U.S. seaports are vital to global trade, serving as gateways for international commerce. Ensuring their efficient operation and maintenance is crucial for economic stability and growth. However, the challenge of how to fund this essential infrastructure has been a contentious issue, leading to various policy debates and reforms.
This policy brief delves into the history, current challenges, and potential reforms for the Harbor Maintenance Trust Fund (HMTF), offering insights into how sustainable and equitable funding solutions can be achieved.
The Harbor Maintenance Trust Fund was established to finance the maintenance and operation of U.S. ports. Over the years, the fund has undergone significant changes, evolving from the Port Infrastructure Development and Improvement Trust Fund in the 1980s to its current form. But the HMTF faces persistent challenges, particularly regarding its funding mechanism, the Harbor Maintenance Fee (HMF)—a fee exacted on eligible shipments that feeds into the HMTF. The funds are used to pay for port improvements, required dredging, and other routine maintenance.
The HMF was initially levied on both imports and exports but was significantly altered by a Supreme Court ruling in 1998 that exempted exports from the fee. This exemption has led to inequities and strained international trade relations.
This brief explores three main policy solutions to reform the Harbor Maintenance Trust Fund and ensure its sustainability: implementing a user fee, abolishing the Harbor Maintenance Fee in favor of general fund appropriations, and increasing diesel fuel tax rates.
These potential reforms are crucial because seaport efficiency directly affects the economy. By addressing the existing inequities and compliance challenges, the U.S. can move toward a more equitable and effective funding mechanism for seaports. The following sections of this brief analyze these topics, offering a comprehensive view of the past, present, and future of seaport funding policy, focusing on regulatory and legal aspects of different funding and financing approaches.
Full Policy Brief: Navigating port funding: Alternatives for reforming the Harbor Maintenance Trust Fund