Meanwhile, the Office of Management and Budget (OMB) has significant influence over funding allocation, and distributes moneys on a “piecemeal basis” in areas that do not necessarily align in the appropriate proportions to the scope and need of the project.
“The federal government allocates a little money to this project, and a little money to that project — that’s why these projects are taking so long to build — the money runs out and no real progress is being made,” Martin says. “For example, the Olmsted project, started back in 1991, was supposed to be completed in eight years; and is still under construction. By the time it’s completed, it will have been under construction for 24 to 26 years in part because projects are funded with a piecemeal approach.”
Every year, the Inland Waterways Trust Fund struggles — even with 50/50 federal match — to fund existing projects, and unable to support the start of new ones.
“We have $3.7 billion worth of projects currently under construction,” Martin notes. “We have another $4.3 billion in projects that are authorized, but are not yet under construction. When you combine those two categories, we need $8 billion to complete the projects that are authorized and under construction, and authorized and not yet under construction. At $160 million a year, we’ll never get there.”
To paint a picture of the current situation with new construction and major rehabilitations consider this: only seven projects across the entire system will be completed in the next 20 years; under the new plan, more than 25 projects will be completed on the inland waterways system by 2030.
“Under the current mechanism of funding projects, we’re not getting a whole lot done,” Martin says. “The plan would change the way the corps manages and delivers on projects to bring more money efficiencies into the system and allow us to build projects more quickly, on time and on budget.”
The barge industry already pays a 20-cents/gallon fuel tax. This tax revenue goes into the Inland Waterways Trust Fund, and is matched by the federal government for use in new construction and major rehabilitation of the inland waterway. Under the plan, an increase of 6 to 9 cents/gallon would be imposed.
“We just don’t have enough money to meet the needs of the system, so the capital development plan that’s been put together will increase the diesel fuel tax paid by the tug and barge industry; and thereby, provide more money to the Trust Fund to build more projects,” Martin says.
Combining a condition assessment with the calculated economic return, the new plan identifies criteria for assessing the condition of each individual lock and dam based on the structural need and its economic impact — i.e., the volume and value of the cargo that moves through the system — to ensure funds are focused on the areas with the greatest need.
In December, the Inland Waterways Users Board endorsed recommendations, and they instructed the team to finalize the report. Meanwhile, several major maritime organizations — Waterways Council, American Waterways Operators, National Waterways Conference — and several commodities groups (e.g., National Corn Growers Association) have unanimously endorsed the plan.
“The major stakeholders are all lining up behind the plan,” Martin says. “Hopefully there will be a broad base of support from the constituency groups when the users board submits the final report to Congress, and it gets that kind of support in Congress,” Martin says. “We’re optimistic.”
Eriksen gives this final thought regarding the importance of a high-functioning intermodal system: “The value of grain is zero until you introduce transportation into the equation. The value of agricultural commodities is derived by a number of people in the whole supply logistics chain working to make it efficient. It’s not just the railroad operator, the barge operator or the corps — it starts with the grain companies — ranging from the multinationals or to your local grain house who have made the necessary investment to efficiently handle and to pass on product to the next mode of transportation.”