Ports unhappy with US federal budget

by Inside Logistics Online Staff

The American Association of Port Authorities (AAPA) noted some positive aspects but mostly disappointment over the funding levels and programmatic changes in federal port-related programs that were proposed in President Obama’s fiscal 2016 budget.

“International trade now accounts for fully 30 percent of the U.S. economy,” said Kurt Nagle, AAPA’s president and CEO. “To compete in global markets, America needs an efficient and modern freight transportation infrastructure system, including seaports and the land and water connections into and out of port facilities.” He added, “We’re pleased to see and support the increased funding requested for surface transportation infrastructure, but deeply troubled by the proposed cuts to maintenance and modernization of federal navigation channels, the critical waterside infrastructure that connect our ports and nation to the world marketplace.”

The President’s budget includes a $478 billion, six-year surface transportation reauthorization proposal, to be paid for with transition revenue from business tax reform. The proposal would pay for repairs to existing roads and bridges, and for new investments in highways, freight networks, and bus, subway, rapid transit, light rail and passenger rail systems.  AAPA is pleased to see a significant focus on freight networks in this proposal.

The budget also seeks to boost private investment in infrastructure through a Rebuild America Partnership by establishing a national infrastructure bank to leverage private and public capital to support projects of national and regional significance. AAPA supports alternative financing mechanisms such as a national infrastructure bank. The budget would also create the new tax-exempt Qualified Public Infrastructure Bonds program, which would help states and localities attract new sources of capital for infrastructure projects.

Specifically, the proposed budget calls for:

  • Increasing the competitive Transportation Infrastructure Generating Economic Recovery (TIGER) grants program to $1.25 billion per year, which is 150 percent more than last year’s $500 million appropriation.
  • Providing $18 billion over six years for a dedicated regional freight infrastructure investment program. This program would support multi-modal, corridor-based projects designed to eliminate existing freight transportation bottlenecks and improve the efficiency of moving goods in support of the Administration’s National Export Initiative
  • Allowing $6 billion over six years ($1 billion/year) to cover the subsidy cost of providing credit assistance for nationally or regionally significant transportation projects through the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. This program, which AAPA successfully urged lowering the minimum loan amount to $50 million (from $100 million) to make more ports eligible, leverages private sector investments in public infrastructure projects
  • Spending $2 million for a new Office of the Assistant Secretary for Innovative Finance that will assume responsibility for managing the U.S. Department of Transportation’s credit programs.

“AAPA believes these grants, loans and policy changes would lead to improved freight movement over our landside transportation system,” said Mr. Nagle, adding that AAPA is a strong proponent of continuing a freight infrastructure grant program, like TIGER, and dedicating at least one-quarter of the grant appropriations to port-related infrastructure.

“These potential benefits to landside freight transportation, however, could be heavily for naught if the budget’s proposed cuts to waterside infrastructure programs are adopted,” he continued.  “If we can’t get the goods efficiently and competitively into and out of our country through seaports and waterside navigation channels, American manufacturers won’t be able to receive the materials and/or components they need, and they as well as U.S. farmers, won’t be able to competitively export their products globally.  In addition, U.S. retailers and consumers will suffer.”

AAPA noted the proposed budget would reduce the U.S. Army Corps of Engineers’ funding from the $2.33 billion appropriated last year to the $1.95 billion budget requested for fiscal 2016.

With the President’s Harbor Maintenance Tax (HMT)-related budget request remaining unchanged from last year, the HMT funding targets and formulas for equitable distribution established in the overwhelmingly-supported, bipartisan Water Resources Reform and Development Act (WRRDA) of 2014 were far from met.  WRRDA set a funding target for fiscal 2016 of $1.32 billion.  The $915 million requested by the President equates to only 47 percent of the estimated calendar year 2015 HMT revenue of $1.93 billion.  Additionally, the President’s request is 16 percent less than the $1.1 billion appropriated by Congress for fiscal 2015.

The President’s budget request for the Corps’ coastal navigation construction program also dropped for fiscal 2016, from $97 million to $81 million. If enacted, it would decline by 16 percent to its lowest level in more than 10 years.

”The Corps of Engineers’ budget proposal falls well short of the waterside maintenance and modernization needs of this country,” Mr. Nagle remarked. “Our nation is at a critical point in maintaining our international competitiveness, and implementation of the FY2016 budget request would result in trade-related infrastructure losing further ground at a time when we are already behind many of our competitors.”

With regard to seaport security, the Administration’s proposal for the Federal Emergency Management Agency’s (FEMA) National Preparedness Grant Program, similar to previous budget requests, would move management of such a consolidated program to the states. This proposal has been blocked by Congress in previous years. AAPA remains strongly opposed to moving these grants to the state level.  It advocates instead for the existing program targeted at port security to be managed at the federal level since seaports are international borders for trade and should not be lumped with state and local programs.

In the environmental arena, the President’s budget for funding the  Diesel Emissions Reduction Act (DERA), which has been highly successful in helping ports reduce air emissions from older diesel engines, would only provide a third of the current $30 million funding level.  Last year, the President recommended eliminating DERA funding all together while AAPA continues to advocate for a robust DERA grant program that meets the authorization target of $100 million.

“As the Administration and Congress grapple with the multiple goals of reducing the nation’s debt while growing jobs and the economy, federal investments in ports and their connecting infrastructure on both the land and waterside continue to be an essential, effective utilization of limited resources, paying dividends through increased trade, jobs, enhanced international competitiveness, and over $200 billion a year in tax revenues,” said Mr. Nagle.