SoCal port officials set to add $15-per-TEU container tax
For the second time in less than a month, Southern California port officials are set to impose a tax on containers moving through the ports of Long Beach and Los Angeles.
The harbor commissions from each port will vote during a joint meeting on Monday to implement the $15-per-TEU tax on all containers moving in or out of the two adjacent ports by truck or rail. The seven-year tax is expected to raise upwards of $1.4 billion to pay for infrastructure development at the two ports.
The proposed tax is in addition to the $35-per-TEU tax approved by the two port authorities late last month to pay for a controversial $2 billion re-regulation plan of the local drayage fleet.
The new $15-per-TEU infrastructure tax would take effect on Jan. 1, 2009, six months after the June 1 start of the $35-per-TEU container tax.
Earlier this year, internal port documents obtained by American Shipper revealed that the ports were planning to tap taxpayers and consumers for $7.8 billion in port-defined infrastructure development while themselves only offering 3.3 percent of the cost.
In the documents, the ports identified $8.1 billion in road and rail projects considered by port officials as “critical” to keeping the two ports growing. According to the documents, the ports were willing to pay $267 million, or 3.3 percent, of the total cost of the projects. Under the ports funding scheme detailed in the documents, taxpayer funds from federal, state and local sources would pay $3.7 billion of the total. The remaining $4.1 billion would be passed along to importers, exporters and the railroads mainly through the $15-per-TEU container tax. Economic experts have said these companies will not absorb these costs, but pass them along to consumers in the form of higher prices.
The two neighboring ports, which together comprise the busiest container port complex in the Western Hemisphere, moved nearly 16 million TEUs last year. Estimates suggest this number will more than double within a decade. Given that the port-area infrastructure continues to deteriorate as costs for repairs and development have skyrocketed, the problem has grown out of reach of even the financially lucrative ports.
For example, one project detailed in the documents — replacing the aging Gerald Desmond Bridge in Long Beach’s port — has risen in cost over the past five years from about $350 million to a current estimate of more than $800 million. A taller, higher-capacity version of the bridge is considered a key project by Long Beach port officials, despite criticisms from local groups that it will lead to higher truck volumes and more pollution. The current bridge was built in the late-1960s and is considered a bottleneck at the ports due to its low traffic capacity. It is also too low to allow future mega-container vessels safe passage underneath it. Despite Long Beach identifying the bridge as a project of critical importance, the port documents reveal the two ports are willing to provide only $100 million to its replacement.
Other projects identified by the documents as being funded by the new $15-per-TEU tax include:
' Numerous on-dock rail projects.
' The Gerald Desmond Bridge replacement, to allow more trucks over it and larger vessels under it.
' Expanding a short port-area freeway that is used almost exclusively to deliver containers to a near-dock port railyard.
' Rebuilding freeway connectors serving the Los Angeles port.
' Highway-rail grade separations in Los Angeles, Orange, Riverside and San Bernardino Counties.
While the documents detailed a $26-per-TEU tax, the additional funds collected above $15 per TEU were proposed to go toward regional projects such as the Colton Crossing rail project in the Inland Empire. The regional projects, based on port comments, appear to have been dropped from the new container tax plan.
The ports also hope to use the $1.4 billion collected from the proposed $15-per-TEU tax to match government funds, resulting in a total available for port-area projects of close to $3 billion. However, much of the federal, state and local funding listed in the port documents has yet to be secured by port officials.
Despite the funding scheme’s heavy reliance for half of this money on taxpayer dollars, the ports continue to maintain that they are not supported by taxpayer dollars. ' Keith Higginbotham
