Washington state senators look to fully collect Harbor Maintenance Tax in new legislation

Legislation recently introduced by Washington state Senators Patty Murray and Maria Cantwell is focused on augmenting United States port operations by fully collecting the Harbor Maintenance Tax (HMT), which is comprised of revenues collected annually from importers and domestic shippers for deep-draft navigation maintenance dredging and the operation and maintenance of large and small ports.

Entitled the Maritime Goods Movement Act of the 21st Century, key components of the bill include:
-repealing the Harbor Maintenance Tax and replacing it with the Maritime Goods Movement User Fee, the proceeds of which would be fully available to Congress to provide for port operation and maintenance, which would double the amount of funds available for American ports;
-ensure that shippers cannot avoid the Maritime Goods Movement User Fee by using ports in Canada and Mexico;
-set aside a portion of the user fee for low-use, remote, and subsistence harbors that are at a competitive disadvantage for federal funding;
-create a competitive grant program using a percentage of the collected user fees to improve the U.S. intermodal transportation system so imported goods and goods for export can more efficiently reach their intended destinations; and
-pay for expanded infrastructure investments by closing loopholes that allow the largest oil and gas companies in America to receive billions of dollars in taxpayer subsidies every year, even though they enjoy profits in excess of $100 billion annually

“Senator Cantwell and I have worked with small and large ports here in Washington state, the business community, and labor leaders to write the Maritime Goods Movement Act – which will make desperately needed improvements to the laws that impact ports of all sizes and business large and small—exporters and importers,” Senator Murray said in a statement. “This legislation will change the Harbor Maintenance Tax to give shippers new incentives to move their goods through American ports – particularly those in the Pacific Northwest.”

The HMT is prominently featured in S. 601, the Water Resources Development Act (WRDA) of 2013, which was passed by the United State Senate’s Environment and Public Works (EPW) Committee in March.

In that bill, the HMT is referred to as the Harbor Maintenance Trust Fund Act of 2013. The bill has language that addresses the growing surplus of funds in the Harbor Maintenance Trust Fund by ensuring all revenues will be spent for port maintenance without impacting other important U.S. Army Corps of Engineers projects.

Since the Harbor Maintenance Tax’s inception in 1986, the American Association of Port Authorities (AAPA) has advocated for full use of its collections for their intended purpose of dredging America’s deep-draft navigation channels to their authorized and required depths and widths. And importers and domestic shippers pay approximately double the annual amount that is drawn from the HMTF for maintenance dredging, leaving a surplus that exceeds $7 billion today. 

In a resource paper issued by the AAPA, it is noted that “most ports need regular maintenance of the federal channels leading into their harbors in order to maintain their constructed depths and widths and continue to move waterborne commerce efficiently,” with the U.S. Army Corps of Engineers overseeing Federal maintenance. The maintenance portion, according to the AAPA, is paid for through a tax on channel use, with the Harbor Maintenance Tax serving as an ad valorum tax of 0.125 percent on imports and domestic waterfront shipments and cruise passengers.

And even with more than $1.5 billion in annual Harbor Maintenance Tax revenues, the AAPA pointed out that Congress has only appropriated slightly more than half of that amount for channel maintenance, which has in turn resulted in a more than $7 billion surplus in the Harbor Maintenance Trust Fund and federal navigation channels in the U.S. being poorly maintained.

“AAPA believes a permanent solution to the HMT spending issue is needed,” it stated in the resource paper. “AAPA urges Congress to pass legislation that guarantees full utilization of the Harbor Maintenance Tax, such as providing an offset to collections or causing the use of collected revenues to be mandatory. HMT funds should be first used for historical intended purposes, and we support providing more equity for HMT donors.”

When shippers’ cargo passes through the U.S. Customs and Border Protection to be allowed into the U.S., they pay a tax directly to Customs, with Customs then depositing it into the Harbor Maintenance Trust Fund, with Congress appropriating money to the trust fund.

“The problem is there is not a linkage between what comes in and what is appropriated,” explained AAPA Vice President of Government Relations Susan Monteverde. “What the bill is trying to do is resolve that in a way that does not have a Congressional score. They are using a point of order to do this rather than take it off budget and have the funds that come in go directly to corps as other fee-based programs do. Congress decided not to do that because the score was too high; it is estimated to be anywhere from $20 billion to $22 billion to fix it that way. So instead Congress is using a point of order to try to allow a member of Congress to go on the floor and block an appropriations bill…if it does not appropriate for maintenance dredging the amount that was collected the year before along with the interest.”