For most of the nation’s history, inland waterways users contributed little to the costs of constructing and maintaining these waterways to safely handle commercial navigation.
After decades of resistance from the commercial beneficiaries of this taxpayer largesse, the
Inland Waterways Trust Fund (IWTF) was created as part of the Inland Waterways Revenue
Act of 1978.
The IWTF was established to finance construction and major rehabilitation on the nation’s inland waterways. Under the IWTF, commercial users of waterways contribute to the trust fund through a modest tax on fuel they use on the waterway system. The fund is then tapped to cover 50 percent of the costs for construction of new dams and navigation locks and major rehabilitation of existing facilities.
Funds for the IWTF come from a $0.20 pergallon tax on diesel fuel used on 27 stretches of the country’s natural and manmade inland waterways (see map). The fueltaxed waters include most of the largest waterways, including the Ohio, Mississippi, and lower
Missouri Rivers, as well as the Gulf and Atlantic Intracoastal waterways. The fuel-‐taxed inland waterways system carries approximately 4 percent of the nation’s total freight traffic tonnage. Within that total the Ohio and Mississippi River systems carry nearly 90 percent of the tonnage transported on inland waterways.
The IWTF was intended to be self-‐sustaining, but a number of structural flaws and years of mismanagement has resulted in the trust fund being effectively bankrupt. The original goal for the IWTF was to create a system where user fees would pay for the cost of the transportation investment and help increase equity among transportation modes and various regions of the country. But under the view of the last years a new and more effective founding system is required, some new ideas has been presented but until now nothing has been decided.
Funding Inland Waterways Transportation – Options for the future
1) Locks usage fees:
Lock Usage Fees Charging companies to use the inland waterways navigation locks is one way of enabling users to generate more revenue for the IWTF. Locks and dams, which make navigation possible on most waterways (the lower Mississippi River being a notable exception) are the most expensive elements of the inland waterways system. A lock usage fee, in place of or in addition to the existing fuel tax, would charge users for their actual use of the locks that enable navigation on these waterways. These fees could vary based on the demand for locks; usage of a lock at a time of high demand would cost more, and could be a tradable commodity amongst companies. This would not only raise revenue, but move traffic more efficiently through existing locks. A lock usage fee was originally included in the 1978 Revenue Act, but was subsequently stripped in final negotiations between the House and Senate. Both the Bush and Obama Administrations also proposed versions of a lock usage fee system that Congress rejected.