The Harbor Maintenance Trust Fund – an account which collects an excise tax assessed to shippers on all waterborne commerce (except exports) – is flush with cash; $10 billion of it. This money is set aside specifically for harbor maintenance activities, including dredging channels, and maintaining jetties and breakwaters. Yet, Congress won’t spend it and the Administration doesn’t want it. In fact, this fund accrues more money than it spends each year, leaving the unallocated budget to continuously accumulate.

Allowing $10 billion to sit idle and unused is particularly problematic considering the state of U.S. ports and harbors. The American Society of Civil Engineers assigned them a “C” grade in its most recent Infrastructure Report Card, and the imminent demands compound with every passing day. Waterborne commerce already plays a major role in the U.S. economy generating nearly $5 trillion in economic activity and bringing $41 billion to federal, state and local coffers annually, but a nearly complete Panama Canal expansion project could push these numbers even higher – if we’re ready.

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When the Panama Canal expansion is complete later this year, it will accommodate significantly larger ships, weighing up to 3 times more, than the cargo vessels which currently pass through the canal. Many U.S. harbors have not been sufficiently dredged to accommodate the larger ships commonly used in international trade, not to mention the mega-ships that will pass through the newly expanded canal. Nevertheless, the U.S. won’t reap the full rewards of these large-scale improvements if basic investments are not made to bring our ports and harbors from a “C” to an “A” for regular day to day use, including regular domestic shipping activities.

So why do Congress and the Obama Administration agree each year to spend less than half of the $2 billion accrued annually, despite having a massive surplus? The answer lies in very complicated budget rules. Even though nearly $2 billion per year is collected in the fund, the Army Corps of Engineers does not have authority to use any of that money. Simply put, if Congress approves use of the funds, it shows up on the federal ledger as increased spending applied against the budget caps. Therefore, an equal amount of spending needs to be cut elsewhere in the federal budget. This is true even though the money is raised through a user fee paid only by those who ship into and out of ports and harbors.

As convoluted as this is, there are solutions. The best and most effective way is to remove Congress’ temptation to withhold HMTF funds to allow increased spending elsewhere.

Three ways to do this are:

1) Authorize the Army Corps of Engineers to spend money from the HMTF as needed without any additional action from Congress (this is how the Highway Trust Fund functions) 

2) Privatize the fund (with limited government oversight) and allow an industry run organization to determine when and how funds are made available

3) Eliminate the tax altogether and allow shippers to self-finance all of their harbor dredging and maintenance needs

There are a finite number of opportunities for the federal government to improve infrastructure without spending a dime of taxpayer money. User fees should directly benefit those who pay them. Cargo shippers have paid their fees; it is now time to invest in the infrastructure they need. As Congress considers the 2016 Water Resources and Development Act, investing in U.S. ports and harbors should be among the top priorities.


Shane Skelton is the Executive Director for the Alliance for Innovation and Infrastructure