Testimony by Glen G. Nekvaal Lake Carriers' Association of the reasons for the excellent communication between industry and the U.S. Coast Guard - finding new efficiencies is the order of the day in industry as well. We are all now truly in the same boat. Lake Carriers' Association is deeply concerned that the preceding glowing report will be dimmed in the not-too-distant future by the Administration's ill-conceived proposal to institute a Navigation Assistance Tax. Although the Office of Management and Budget terms these new taxes User Fees, let's not kid ourselves. Our industry, and therefore our customers and their employees, will be burdened with additional taxes if this proposal becomes law. The Navigation Assistance Tax is like the iceberg that sank the TITANIC. At first sighting, it seems small and harmless, but it's what lies below the waterline that could damage or even sink waterborne commerce on the Great Lakes and other U.S. waterways. In its first full year, the Navigation Assistance Tax would raise $176 million, but what will the next year or years hold? Look at the tax that funds the Harbor Maintenance Trust Fund. It tripled overnight and has never come down, even though it is generating a surplus year after year. The Navigation Assistance Tax should be rejected as poor public policy to start with for it takes too narrow a view of U.S. Coast Guard functions. Earlier, I stated that Aids to Navigation help keep ships on a safe course, but a safe transit protects the marine and surrounding environment. And why must commercial navigation bear all the pain? Aids to Navigation are used by fishermen, pleasure boaters, cruise and gaming vessels, ferries... as well as by government ships, including U.S. Coast Guard and U.S. Navy. Since not all the users are included, this new tax doesn't even comply with the theoretical model for a user fee. The Navigation Assistance Tax will be applied to icebreaking in FY2000. Again, while U.S. Coast Guard icebreakers do what their name implies, the icebreaking mission is not solely related to commercial navigation. The U.S. Coast Guard also performs icebreaking to prevent flooding, but where's the bill for riparian dwellers? Again, commercial navigation would be footing the bill for all beneficiaries. What will be the impacts of this foot-in-the-door tax on Aids to Navigation and Icebreaking? Higher costs for American industry competing on a global basis. Our customers will likely react in one of two ways. They will either switch to Canadian ports to avoid the tax, or switch to a land-based mode of transportation. Yet, let's not forget that these options are presently available, but remain unused. Why? Because waterbome commerce via American ports is the most cost-effective means of transportation. No matter what option industry pursues, the result is a higher delivered cost for raw materials and goods. That benefits no one. Our environment will suffer too from these modal and source shifts. Vessels are the greenest form of transportation. Their powerplants bum significantly less fuel and produce much less emissions than trains or trucks. Just to give you an example from the Lakes, were a steel company to switch from vessels to trains, it would take six 100-car unit trains to equal one trip in a 1,000-foot-long selfunloader. There are legal grounds for rejecting the Navigation Assistance Tax. As my examples illustrated, the tax is not specifically targeted to all users of a requested service, something the Supreme Court has ruled unconstitutional. Nor will the revenue generated be applied to the cost of those services, again a violation of a valid tax or user fee. But let's not engage a team of lawyers to debate these points. It boils down to this. Waterborne commerce directly or indirectly impacts the economic livelihood of nearly every man, woman, and child -Page 2 of 3 Testimony by Glen G. Nekvaal Lake Carriers' Association in this nation. That's why the vast majority of U.S. Coast Guard functions have been funded from general revenues. This Subcommittee and this Congress must retain the policy of funding U.S. Coast Guard missions from general revenues and amend our laws to state that there will be no taxes on Aids to Navigation or Icebreaking. These are services to the entire nation. As our logo says ... NO NATI If, for some reason, these arguments have failed to persuade you, then Congress must consider making the Navigational Assistance Tax a fair one. You should direct the U.S. Coast Guard to establish a cost accounting system which determines costs directly attributable to the services commercial navigation needs, and you should direct the U.S. Coast Guard to only provide services the commercial navigation interests ask for. You then should direct the U.S. Coast Guard to develop a means to recover costs from recreational boaters, fisherman, and other beneficiaries of these functions. Somehow, I don't think these steps will be