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Committee on Taxation
June 6, 1984
JCX-13-84



BACKGROUND FOR FINANCE COMMITTEE MARKUP ON
SECTIONS 502 AND 1006 OF S. 1739

(Water Resources Development Act)

I. Summary of Revenue-Related Provisions of S. 1739

S. 1739 (Water Resources Development Act) was reported
by the Committee on Environment and Public Works on November
17, 1983 (S. Rept. No. 98-340), and was reported by the
Committee on Energy and Natural Resources on April 27, 1984
(S. Rept. No. 98-418). Sections 502 and 1006 of S. 1739 were
referred on May 16, 1984, to the Committee on Finance for a
period not to exceed beyond June 8, 1984. The Finance
Subcommittee on Taxation and Debt Management held a public
hearing on these provisions on June 5, 1984.

Administration Budget

The Administration's budget for fiscal year 1985
contains a proposal for $200 million in user charges on
inland and coastal channels and waterways and deep-draft
waterways. Revenues from the user fees would be treated as
offsetting receipts, i.e., they would appear in the budget
accounts of the agency responsible for the expenditures—the
Corps of Engineers Civil functions — as a reduction in
outlays.

The Administration based its budget recommendation on
the belief that shipping companies and their customers who
receive the benefits of Federal navigation projects should
pay a greater share of construction and operations and
maintenance costs.

Fiscal 1984 expenditures and receipts . — In fiscal year
1984, the Federal expenditures were about $650 million to
maintain shipping channels and inland waterways. The
existing user fuel tax (currently 8 cents per gallon) on
inland waterway commercial cargo users is estimated to raise
$39 million in fiscal 1984.

Section 502 — Inland Waterway User Charges

Section 502 of S. 1739 would authorize the Secretary of
the Army "to impose, collect and obligate use charges on the
commercial users of the inland waterways and harbors of the
United States to the degree necessary for additional



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construction, rehabilitation, renovation, operation, and
maintenance of commercial navigational features and
components of the inland waterways and harbors... so they are
sufficient to meet the needs of the commercial waterway
users, as recommended by the Inland Waterways Users Board..."
The user charges could be instituted only if spending for
such inland waterway and harbor purposes is to exceed the
$646 million annual ceiling set by section 501 of the bill
for fiscal years 1986-1999.

Section 1006 — Port Development Fees

Section 1006 would authorize a non-Federal interest,
e.g. , a State or a port authority, to recover its obligations
for construction and incremental maintenance costs relating
to harbors by collecting user fees from vessels in commercial
waterway transportation. Direct beneficiaries would be
assessed 80 percent of the costs. The fees would be used
only to pay for the non-Federal share of the construction and
incremental maintenance costs of work on harbors.



II. Status of Inland Waterway Trust Fund



Some of the expenditures for inland waterways projects
that are authorized in S. 1739 would be made from the Inland
Waterways Trust Fund. The budget status of the trust fund is
described in the following table.



Inland Waterways Trust Fund

Amounts Available for Appropriation
($ millions)

Fiscal years



Unappropriated balance,
start of year

Receipts

Inland waterway fuel tax
Interest and profits on
investments
Total available for appropriation 91.5 142.5 204.5

Unappropriated balance,

end of year 91.5 142.5 204.5

1/ Revenues are projected at $55 million and $59

million for fiscal years 1986 and 1987, respectively,



1983


1984


1985


actual


est .


est .


55.5


91.5


142.5


28.8


39.0


46.0I 7


7.2


12.0


16.0



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' The Inland Waterways Trust Fund was established in
accordance with the Inland Waterways Revenue Act of 1978.
Revenue is derived from receipts from taxes imposed on fuel
used in cargo vessels in commercial inland and intracoastal
waterway transportation. The tax currently is 8 cents per
gallon, and it is scheduled to increase to 10 cents per
gallon on October 1, 1985. The tax does not apply to
deep-draft ocean-going vessels, passenger or fishing vessels,
or certain barges primarily used as cargo containers on
ocean-going vessels. The Act provides that amounts in the
trust fund shall be available, by appropriations acts, for
making construction and rehabilitation expenditures for
navigation on the inland waterways described in section 206
of the 1978 Act. No appropriation from the trust fund was
requested for either of fiscal years 1983, 1984 or 1985.


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