposal,” said Laura Kammin of Prairie Rivers Network, an Illinois-based river conservation group.

The Corps of Engineers budget functions in a competitive nature for directing funding to projects and priorities, and the letter’s authors note that increasing taxpayer funding for the Inland Waterway System would result in reduced funding available for projects targeting environmental restoration and flood and storm damage prevention.

“It’s more than just the principle of corporate welfare that we oppose; the proposal would eat up limited resources that should go towards repairing some of the damage we’ve done to the river over the past 100 years,” said Glynnis Collins, Executive Director of Prairie Rivers Network. “The public money that has funded most of the navigation system has resulted in untold public costs in the form of flooding, pollution and decline of fish and waterfowl populations. Corps funds should be directed to efforts like floodplain restoration and wetland protection that will lead to a cleaner, healthier river.”

Currently, the inland waterways system is publicly subsidized at approximately 90 percent, including 50 percent of the costs for new construction projects and rehabilitation projects, and 100 percent of all operation and maintenance expenses. This is the largest rate of subsidy among all freight shipping modes in the country. The industry provides about $80 million per year to the IWTF through a $0.20 per gallon fuel tax that has not increased since 1995. The remaining more than $720 million required to keep the system functioning is provided by taxpayers. The letter’s authors estimate the IMTS recommendations will further increase the public subsidy for inland waterway construction and rehabilitation by about $200 million annually, while adding major additional taxpayer obligations for operating and maintaining the inland waterway system.

“We fully endorse federal transportation initiatives that support a thriving agricultural economy and strong rural communities, but increasing the taxpayer burden for navigation projects – while Mississippi River navigation traffic continues a long-term downward trend – is simply not sound public policy,” said Mark Muller, Program Director for the Institute for Agriculture and Trade Policy.

The table below details the changes proposed by the inland waterways users to the long-standing cost share obligations that transfer current industry costs onto the U.S. Treasury.

Inland Waterways Trust Fund Cost Share Obligations

Project Type                Current Law       IMTS Recommendations
New Lock
Construction

50% public/
50% IWTF

 

50% public/50% IWTF

Lock Rehabilitation
>$100 million

50% public/
50% IWTF

 

50% public/50% IWTF
Lock Rehabilitation
<$100 million

50% public/
50% IWTF

 

100% public
New Dam
Construction

50% public/
50% IWTF

 

100% public
Dam Rehabilitation

50% public/
50% IWTF

 

100% public

Cost Overruns

50% public/
50% IWTF

 

100% public

In their letter the groups urge that the IMTS report recommendations for increasing the public’s cost share obligations on the inland waterways system be rejected. Citing current fiscal conditions where the federal budget is in long-term deficit, the authors assert that seeking an increase in an already excessive subsidy is clearly unwarranted and irresponsible.

 
 
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