TRVA Position on Lockage Fees Proposal
Inland Waterway Trust Fund
Description: As part of its budget proposal for FY2010, the Administration sent to congress a proposal which would alter the current funding mechanism of the Inland Waterway Trust Fund (IWTF) from a per gallon fuel tax to a fee charged for each individual barge lockage (lockage fee). The Administration intends to more than double the annual funding for the IWTF from the current fuel tax collections of approximately $90M to the proposed lockage fee collections of $200M. At issue is the more than 120% increase in taxes/fees on the waterway users and the manner in which the lockage fee would impose the increased tax burden on those shippers who are located on locking waterway segments such as our Tennessee and Cumberland Rivers.
Background: Under 1978 authorizing legislation, the IWTF if funded by a per gallon fuel tax, which was increased by WRDA 1986 to its current $0.20 per gallon level. Since the passage of those legislations, all congressionally approved waterway infrastructure construction and/or renewal projects have been funded 50% through the IWTF and 50% through congressional appropriations from the treasury. Use of the IWTF is totally at the discretion of Congress through its appropriation process. In recent years, heavy appropriations from the IWTF have left it depleted, with income insufficient to sustain needed levels of investment. Poor budgeting, planning, and the execution of the use of project funds have further depleted the funding balances. These inefficiencies have caused protracted delays in needed waterway improvements resulting in added funding requirements to complete those projects.
Status: The nation’s nearly 12,000 miles of commercially active inland waterway have been and continue to be at substantial risk from lack of adequate funding for infrastructure maintenance, construction and/or renewal. This lack of funding has placed our nation decades behind in the very real battle to reconstruct our aging infrastructure. This proposed lockage fee would be extremely detrimental to the nation’s inland waterway transportation system. Approximately one half of annual shipments on the nation’s waterways currently utilize waterway segments that have no locks. By collecting all the funding for the IWTF from the remaining one half of annual shipments that do move on locking waterway segments, the Administration will be increasing the tax burden on those users by approximately 300%. This unfair taxing of those locking waterway segments and the industries they serve will erode and in some cases totally eliminate any competitive advantages which currently enable entire segments of our nation’s already disadvantaged industrial community to compete in the global economy.
An example of the inequity in this proposal can be realized by the fact that under this proposal, an 8-barge tow shipped from Mobile, Alabama to Decatur, Alabama would pay in excess of $10,000 in lockage fees, while a 25-barge tow operating between New Orleans and St. Louis would not pay any fees. Returning empty barges would pay the same fees.
If enacted, this proposal would disrupt the nation’s entire transportation system because higher costs on locking river segments will inevitably force shippers to seek transportation on other modes. Any loss of traffic on the locking river segments will likely trigger the upward adjustment provisions contained in this proposal, and with each increase new waves of shippers will leave the waterways perpetuating annual escalations. Once started, this reaction will likely continue with every round of increase until the proposal is repealed or until most, if not all, the locking segments will have become non-viable.
TRVA-TCWC Position: The Tennessee River Valley Association and the Tennessee-Cumberland Waterways Council rejects the Administration’s proposed restructuring of the IWTF and implementation of the tax increase in the form of the lockage fee. Proposals to raise taxes on the waterborne transportation industry, such as the one being advanced by the Administration, are based on flawed and misguided premises and should be rejected by Congress. The fee will raise consumer costs and further depress the economy, especially in regions like Alabama, Tennessee, Kentucky, West Virginia, Ohio, Pennsylvania, Missouri, Indiana, Illinois, Iowa, Wisconsin and Minnesota, which will be hit hardest by this proposal.
New processes should be sought for authorizing, funding, planning and delivering projects to insure funding is provided consistently and at levels needed to support construction and/or renewal of waterway infrastructure and insure delivery of those projects efficiently. Current discussions between the U.S Army Corps of Engineers and the Inland Waterways Users Board are expected to result in recommendations that will resolve the insolvency of the Inland Waterways Trust Fund and provide the necessary funds needed to continue the improvement, development and modernization of the nation’s inland waterway infrastructure.
