Harbor Maintenance Trust Fund Spending Exceeded Deposits in FY19 for First Time in Over 30 Years

The just-ended fiscal year 2019 appears to be the first year since 1988 where the year-end unexpended balance in the Harbor Maintenance Trust Fund (HMTF) was lower than the balance at the end of the previous fiscal year – but not by much. The September 2019 report from the Treasury Department, released this week, states (page 7) that during 2019, the following happened:

FY 2018 Harbor Maintenance Trust Fund Cash Flow

Harbor Maintenance Tax deposits  $   1,555,407,458.37
Interest on balances  $      224,771,754.73
Total, Dollars Deposited in the HMTF  $   1,780,179,213.10
Transfers to Corps of Engineers  $ (1,745,402,443.90)
Transfers to St. Lawrence Seaway  $      (36,000,000.00)
Transfers to Customs (overhead)  $        (3,274,000.00)
Total, Dollars Removed from the HMTF  $ (1,784,676,443.90)
Result of FY 2018 HMTF Operations  $        (4,497,230.80)

Spending down $4.5 million in balances on a $1.8 billion per year fund may not sound like much, but it represents a major departure from the inexorable rise of unexpended balances in the Trust Fund over the last 30 years, as shown in the table below.

As to what the exact balance in the HMTF is at this moment, we can’t really say with precision. The FY 2018 totals in the table above were taken from the March 2019 Treasury Bulletin (page 91) and were provided by the Corps of Engineers, and they show the Trust Fund starting out the year with $9,100 million, taking in $1,658 million in deposits, spending $1,436 million and having $9,322 million left over at the end of the year. The President’s Budget for FY 2020, on the other hand, says on page 1021 of the Appendix that the FY 2018 starting balance was $9,108 million, not $9,100 million, that receipts and interest were about $1 million less than the Treasury Bulletin says they were, that transfers out were $1,433 million instead of Treasury’s $1,436 million, and that the year-end balance was $9,332 million, not the $9,322 million.

So Treasury/Corps and OMB are $10 million apart on the starting point for FY 2019 HMTF balances, and if the accounting discrepancies between Treasury, the Corps, and OMB can result in a $10 million difference on a year-end balance, then it is possible that this $4.5 million balance drawdown from this week’s initial (unaudited) Treasury reporting might evaporate in a puff of smoke.

Nevertheless, the fact that HMTF spending and deposits have in any case drawn roughly even is a testament to just how much the February 2018 and August 2019 bipartisan budget laws have loosened the purse strings of the Appropriations Committees. Total outgo from the HMTF went from $1.15 billion in FY 2017 to $1.44 billion in FY 2018 and now to $1.79 billion in FY 2019 because the budget deals lifted the statutory ceilings on non-defense discretionary appropriations, under which all HMTF appropriations must fit.

Looking forward, there is still an unexpended balance in the Trust Fund of around $9.3 billion that was collected from the shipping industry for their use of harbors but has not been spent for harbor maintenance. House Transportation and Infrastructure chairman Peter DeFazio (D-OR) has a plan for that – legislation (H.R. 2440 – bill text here and committee report here)  that would remove the HMTF from the scope of the statutory cap on discretionary spending. Were this bill (which has been reported from committee and is pending on the House Calendar) to be enacted, future appropriations from the HMTF would not be counted towards the non-defense discretionary budget cap, so nothing would be stopping the Appropriations Committee from giving the Corps of Engineers as much money as necessary to spend down the Trust Fund balance over several years.

Pivotally, the House Budget Committee, which has in past Congresses blocked this legislation, this year decided not to exercise its jurisdiction over the bill.

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