Resolution of the

Upper Mississippi River Basin Association

Opposing Proposed Increases

in the Inland Waterways Fuel Tax and

Supporting Justified Infrastructure Investment

in the

Upper Mississippi River System

December 11, 1998

WHEREAS, the United States currently imposes a tax of 24.3 cents per gallon on fuel for commercial vessels on the nation's inland waterways, 20 cents of which is deposited in the Inland Waterways Trust Fund and 4.3 cents of which is dedicated to deficit reduction;

WHEREAS, there have been several proposals in recent years to increase this Inland Waterways Fuel Tax by $1.00, or 411 percent, from its current level of 24.3 cents per gallon to $1.243 per gallon;

WHEREAS, revenue generated by the fuel tax and deposited into the Inland Waterways Trust Fund is used to provide the required 50 percent non-federal cost-share for new construction and major rehabilitation of navigation infrastructure;

WHEREAS, the U.S. Army Corps of Engineers has determined that the current fuel tax structure is sufficient to support priority navigation improvements with construction starts through 2013, including projects that are currently authorized as well as several that are under study;

WHEREAS, the United States faces increased competition from Latin America in international grain markets and is competitive in global markets due in part to our low-cost river transportation system;

WHEREAS, Midwestern farmers depend on international markets for their financial viability and the Upper Mississippi River System is the most efficient means for many of these farmers to transport their crops to international markets;

WHEREAS, an increase of $1.00 per gallon in the fuel tax would increase Midwestern farmers' cost of using waterway transportation by approximately 10 cents per bushel for shipments originating in the northern reaches of the system;

WHEREAS, the Upper Mississippi River System is the leading carrier of export-bound grain in the United States, transporting 54 percent of all U.S. corn exports and 40 percent of all soybean exports;

WHEREAS, an increase in the fuel tax would likely force additional tonnage onto
already-congested highways and railroads, thereby increasing highway repair costs and raising public safety and air pollution concerns;

WHEREAS, the inland waterways provide a vital regional, national, and international transportation system, with economic benefits to the nation as a whole; and

WHEREAS, farmers and others who ship products on the Upper Mississippi River System contribute almost 40 percent of the revenue flowing into the Inland Waterways Trust Fund, while only about 15 percent of expenditures from the Fund have gone to infrastructure improvements on the Upper Mississippi River System;

NOW, THEREFORE, BE IT RESOLVED, that the member states of the Upper Mississippi River Basin Association do not support any increase in the Inland Waterways Fuel Tax, on the grounds that such an increase is unnecessary and would adversely affect the profitability of farmers in Illinois, Iowa, Minnesota, Missouri, and Wisconsin;

BE IT FURTHER RESOLVED, that the Upper Mississippi River Basin Association believes adequate funds should be available for Upper Mississippi River System navigation improvement projects with demonstrated economic justification and environmental acceptability, given the region's considerable contributions to the Inland Waterways Trust Fund; and

BE IT FINALLY RESOLVED, that the Upper Mississippi River Basin Association calls upon Congress and the Executive Branch to inform and consult with the Upper Mississippi River Basin Association and its member states prior to initiating any increase in waterway user taxes.

Unanimously approved by the Upper Mississippi River Basin Association via conference call on December 11, 1998.