Alliance for Innovation and Infrastructure | With Stimulus, Congress Got An Infrastructure Issue Right - Alliance for Innovation and Infrastructure
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NEWS

With Stimulus, Congress Got An Infrastructure Issue Right

27 Mar 2020

 

For years, the Harbor Maintenance Trust Fund has been accumulating billions of dollars. Despite an overflowing fund dedicated solely to ports and harbors, our waterside infrastructure has been in decline. Now, with an emergency coronavirus stimulus package, Congress has remedied this issue.

The Alliance for Innovation and Infrastructure (Aii) has long articulated a need to address the Harbor Maintenance Trust Fund. The issue has been with federal spending rules, not revenue itself. For the last decade, Congressional appropriators have been subject to strict spending constraints, known as “discretionary spending caps” as a result of previous deficit reduction agreements negotiated during the Obama Administration. Even in years with no statutory caps in place, appropriators are forced to make tough decisions on where to spend federal dollars.

The real issue though, is that spending from the Harbor Maintenance Trust Fund should never have been considered “discretionary,” i.e., subject to appropriations in the first place. The Fund takes in nearly $2 billion each year in excise taxes. Despite this, it has routinely paid out less than $1 billion annually. That means that it has been accruing billions of dollars every year. So not only would spending increases be paid for, they would be paid out of an exclusive fund with a surplus – not the general fund where most income and corporate taxes accrue.

The need is also critical for two reasons. The infrastructure report card from the American Society for Civil Engineers currently rates American ports as a C+. Not only does this reflect low quality infrastructure, but high opportunity cost causing America to miss out on critical revenue.

Shallow ports along our coastlines are unable to receive larger and heavier ships carrying more economic goods. Money from the Trust Fund can be used for dredging and improving these ports to receive more shipments and larger ships.

The latest development resolves the spending problem, and hopefully paves the way for critical investments and improvements to be made. Included in the latest $2 trillion stimulus package is language that lifts discretionary spending caps on the Fund for the Army Corps of Engineers.

The legislative fix now means that the Army Corps of Engineers, which undertakes the maintenance projects for our ports, can report on the needs and receive the necessary resources without straining the budgetary process. And because the money is already waiting, it will not strain the deficit or impact other programs.

As time goes on, the Harbor Maintenance Trust Fund may need revisiting. The latest action is no doubt a step in the right direction, but other options may prove to be more fiscally responsible, efficient, or impactful.

While this fix is not intended to stimulate the economy in the short term, it will undoubtedly spur growth as new infrastructure projects get underway. When those jobs are complete, the economic activity at our ports will be a further boon to American commerce, and the Fund will continue to grow.

 

 

Written by Benjamin Dierker, Director of Public Policy