Flaws Hinder US Harbor Maintenance Fund -Report

There exist serious flaws in U.S. infrastructure funding practices that hinder the maintenance and improvement of American ports and harbors, according to a new report, “Harbor Maintenance Trust Fund: Broken or Misused?” released by the Alliance for Innovation and Infrastructure (Aii).

“Insufficient funding is a constant issue for large-scale infrastructure projects, but the shortfall in harbor funding is particularly problematic since waterborne cargo shippers pay an excise tax specifically aimed at solving this problem, only to see the funds lie dormant in government coffers to allow increased spending for unrelated programs,” said Shane Skelton, executive director of Aii. “This must be fixed."

Currently, the Harbor Maintenance Tax (HMT) is levied upon the value of commercial cargo shipped through U.S. ports and harbors, (excluding exported product). The taxes collected under this provision are deposited into the Harbor Maintenance Trust Fund (HMTF), from where Congress may appropriate the monies for qualified activities, i.e., “dredging channels, maintaining jetties and breakwaters and operating locks along the coasts and in the Great Lakes.” 

Yet, due to Congressional budget caps and statutory federal spending rules, the HMTF has a positive balance of $9.2 billion dollars. Despite the urgent need to maintain certain harbors and deepen others, the U.S. Army Corp of Engineers, the entity responsible for carrying out the federal government’s harbor activities, only asked Congress to allocate $986 million for harbor maintenance activities in the coming year. If Congress complies, the backlog of needed projects will grow, while excise taxes collected from shippers sit idle to allow increased spending on unrelated government activities, Aii noted.

The best and most effective way to ensure harbor projects get the funding they need is to eliminate the temptation and ability of Congress and the administration to withhold HMT revenues for the purpose of bolstering unrelated spending accounts, Aii said. Aii presents several solutions in its policy report, which aim to fix this policy.