Tuesday, October 4, 2011

California Coalition Calls For Release of Billions in Idle Federal Dredging Taxes

A coalition of California elected officials, port authorities and shipping industry leaders are ratcheting up their demands that Congress immediately release the state's $5.6 billion share of the federal Harbor Maintenance Trust Fund to boost investment in and job growth at the state's ports.

"California’s future as a global leader depends on much needed job creation and economic growth," California Lt. Governor Gavin Newsom said at a press conference in Oakland on Friday.

"Utilizing the federal Harbor Maintenance Trust Fund surplus doesn’t cost anyone a dime in new taxes, and it would immediately boost our trade competitiveness, invest in California’s infrastructure, and help to both grow jobs on our waterfront immediately and on our farms and manufacturing floors over the long term.”

Established in 1986, the Harbor Maintenance Tax (HMT) is a federal tax imposed on port customers based on the value of the goods being imported through about 200 of the nation's ports. Typically collected by customs brokers, the taxes are placed in the Harbor Maintenance Trust Fund to be used for maintenance dredging of federal navigational channels.

According to the American Association of Port Authorities, over 90 percent of the nation's top 50 ports engaged in foreign waterborne commerce require regular maintenance dredging.

However, while the tax continues to be collected – to the tune of more than $400 million a year from California port customers alone – the vast majority of the collected taxes remain idle in the trust fund.

Even of those HMT funds allocated, California does not receive an equal share based on its contributions. While California port customers contribute more than 30 percent of all HMT funds collected, the same ports receive less than 5 percent of those HMT funds expended.

In response to this situation, State Sen. Mark DeSaulnier (D-Concord) and Sen. Jean Fuller (R-Bakersfield) have jointly authored California Senate Joint Resolution 15, which demands that the state's entire $5.6 billion share of the trust fund surplus be released immediately to fund improvements at California ports.

"The California businesses calling on the federal government to release Harbor Maintenance funds aren’t just on the waterfront," Fuller said at the press conference.

"In fact, agricultural exporters in the Central Valley are hurt when this money isn’t spent as promised. These funds were collected for the purpose of making the necessary infrastructure improvements and by seeing that the funds are spent on those improvements, we can ensure that California’s ports are among the most competitive in the world."

Newsom and the two state senators were joined at Friday's press conference by representatives of the Port of Oakland, the California Marine Affairs and Navigation Conference (CMANC), the International Longshore and Warehouse Union (ILWU), the Pacific Maritime Association (PMA), and the Pacific Merchant Shipping Association (PMSA) to offer support to the DeSaulnier/Fuller resolution.

"Spending this money as intended will clear navigational channels in the San Francisco Bay that have draft restrictions on them – if we don’t maintain our channels then our ability to maximize our exports are limited. The taxes to pay for these projects have already been collected, but that won’t help us achieve anything if the funds we need are sitting in an account in Washington DC just waiting to be spent," CMANC Executive Director Jim Haussener said.

Port of Oakland Commissioner Gilda Gonzales also highlighted the impact on jobs.
"When our channels are in good shape that means commerce can flow efficiently, our ports remain competitive internationally, and we can continue to support thousands of jobs here in California and across the nation," Gonzales said.

James McKenna, President of the PMA, added that the idle HMT funds collected from California port customers has led to a dearth of needed dredging and "the inability to keep channels dredged to their maximum depth is nothing but a short-sighted drag on our economic growth."

The lack of HMT investments in the state is also a threat to the competitiveness of California ports, according to PMSA President John McLaurin.

"It is imperative that the taxes already collected from California be made available for California projects immediately," McLaurin said.

"We must continue to make investments in California’s ports in order to stay at the top of the game. When we lose cargo and business, we lose vital jobs that are imperative to our local and state economies."