necessary. I trust this Congress will continue to recognize that U.S. Coast Guard functions are services to the entire nation. All the funds for U.S. Coast Guard services and equipment should be drawn from general revenues. We ask Congress to appropriate full funding to the Acquisition Construction & Improvements Account. This Subcommittee and Congress can perform another service to the Nation by including $6 million in the U.S. Coast Guard's budget to develop detailed design proposals for a multi-purpose vessel with heavy icebreaking capabilities to replace the U.S. Coast Guard Cutter MACKINAW. The MACKINAW is the only heavy icebreaker stationed on the Lakes and for 53 years she has kept commerce moving through the harshest conditions. While her hull is still sound, she is technologically outdated and, thus, expensive to operate. The U.S. Coast Guard has concluded that the cost of modernizing the MACKINAW nearly equals the cost of a new build. Furthermore, a new build would be a multi-mission vessel, something no amount of modemization can achieve with the MACKINAW. I cannot stress the importance of maintaining heavy icebreaking capability on the Great Lakes. During the winters of 1994-96, more than 45 million tons of dry-bulk cargo moved during the ice season. Although this past December and January were virtually ice-free-thanks, we gather to El Nino, this is an aberration. Great Lakes steel mills account for more than 70 percent of our nation's steelmaking capacity and they cannot be operated efficiently unless they receive iron ore from early March until late January. The requested $6 million will move forward the process of maintaining the icebreaking capability needed on the Great Lakes, and in the long term, reduce Federal expenditures, as the replacement vessel(s) will require less crew and be much more fuel efficient. Thank you for this opportunity to appear before this Subcommittee. I will be pleased to try to answer any questions you may have. GN:cal -Page 3 of 3 DEPARTMENT OF TRANSPORTATION U.S. COAST GUARD STATEMENT OF MASTER CHIEF PETTY OFFICER OF THE COAST GUARD ON THE FISCAL YEAR 1999 BUDGET AUTHORIZATION SUBCOMMITTEE ON COAST GUARD AND MARITIME COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE Mr. Chairman, I appreciate this opportunity to discuss the state of Coast Guard enlisted personnel with your distinguished committee. Thank you for inviting me. As I begin my remarks, I want to join the Commandant in thanking you for your support of Team Coast Guard. Enactment of the Coast Guard Authorization Act of 1996 allowed the American people to continue benefiting from the services they expect the Coast Guard to deliver and provided improvements to the quality of life for our members and their families. OPENING There are approximately 33,000 active duty and Reserve component enlisted men and women in the Coast Guard today. The primary responsibility of the Master Chief Petty Officer of the Coast Guard is to advise the Commandant on all matters that affect enlisted members and their families. To ensure that I am knowledgeable about issues pertinent to their work, safety, morale, welfare, and quality of life, I spend a significant number of days each month talking with enlisted members. I also rely on several other sources of information. • During the past 45 months I have visited almost 300 Coast Guard units and personally talked with thousands of members. • I participate on a myriad of teams studying or evaluating enlisted programs and policy. ⚫ I conduct open forums with members of each class participating in • I have a network of senior enlisted leaders in the field that keeps me • My wife, Linda, provides additional input resulting from her many meetings As a result of my personal involvement, and these additional resources, I have a clear understanding of the issues that affect enlisted personnel and their families. I am confident in my ability to provide appropriate advice to the Commandant and believe I am qualified to give my personal input to this committee. During previous testimony before this committee, I have asked for your support on a number of issues that would improve the quality of life for Coast Guard enlisted members. Congress has again provided an indication of its commitment to members of the Armed Forces by increasing basic pay, hazardous duty incentive pay, family separation pay, and by improving the Survivor Benefit Plan. I have also previously described in detail the detrimental impact on Coast Guard members when they are transferred to high-cost areas and their housing allowances do not appropriately compensate them for the out-of-pocket cost fluctuations they encounter. I asked for your support in neutralizing this problem, and Congress acted by authorizing the new Basic Allowance for Housing. Your action on these issues did not go unnoticed and, on behalf of the enlisted members of the Coast Guard, I thank you very much for your effort. |