March 14, 2012

UPDATE II: Port Developments

Marc Comtois

Last month I expressed my approval of progress being made to further develop the port of Davisville and Quonset Point. However, I also explained my philosophical opposition to paying for port improvements, ie; dredging, via a bond instead of from the general revenue. However, I subsequently learned that I was mistaken when I thought the bond was being proposed outside of the 2012 budget. I explained my error in a follow-up post, but also noted that a bond is still a bond:

Whether a bond is passed as part of the budget, via a referendum or in a separate piece of legislation, my original contention remains: Though I understand the philosophy of spreading debt out over X number of years, I'm critical of the bond avenue because I believe that we are asked to fund too many bonds to pay for items that should be paid for via appropriation from the general revenue, not as loans with interest. If the dredging was funded through a regular appropriation, the $7.5 million worth of work would cost $7.5 million, not $9.1 million. I also understand that we can't appropriate everything on the bond wishlist using today's funds, but that's where setting priorities comes in.
Last night, a comment from @Port_Davisville sought to clarify things further.
...this is not a general obligation bond, but a revenue bond which will be financed completely with payments from port users and QDC revenues. There will be no direct cost to the taxpayer.
That is correct: the proposed bond is a revenue bond, which means the funds to pay for it will not come "from the taxpayers", as I had interpreted, but from the Quonset Development Corporation, Port of Davisville, etc. The language of the budget (Article 7 of this PDF) makes this perfectly clear:
The bonds or loan agreements issued pursuant to this article will not constitute the indebtedness of the State, and required payments will be derived from Corporation revenues. The Corporation has identified several sources of revenue to contribute to this debt service, including increasing the tariff on dockage from $3.00 to $6.00 per foot ($243,750 annually), increasing the tariff on wharfage from $3.00 to $6.00 per vehicle ($160,000 annually), and contributing $507,456 annually from operating funds. The authorization for this debt applies to bonds issued within one year of the passage of the resolution.
So much for my prospective degree in financing! So, to sum it up, taxpayers aren't being asked to foot the bill. Instead, those that are set to benefit most directly from the improvements will be. I could quibble a bit (you knew this was coming, right?); what is a "tariff" but a tax and it looks like those are increasing. But, to be fair, I'm willing to bet that the tariff increases still aren't as high as they would be if Quonset/Davisville joined the Harbor Maintenance program--which is funded by a tax all its own (currently QP/Davisville is exempt--that's a competitive advantage)--to help pay for the dredging.

So, in the end. I learned a few things and my philosophical wariness was displayed and addressed. Consider me an unqualified supporter now.

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How much dredging is required for Davisville/Quonset? I confuse the Navy bases I visited as a kid, but I seem to recall an aircraft carrier there.

What I can't forget is seeing the Enterprize in dry dock at Newport News.

Posted by: Warrington Faust at March 14, 2012 1:17 PM
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