On May 3, 1977, the Iowa Department of Transportation Commission voted to make the attached Staff Waterway User Charge Proposal an Iowa Department of Transportation Waterway User Charge Proposal. ABSTRACT Waterway User Charges The lowa DOT reviewed Corps of Engineers accounting records to determine the costs of operating and maintaining a 300 mile section of the Mississippi River. An analysis of accounts was made, and costs were separated into channel and lock maintenance components. The lowa DOT examined the impact of assessing 43% of the attributable charges against the barge companies, ...an amount comparable to that paid by the trucking industry for the publicly-owned highway system. The results were: 3¢ per gallon of fuel $32 per single lockage The above waterway user charges would cause a 3% to 4% increase in barge rates (e.g., Davenport to New Orleans from $5.32/ton to $5.47/ton, or + 1/2¢/bushel). Such rates do not appear sensitive to variations in the 43% cost-coverage assumption, since a +10% change = ±1% rate change. The proposed charges would generate $75 to $100 million annually across the nation. User charges were not recommended for recreational boaters. The lowa DOT urges further study to determine whether the 300 mile section studied is nationally representative in its maintenance costs, standards, and the analytical methodology used. For further information contact: Joe Kennedy, Director River Division Iowa Department of Transportation 5268 N. W. 2nd Avenue Des Moines, Iowa 50313 Ph. 515-281-4295 Why User Charges? In 1787 the Northwest Ordinance first addressed the topic of waterways by saying that navigable waterways shall be "forever free.... without any tax, impost, or duty...." At the time, there were few navigation alternatives in a developing frontier country. In the 1830's, the Federal Government began funding further navigational improvements on the Mississippi River. The first such works consisted of the removal of snags, shoals, and sand bars; and the dynamiting and excavation of rock to clear passage. In 1878, Congress authorized the first comprehensive project on the upper Mississippi River---a 4 1/2-foot channel to facilitate commerce. In that project, several rapids were completely by-passed by construction of short parallel canals with navigation locks. Later, in 1907, a 6-foot channel was authorized. The increased depth was obtained primarily by construction of hundreds of rock and brush "wing dams''---low structures extending from the shore out into the river to constrict water flows. In 1930, after extensive study, Congress authorized the present 9-foot channel project on the upper Mississippi River north from the Missouri River confluence to Minneapolis. The navigation depth was to be achieved by construction of a system of locks, dams, and dredging. The Federal Government's concern with creating a viable water transportation system is further illustrated by the fact that beginning in 1918 a federally owned barge line was established on the Mississippi River and her tributaries. This was intended to stimulate investment by the private sector, and usage of the forthcoming river improvements. It was the major operator for years, as competition gradually began to appear. In 1953, the Federal Barge Lines was sold by the Government to a private corporation, having met its congressionally mandated objectives. Waterway users today still enjoy use of the government built and maintained river systems without "....any tax, impost, or duty...." All navigable rivers and canals of the United States share this background of federal subsidization. In other parts of the world fees are assessed for waterway usage. Users of the St. Lawrence Seaway, for example, pay a seaway fee. Users of the Welland Canal between lakes Erie and Ontario pay $800 to transit the canal's 8 locks. Trucks pay fuel taxes, permit fees, and tolls to operate on our nation's highways. Aircraft pay fuel and ticket taxes plus landing fees for the use of our nation's airports and air control systems. Additionally, while not routinely subsidized by the Federal Government, railroads nonetheless pay substantial property taxes. Therefore, after careful consideration, the lowa DOT staff endorses the concept of waterway user charges. Whether or not the State of Iowa ultimately supports such user charges will depend upon the content of this report and the comments generated by the public review process. These comments will be reviewed carefully by the Transportation Commission prior to finalizing a departmental position. Purpose Of The Study The question now becomes one of how much, and how to assess it. User charges may be assessed by various methods. Those most often mentioned, and considered most realistic are: 1. A fuel tax. 2. A locking fee. 3. A ton-mile assessment. 4. Combinations of the above. Analysis of the above methods reveals that the ton-mile assessment is the most difficult to administer, and the least familiar to other fee-paying transportation modes. Consideration of the remaining alternatives suggests that a combination fuel tax and locking fee would be the easiest to administer, and could be equitably assessed and audited. Thus, the balance of this paper discusses whether or not a realistic user charge system can be developed on the basis of a combination fuel tax and locking fee. The Study Since an analysis of the entire United States waterway system is a lengthy and expensive task, and beyond lowa's capabilities, it was decided to analyze representative areas. If |