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March 16, 2006 - ASCE Statement - Budget for FY 2007 for U.S. Army Corps of Engineers

Statement Of
The American Society of Civil Engineers
Before the Subcommittee on Energy and Water Development
On the Budget for
The U.S. Army Corps of Engineers
For the Fiscal Year 2007

March 16, 2006

The American Society of Civil Engineers (ASCE) recommends that Congress appropriate $9 billion for the U.S. Army Corps of Engineers Civil Works programs in fiscal year 2007. This will ensure that the Corps is able to meet its obligation to complete all existing congressionally authorized water resources and environmental restoration projects.

A. The 2007 Budget Request

The administration’s budget request for the Corps of Engineers Civil Works programs in FY 2007 is $4.733 billion, which is 42.5% below the $8.228 billion (including supplemental appropriations) enacted for the Corps by Congress FY 2006. The president’s budget request reduces funding for most of the major accounts that support Corps projects and activities. The budget gives priority to completing existing studies and projects already under construction. The proposed budget would require the cancellation of 532 authorized, on-going studies, construction, and operation and maintenance projects. It does not adequately address the costs associated with these cancellations.

The president’s budget requests $94 million Investigations. This is $1 million less than the FY 2006 request of $95 million and $105.7 million (53%) less than the FY 2006 enacted Corps budget of $199.7 million. Of the $94 million budget request, $45 million is going for two studies, a national inventory of flood damage reduction projects and additional studies for the Louisiana Coastal Area. These funds are used for the study of potential projects related to river and harbor navigation, flood control, shore protection, environmental restoration, and related purposes. They also cover restudy of authorized projects, miscellaneous investigations, and plans and specifications of projects prior to construction. Under this proposed budget, no new studies are funded, and the focus is on completing existing studies. In addition, no funding is provided for projects that have completed the feasibility study phase and are ready for preconstruction, engineering, and design. This would halt the continuous funding of projects that has been the standard practice of the Corps. In FY 2007, the Corps has the capability to obligate $200 million for studies. If enacted at the levels proposed, the FY 2007 General Investigations budget would have a significant effect on staffing levels of Corps district offices because the salaries of Corps employees are paid from project funds, and in part from funds for project studies.

The president’s budget requests $1.555 billion for Construction. This is $82 million less than the FY 2006 request of $1.637 billion, but $895 million (36.6%) less than the FY 2006 construction budget of $2.45 billion, including supplemental appropriations. These funds are used for the construction of river and harbor, flood control, shore protection, environmental restoration, and related projects. Generally, the reduced construction budget gives priority to ongoing projects with a remaining benefit-cost ratio greater than 3:1. There is funding for one new construction start and 14 project completions. Continuing projects with a remaining benefit-cost ratio less than 3:1 are not funded for any new construction, with some exceptions. Overall, the Corps of Engineers has the capability to obligate $3.5 billion for construction activities in FY 2007.

The president requests $2.258 billion for expenses necessary for the preservation, operation, maintenance, and care of existing river and harbor, flood control, and related projects. This is $279 million more than the FY 2006 request of $1.979 billion and $39 million less than the enacted FY 2006 Corps of Engineers operation and maintenance budget of $2.297 billion, including supplemental appropriations, 1.7% below the FY 2006 enacted level.

The budget gives priority to deep-draft ports ($523.8 million) and high commercial use waterways ($521.5 million) and limits funding for operation and maintenance of shallow-draft harbors (less than 14 feet in depth) and low commercial use waterways (less than 1 billion tonmiles per year). Budget support for maintenance of low commercial use waterways will be limited to $81.2 million, and maintenance of shallow draft ports will be limited to $44.3 million. No funding is provided for purely recreational harbors. In FY 2007, the Corps has the capability to obligate $4 billion for operation and maintenance activities.

The constricted budget for operation and maintenance in the past few fiscal years is already beginning to affect the navigability of certain waterways. Needed maintenance dredging continues to be delayed. Parts of the Atlantic Intracoastal Waterway have been closed to commercial navigation due to lack of maintenance dredging. The budget request for operation and maintenance in FY 2007 will exacerbate this situation. Last year’s operations and maintenance budget was inadequate, causing a need for a supplemental appropriations for planned maintenance, as well as emergency shoaling caused by hurricanes. This year’s request, also inadequate, may again require additional funding through a supplemental appropriations act. Underfunding the Operations and Maintenance account and seeking subsequent supplemental appropriations complicates effective planning and creates inefficiencies.

B. The U.S. Levee System

The president’s budget request proposes to spend $20 million in FY 2007 to conduct an inventory of all levees in the United States. ASCE believes a catalog of the U.S. levee system is long overdue, and we urge Congress to appropriate the full amount of the budget request for the levee inventory.

C. Inland Waterways Trust Fund

ASCE urges Congress to appropriate the entire anticipated balance of $233 million in the Inland Waterways Trust Fund for FY 2007. The president’s budget calls for an appropriation of only $197 million from the Trust Fund.

