State Advisory

Are California Ports and Harbors at a Disadvantage?

California’s local agency port system is a collection of city departments, special districts and charter ports. Unlike the majority of other states with ports, California does not substantially contribute to the development and improvement of ports.

Over the past decade, the State of California has only invested a few million dollars. According to the General Accounting Office, of the five Pacific Rim states, only California does not provide grants or appropriations to fund navigation projects. Over 50% of the container cargo through California comes from and goes to other states. This cargo can and will go to ports in other states and countries if California does not meet the challenge. With the loss of cargo will be the loss in jobs, personal income and state taxes.

What California Ports and Harbors Mean to the State Economy

Economic activity that depends on California ports creates 941,000 jobs in California , contributes $30.2 billion to the Gross State Product, pays over $1.48 billion in taxes to the revenues of the State Treasury and has an impact on Personal Income of $32.5 billion.

The value of Waterborne International Trade in 1997 for the United States was $626 billion, 31% of it, or $194 billion came through California. Three of the top ten ports in the nation by dollar value of imports and exports are in California; Los Angeles is number 1; Long Beach is number 2; and Oakland is number 4.

These same three ports are in the top five ports in North America for container movements. In the world only two U.S. ports are in the top ten for container movements, both are in California; Los Angeles is number 6 and Long Beach is number 7. According to the President’s Trade Policy Agenda for the Year 2000: “…the United States has regained its position as the world’s largest exporting nation. This is especially important, as export-related jobs typically pay 13-16 percent above the average U.S. wage;…openness to imports has helped to keep inflation low, broaden choice and improve consumer prices especially for basic household necessities. This is especially important for the poorest families.”

California is the number one food and agricultural producer in the United States. It is estimated that for every $1 billion in agricultural export sales, 27,000 jobs are created in the State. California’s food and agricultural exports for 1997 totaled $6.7 billion. Six of California’s top 10 agricultural export markets are Pacific Rim countries, accounting for nearly one-third of the total market share ($2.3 billion). Cotton and almonds are California’s leading agricultural exports, followed by wine, grapes, oranges and beef. California wine has experienced an 80% increase in exports from 1995 to 1997.

State Port and Harbor Issues

The federal government realizes one of the primary goals of the U.S. transportation system is to facilitate safe and secure movement of people and cargo in domestic and international waterborne commerce in order to promote the Nation’s economic growth and international competitiveness in a safe and healthy environment. Increasing world trade and rapid evolution of shipping practices and technology, including containerization and intermodalism, have increased the need for port and harbor development.

Another pressing issue for ports is landside access. Intermodal connections between transportation modes are typically the weakest links in the Nation’s transportation system. Between 1970 and 1995, U.S. international waterborne freight nearly doubled. It is forecasted that international waterborne freight volume will triple by year 2020. With the phenomenal growth in exports and imports has come the equally phenomenal increase in truck traffic. The Ports of Long Beach and Los Angeles handle 20,000 truck and 30 train movements per day. By 2020, these figures are projected to grow to 50,000 trucks and 100 trains.

A pressing issue for ports is water depth and the dredging needed to construct and maintain navigation channels that allow ships to come and go without delays and without being only partially loaded. The shipping companies have recognized the value of larger ships, which require deeper navigation channels. If the ports cannot meet the need the shipping companies, they will take their ships to other ports that can. California ports compete with Washington and Canadian ports in Puget Sound, which do not have the same dredging issues.

Most importantly, a major issue for ports is having sufficient funds available to dredge California’s ports and harbors and to invest in construction of cargo handling facilities and infrastructure that are required to remain competitive. According to the U.S. Department of Transportation’s Maritime Administration, California’s ports invested 436 million dollars in capital expenditures during 1999 alone. This was equal to 40% of all port investments nationwide. Annually, the United States has invested tens of millions of dollars in the federal navigation system in California but not enough to fund all needed navigation channel construction and maintenance.

The United States through the Water Resources Development Act (WRDA) and the annual Energy and Water Appropriations Act provides a significant share of the funding for the development of the navigation infrastructure and its maintenance. The ports pay for the balance. The ports also pay for the development and maintenance of the cargo working areas and berthing areas, including docks, wharves, piers and container cranes. The ports have also invested money into the railroads to improve the railroad system to maintain California’s competitive stature. The State of California, which gains the most by having ports and harbors, has the most to lose if the nation’s international cargo is shipped overseas through ports in other West Coast states, Canada or Mexico.

California Ports and Harbors are a partner with the Environment

Port development is being done in an environmentally friendly manner. Because of this development, degraded wetland areas in California have been restored that otherwise would not have had available funding to carry the restorations. In addition, infrastructure projects have been constructed as a part of port development that have minimized or eliminated environmental impacts. These projects have resulted in:

Over 4,500 acres of wetlands being restored.

Water quality enhancement through the removal of contaminated sediments.

The creation of over 650 acres of shallow water habitat.

The elimination of 2.5 million truck trips and the resultant air quality benefits by constructing intermodal rail facilities in or near major ports.

Issues for California’s Governor and Legislature

Fund Local Share of Federal Projects

Due to changes in federal law and the benefits received by all Californians, we strongly endorse the concept of providing a mechanism for state financial contributions to maritime transportation projects.

Support Federal Funding

Support federal appropriations that fund California maritime and coastal projects. California generates over 40% of the federal Harbor Maintenance Tax and only receives 8% back!

State Harbors and Watercraft Revolving Fund

Keep intact the harbors and watercraft revolving fund managed by the California Department of Boating and Waterways. This watercraft revolving fund is the first and finest in the nation. Recreational boaters solely fund it. It is greatly responsible for the strength of California’s wonderful small craft infrastructure system.

Maritime Transportation Linkage

Sponsor and support the development of a comprehensive California transportation plan that includes rail and highway links to the ports allowing the efficient and seamless goods movement from land and to sea. California should implement this program in conjunction with the federal Maritime Transportation System initiative.

State Maritime Policy

Adopt maritime policy at the Governor’s cabinet level which recognizes the current and future value of California’s ports and harbors.

California Maritime Infrastructure Bank

Support the California State Maritime Infrastructure Bank, which is dedicated to helping ports and harbors fund projects: a.) Fund the Bank with initial capitalization of $3 to $5 million to start the revolving fund; b.) Support federal policy changes in the distribution of federal Wallop-Breaux funds so that California, as well as all states, receives its fair share of designated boating and fishing generated tax funds.

Mitigation Banking

California should adopt a strong mitigation banking policy allowing credits to be given for environmental enhancements accomplished in port and harbor projects.