Bush Administration Budget FY 2009

The Bush Administration released its FY 2009 Budget on February 4, 2008. A review of the full FY 2009 Budget submission provides the following information regarding programs affecting the maritime industry.

MARITIME ADMINISTRATION (MarAd)  

• Maritime Security Program –The Maritime Security Program will be funded with $174 million to provide payments of $2.9 million for 60 vessels in FY 2009, an increase of $19.6 million over the FY 2008 request.

• National Defense Tank Vessel Construction Program – Zero funding is requested, identical to last year’s request  

• Title XI Shipbuilding Loan Guarantee Program – No new funds are requested for loan guarantees. For administrative expenses to carry out the existing Title XI loan guarantee portfolios, $3.5 million is requested “which shall be transferred to and merged with the appropriation for Operations and Training.” The request amounts to a $100,000 increase over last year’s budget.
   
• Ready Reserve Force – $277 million for the Ready Reserve Force (RRF) from the Defense Department budget, reflecting an increase of $49 million over the FY 2008 Budget request. The Defense Department will continue to reimburse the Department of Transportation for operation and maintenance of the RRF from funds appropriated to DOD. MarAd will continue to manage the program. RRF vessels continue to serve in Operation Iraqi Freedom.

• Operations and Training – $117.8 million, including $61 million for the U.S. Merchant Marine Academy, (of which $8.1 million is directed toward capital improvement projects) and $11 million for support of the State Maritime Schools and $46 million for MarAd operations. The operations and training account request is $2.5 million more than the request from last year.  

• Ocean Freight Differential – $175 million is programmed, a $30 million increase over the request of last year.  

• Ship Disposal – $18 million is programmed to dispose of obsolete vessels in the National Defense Reserve Fleet, a $2 million reduction from the FY 2008 request.  

• War Risk Insurance Revolving Fund – $2 million is requested to provide interim insurance for those vessels operating in defined war zones until commercial insurance can be obtained on reasonable terms and conditions. The Fund carries forward an unobligated balance of $47 million.

• Small Shipyard Grant Program – Appropriations of $10 million were authorized in the National Defense Authorization Act for Fiscal Year 2006. No new funds are requested for Fiscal Year 2009.  

HOMELAND SECURITY (DHS)  

• Coast Guard – $9.3 billion is requested, an increase of $2.1 billion over last year’s budget, including $6.2 billion for operating expenses of which $1.9 billion is earmarked for ports, waterways and coastal security; $935 million for aids to navigation; $140 million for marine environmental protection; $448 million for marine safety; and $102 million for ice operations. The FY 2009 Budget provides $990 million to continue the agency’s Integrated Deepwater Systems Program to be used for vessel replacement.

• Transportation Security Administration – The Administration has proposed $173 million for the Transportation Threat Assessment and Credentialing program, of which $133 million is in direct appropriation and $40 million is derived through fee assessments. A portion of this account is used to fund the Transportation Worker Identification Credential initiative.

• U.S. Customs and Border Protection - The Administration has proposed funding for certain maritime related programs including $210 million for port security grants and $317 million for the Automated Commercial Environment initiative.   

DEFENSE DEPARTMENT (DOD)  

• National Defense Sealift Fund – $1.3 billion is requested for construction and conversion; $1.01 billion for strategic sealift operation and maintenance; and $277 million for the Ready Reserve Force (RRF) used to reimburse the Department of Transportation for maintenance of the RRF. This reflects an increase of $512 million in these programs over last year’s request.  

• Army Corps of Engineers – $4.741 billion in new federal funding, a decrease of $130 million over last year’s budget request for the civil works program of the Corps, of which $2.4 billion is requested for operation and maintenance; $1.4 billion for construction; and $240 million for Flood Control, Mississippi River, and Tributaries.

AGRICULTURE DEPARTMENT (USDA)
For 2009, the budget provides an increase of some $100 million over the previous year’s request for foreign assistance programs of nearly $1.6 billion including:

• P.L. 480 Title I Export Credits – No funds were requested for this program in Fiscal Year 2009.

• P.L. 480 Title II Humanitarian Food Aid – The Administration requests $1.226 billion for this program, and includes language that would authorize up to 25 percent of Title II funds to purchase food commodities locally, the fourth consecutive time the Administration has requested such authorization.

• Bill Emerson Humanitarian Trust – The Trust is a commodity reserve designed to ensure that the U.S. can meet its international food assistance commitments. Up to 500,000 metric tons of wheat, corn, sorghum, and rice can be held in the Trust. The Secretary is authorized to release commodities from the Trust for programming under P.L. 480.

• Food for Progress – The Food for Progress Act of 1985 authorizes U.S. agricultural products to be provided to developing countries and emerging democracies that have made commitments to introduce and expand free enterprise in their agricultural economies. The 2009 Budget assumes a program level of $340 million ($177 million more than last year’s request) for the Commodity Credit Corporation funded portion of Food for Progress which is expected to meet the minimum tonnage level based on current commodity price projections.

• McGovern-Dole International Food for Education and Child Nutrition Program Grants – The Program provides for the donation of U.S. agricultural commodities and associated financial and technical assistance to carry out preschool and school feeding programs in foreign countries, as well as maternal, infant and child nutrition programs. For 2008, the Budget request appropriated funding of $100 million, the same as last year’s request. This will be supplemented by an additional $5 million of anticipated cargo preference reimbursements.

EXPORT-IMPORT BANK  

The FY 2009 Budget estimates that the Bank’s export credit support will total $14 billion, and will be funded by a requested $140 million of new budget authority in addition to amounts carried over from prior years. The budget also proposes $81.5 million for administrative expenses, of which $10.7 million are budgeted for technology expenses. The new budget authority would be $7 million less than the fiscal year 2008 request.

FEDERAL MARITIME COMMISSION (FMC)

The agency’s budget is programmed at $24 million, reflecting a nearly $2 million increase over last year’s request. Major program areas for FY 2009 are carrying out investigations of foreign trade practices under the Foreign Shipping Practices Act; maintaining equitable trading conditions in U.S. ocean commerce; facilitating compliance with applicable shipping statutes through outreach and oversight; and reviewing ocean carrier operational and pricing agreements to guard against excessively anticompetitive effects.

ST. LAWRENCE SEAWAY DEVELOPMENT CORPORATION  

$34 million is requested to fund the operation, maintenance, and capital infrastructure improvements of the U.S. portion of the St. Lawrence Seaway between Montreal and Lake Erie. The funding request, nearly $17 million more than last year, is financed through appropriations from the Harbor Maintenance Trust Fund and other non-federal sources.

February 8, 2008