States accept greater burden for port improvements

AP News
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Posted: Oct 11, 2014 10:28 AM
States accept greater burden for port improvements

SAVANNAH, Ga. (AP) — As Georgia and South Carolina reached milestones this week in their efforts to deepen waterways so that giant cargo ships can reach their busy seaports, officials in both states showed they're willing to shoulder more of the financial burden for federal construction projects costing more than a half-billion dollars apiece.

A draft study on plans to make room for bigger ships in the Port of Charleston estimated South Carolina will pay two-thirds of the $509 million price tag, rather than split the cost 50-50 with Washington. That's mostly because state officials want to dredge Charleston's harbor deeper than a federal agency recommends.

Meanwhile, Georgia signed an agreement allowing the Army Corps of Engineers to start deepening the river channel that connects the Port of Savannah to the Atlantic Ocean by using $266 million in state money upfront. The deal calls for the federal government to cover 60 percent of the $706 million project, but there's no guarantee it will start funding construction by the time Georgia's cash gets spent.

"We can't afford to wait on you fellas in Washington," Gov. Nathan Deal said during the signing ceremony Wednesday, noting Georgia has been pushing for more than 15 years to deepen the Savannah harbor.

There's a reason East Coast states are impatient to deepen their ports. The Panama Canal is expected to finish a major expansion in early 2016, giving passage to supersized cargo ships bound for U.S. ports from Miami to Boston. Only the Port of New York and New Jersey and the Port of Norfolk, Virginia, are deep enough to accommodate the big ships with full loads and at low tide.

The Obama administration two years ago launched an initiative to streamline regulatory requirements to get harbor expansions started faster. But getting federal money for those projects has been tough with Washington focused on budget cuts and deficit reduction.

Now, there's mounting evidence of states putting up more of their own cash in a race for deeper water.

"If you want to be in the running for those bigger ships coming into the ports, it's a question of not getting left behind," said Jim Walker, navigation policy director for the American Association of Port Authorities. "They're doing what was essentially a federal responsibility."

That's been especially true for Miami, where digging began last year on a $220 million project to deepen the port's shipping channel. Eager to become the third East Coast port ready for giant ships even at low tide, Miami-Dade County put up $108 million and the Florida Legislature agreed to pay the rest. When President Barack Obama visited PortMiami in March 2013, Florida Gov. Rick Scott said he was "late to the party."

"This is something that, so far, the state of Florida and Miami-Dade County are doing on their own," said Andria Muniz, a spokeswoman for the Miami port, where dredging is scheduled to wrap up next summer.

The federal government once covered the entire cost of deepening U.S. harbors to ensure ships had access to ports. That changed in 1986, when President Ronald Reagan signed a law requiring states to pay a portion of the bill — typically 25 to 50 percent. The cost-sharing requirement was intended to help the federal government stretch its money for harbor upgrades among more projects. Proponents argued it would also weed out waste, as states would refuse to help pay for projects they didn't need.

The 1986 law also gave states more say in harbor improvements. So when the Army Corps last Tuesday tentatively recommended that Charleston's harbor be deepened from 45 feet to 50 feet, South Carolina officials insisted they preferred to dredge deeper to 52 feet. However, the state must pay the full cost for the extra 2 feet of depth — almost $75 million.

"We really felt we needed a harbor that could be accessed with a fully loaded ship 24 hours a day," said Jim Newsome, CEO of the South Carolina Ports Authority.

South Carolina has already set aside $300 million of its estimated $330 million share to deepen the Charleston harbor, with construction tentatively scheduled to begin in 2018. Newsome said he still expects Washington to pay its $166 million portion of the project.

"These are federal harbors and the people of South Carolina don't need to be paying for the federal share of the deepening project," Newsome said.

Georgia's governor also said this week he won't ask state lawmakers to cover more than their 40-percent stake in the Savannah harbor. That could pose a challenge if Congress and the president don't approve construction funding for the Savannah project next year. Dredging is scheduled to begin at least by early 2015, and Army Corps officials say contracts awarded in the first year will use up most of Georgia's $266 million.

Deal, who served 17 years in Congress before he was elected governor, sounded unconcerned Wednesday.

"We've come up with our share," Deal said. "I believe the federal government is going to live up to its responsibilities and its obligations."

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Associated Press writers Bruce Smith in Charleston, South Carolina, and Kathleen Foody in Atlanta contributed to this story.