Port Study Skirmish
There’s another skirmish in the Palmetto state’s most notoriously anti-competitive war …
Except this time we’re not talking about the losing battle South Carolina is fighting with other port states, we’re talking about the latest intra-state port spat between warring South Carolina political factions.
Last summer we had the S.C. General Assembly battling with Gov. Mark Sanford in an effort to weaken his influence over the S.C. State Ports Authority (SPA). Sanford lost that fight and was stripped of considerable power, although the sad truth is that he has failed miserably over the last eight years to appoint pro-free market conservatives to lead the SPA.
As a result, South Carolina’s failed “total state control” model of port management (which forbids private investment in our port facilities) has never been more entrenched. While our competitors expand their facilities using creative landlord-tenant partnerships, our state continues to turn its nose up to billions of dollars in private investment and thousands of new jobs. In fact Sanford, House Speaker Bobby Harrell and Senate President Glenn McConnell were specifically warned in July 2006 that South Carolina’s restrictions against free market investment were “counterproductive” and would “discourage investment” in our facilities.
They didn’t listen … and now our state’s economy is paying the price.
How bad is it? Well, the Port of Charleston has dropped from No. 4 to No. 10 in the nation in terms of container traffic over the last eight years. Meanwhile dreams of a deepwater port in Jasper County remain unrealized – despite the SPA’s promise to move forward on the project five years ago.
Hopefully Gov.-elect Nikki Haley will fare better than Sanford … but she’s not exactly off to promising start.
While South Carolina loses additional ground to its neighboring states, however, the entrenched port establishment in Charleston, S.C. has launched a new skirmish against another Palmetto politician.
Specifically, a required feasibility study for the deepening of Charleston harbor has become a focal point for those who want to continue to the wasteful practice of earmark spending in Washington, D.C. It has also become a rallying cry against U.S. Sen. Jim DeMint, who has encountered newfound success in his war against pork barrel spending.
In fact, to hear some port backers tell it – DeMint’s crusade against earmarks is what is keeping the deepening of Charleston harbor (which should have been done years ago) from moving forward.
Currently, Charleston harbor has a depth of 47 feet in its entrance channel and 45 feet through the remainder of the shipping lanes. Port officials want to increase these depths to 50 feet, and then extend the new maximum depth by two miles to “reach the needed ocean contours for length of channel.” First they’ve got to finish jumping through costly regulatory hoops, though – a process they say will require earmark funding.
Accounting for less than one percent of the federal budget, earmarks are used (and routinely abused) by lawmakers in Washington to direct federal spending. And while they have yet to be officially banned, DeMint has succeeded in convincing GOP Senate Leader Mitch McConnell – a one-time proponent of earmarks – to flip-flop his position. DeMint has also refused to request earmarks himself – including money for the feasibility study.
In an effort to get to the bottom of this issue, FITS spoke with a pair of sources on the front lines of the battle – one close to DeMint, the other close to the State Ports Authority.
“The bottom line is that (the SPA) is not taking the initiative to deepen the Charleston port as quickly as possible using non-federal dollars,” the source close to DeMint tells us. “They are waiting to get federal dollars that are not coming this year and maybe not next year. They are then blaming DeMint’s efforts to get rid of earmarks for their lack of progress, when they have other means of getting the job done.”
Our port source described that terminology as “harsh,” and points out that since the funding was left out of the federal budget – an earmark is the only way to get it included.
“We chose to follow the normal federal cost share process,” our source close to the SPA says. “The Chairman of the Senate Appropriations Committee that stated that both Senators needed to request funding for a project of this nature for consideration, and we are seeking support from our whole delegation on this.”
The $3.4 million study is one of many regulatory hoops required before the Army Corps of Engineers can deepen the harbor. The Corps requires these intense studies on construction projects (and a cost share with state governments) because once the projects are completed the federal government is on the hook for 100 percent of the costs associated with maintaining the new harbor depth.
Projects for several of Charleston’s port competitors were funded in President Barack Obama’s budget – but South Carolina was left out in the cold. Efforts to get federal funding for the study have been supported by Democrats Jim Clyburn and John Spratt as well as Republican Sen. Lindsey Graham – South Carolina’s most prolific earmark spender.
“The federal government collects a variety of taxes from businesses that import and export and South Carolina should not be the only state that pays their own way among our competitors,” the port source told us. “Unless Sen. DeMint’s bill passes to change the way ports are funded, it would take either congressional directed spending or being in the administration’s budget to get reimbursement (for the project).”
Our pro-DeMint source disagrees.
“The Charleston Port has the option of fully funding the $3.4 million feasibility study and getting half of that credited back to them by the Corps during the construction phase of the deepening,” the source says.
That’s not guaranteed, however, according to our port source.
“You have to complete construction before you seek reimbursement for the study and it is not guaranteed,” the source says, adding that $3.4 million is the “original Corps estimate for the Feasibility Cost but they have not scoped the project yet … (it) could be more expensive.”
So … which source is right?
Well, both … and neither.
First of all, this latest spat is yet another example of how South Carolina’s “total state control” management approach is fatally flawed. If our state was leveraging private investment in its port system, coming up with $3.4 million (in anticipation of reimbursement) would be no big deal.
We’re not leveraging that investment, though … and once again that’s costing us on the competitiveness front.
Also, it stands to reason that private companies willing to spend billions of dollars on port infrastructure could easily come up with $3.4 million to study the deepening of a harbor – not to mention the estimated $300 million required to actually deepen it.
Assuming you believe that harbor deepening (and port management) are core government functions – an idea we’re not sold on – then we would humbly suggest that you look at who is ultimately responsible for federal spending. The bottom line is that President Barack Obama didn’t fund the project – nor did House Budget Committee Chairman John Spratt (who was too busy ramming Obamacare down our throats to pass a budget this year). And then there’s U.S. Majority Leader Jim Clyburn – who was apparently too busy sending pork to the wrong state.