CBO Projections Show Water Trust Fund Trends Diverging Sharply
As part of its updated Budget and Economic Outlook release this week, the nonpartisan Congressional Budget Office updated its ten-year baseline projections for the Harbor Maintenance Trust Fund and the Inland Waterways Trust Fund, and the latter is in bad shape.
Harbor maintenance. The fiscal 2020 appropriations acts provided $1.67 billion from the Harbor Maintenance Trust Fund, not quite the all-time high, but close. (From FY 2010-2017, appropriations averaged $1.0 billion per year, before rising to $1.4 billion in 2018 and almost $1.8 billion in 2019.) CBO then extrapolates that 2020 total forward, with inflation, each year, totaling $18.7 billion in spending over the ten-year 2021-2030 period.
This is measured against an estimated $19.5 billion of Harbor Maintenance Tax receipts, plus the estimated $9.3 billion carryover balance from prior years at the start of 2021 (see the full backstory here). The projections call for year-end balances staying in the $9+ billion range for the remainder of the decade. (The House passed a bill three months ago that would allow the immediate spend-down of that $9 billion carryover balance, and House Democrats yesterday vowed to include that legislation in any infrastructure initiative that passes Congress this year.)
CBO January 2020 Baseline Projections for the Harbor Maintenance Trust Fund
|Millions of dollars.|
|Tax Revenues and Interest||1,627||1,679||1,668||1,761||1,832||1,899||1,970||2,044||2,123||2,209||2,296|
|New Budget Authority||-1,671||-1,705||-1,742||-1,779||-1,816||-1,854||-1,890||-1,930||-1,968||-2,006||-2,046|
Inland waterways. In terms of cash flow, the Inland Waterways Trust Fund is a rounding error compared to the HMTF – its annual tax revenues are only a bit over $100 million per year. And the IWTF usually only works on one large project at a time (the most recent of which was Olmsted Locks and Dam on the Ohio River. By statute, the IWTF is supposed to pay half of the federal appropriations for whatever project is is working on, but Olmsted was so expensive that Congress had to adjust the share for that project to avoid bankrupting the IWTF. The next big project will be Chickamauga Locks and Dam near Chattanooga, and the 2020 appropriations law lowered the IWTF share of any funding for that project that occurs during FY 2020 down to 35 percent.
FY 2020 appropriations from the IWTF are still $131 million, versus tax receipts and interest of just $118 million. Extrapolating that spending forward with annual inflation adjustments, versus tax receipts that are estimated to be stagnant, means that CBO is now projecting the IWTF to become insolvent by 2023.
CBO January 2020 Baseline Projections for the Inland Waterways Trust Fund
|Millions of dollars.|
|Tax Revenues and Interest||118||117||116||114||113||112||111||110||109||108||108|
|New Budget Authority||-131||-134||-137||-139||-142||-145||-148||-151||-154||-157||-160|
What to do? Congress could lower the IWTF share of Chickamauga still lower, or they could increase the barge diesel fuel taxes that support the IWTF yet again (they did so, via epic chicanery, five years ago), or they could take up the George W. Bush – Barack Obama proposal from OMB to replace the diesel tax with user fees.