The U.S. Army Corps of Engineers maintains more than 12,000 miles (19,200 kilometers) of inland waterways, and owns or operates 257 locks at 212 sites on inland waterways. These waterways—a system of rivers, lakes and coastal bays improved for commercial and recreational transportation—carry about one-sixth of the nation's intercity freight, at a cost per ton-mile about half that of rail, or one-tenth that of trucks. The physical condition of these waterways received a grade of D– from ASCE on our 2005 Report Card for America’s Infrastructure released in March 2005.

Waterway usage is increasing, but the facilities are aging; many Corps-owned or - operated locks are well past their planned design life of 50 years. Of the 257 locks still in use in the United States, 30 were built in the 19th century; another 92 locks are more than 60 years old. In other words, nearly 50% of all Corps-maintained locks were functionally obsolete by the beginning of 2005. Assuming that no new locks are built in the next 20 years, by 2020, another 93 existing locks will be obsolete—rendering more than 8 of every 10 locks now in service antiquated.

The Inland Waterway Trust Fund, created in 1978, pays half the cost of the construction and major rehabilitation costs for specified federal inland waterways projects. It receives money from a tax on fuel (currently set at 20 cents per gallon) on vessels engaged in commercial transportation on inland waterways.

Congress should amend the Inland Waterways Trust Fund Act of 1978 to allow all funds collected to be used for repair and construction of dams and locks. Congress should then appropriate the full fund balance each year to pay for the cost of rehabilitating the nation’s oldest locks. The government needs to set a priority system for restoring locks that have outlasted their design lives, with an initial focus on all locks built in the 19th century. The current federal budget process does not differentiate between expenditures for current consumption and longterm investment. This causes major inefficiencies in the planning, design and construction process for long-term investments.

In the interim, Congress must appropriate the full fund balance of $233 million in the Inland Waterway Trust Fund to begin reducing the maintenance backlog.

D. Harbor Maintenance Trust Fund

The balance in the HMTF will increase to $3.962 billion at the end of FY 2007, according to the budget. The administration proposes to appropriate $718 million from the Trust Fund in FY 2007. Total HMTF revenues for fiscal year 2006 were $1.275 billion. The total Fund balance, however, was approximately $3.277 billion as of September 30, 2005.

ASCE believes Congress must commit the entire balance to port and harbor improvements. Growing traffic volumes and ever- larger ships are expected to strain U.S. port facilities in the first half of the 21st century. In a 2002 study for the U.S. Army Corps of Engineers on U.S. harbor needs through 2020, analysts concluded that foreign commerce now makes up about 27 percent of the U.S. Gross Domestic Product (GDP) and is worth roughly $1.5 trillion. Forecasts indicate that foreign cargo traffic will more than double by the year 2020. By 2040, imports and exports are expected to increase eightfold.

There are about 9,300 commercial harbor and waterway piers, wharves and docks in the United States. Of these, 150 deep-draft ports account for more than 99 percent of foreign waterborne trade entering the U.S. Moreover, about 75 percent of international tonnage and almost 90 percent of international cargo value flows through only 25 U.S. ports. Increasingly, the cargo traffic entering U.S. ports is being carried on a new class of “megaships.”

Today, companies are introducing “mega ships” that range from 6,000 to 7,500 TEUs, and plans are under way for vessels of 10,000 to 12,000 TEUs. Fully loaded by weight, mega ships require channels of 50 feet or more in depth. In the U.S., only a handful of ports currently meet this requirement.

Vessel demands on the nation’s ports will escalate, as commodity flows increase. The total number of annual vessel calls to and from the U.S. is expected to more than double by the year 2020 from about 114,500 in the year 2000 to approximately 261,000 in the year 2020. Between 2000 through 2020 containership calls are projected to increase at a 5.5 percent annual rate and grow from about 42,000 to almost 121,000.

Congress must appropriate the full balance of $3.9 billion in the HMTF in FY 2007 to pay for critically needed port and harbor improvements. The huge investment gap in our port and harbor infrastructure can be overcome by spending down the annual HMTF balances for the purposes the monies were intended. Our key deep-draft channels at the nation's gateway ports are inadequate for the container mega ships, which are the world standard for international trade, and intermodal connectors to ports are in poor condition.

E. National Inventory of Dams

The National Inventory of Dams is a computer database, maintained by the USACE, which houses vital information of federal and non-federal dams across the United States. The database tracks information about the dam’s location, size, use, type, proximity to nearest town, hazard classification, age, height and many other technical data fields. The database can be used for states or federal agencies to access comprehensive information for planning, security alerts or to use within a Graphic Information System (GIS) vital in tracking lifeline systems and responding to emergency events through using the geographic and mapping abilities along with the engineering information within the NID database.

ASCE respectfully requests that the subcommittee recognize the importance of this national dam database and increase the appropriation amount from the proposed funding level in the president’s budget of $200,000 to the full authorized funding amount of $500,000.

F. Beach Nourishment

The administration has proposed $44 million for beach projects and studies in FY 2007. Congress, however, appropriated $122.8 million for beach projects and studies in FY 2006. The administration’s proposal for FY 2007 is 64% lower than the level Congress enacted for FY 2006. We believe that Congress shouldappropriate $150 million for beach nourishment programs in FY 2007 to meet the growing need for this important program.