The need to invest in California's infrastructure is readily apparent to anyone who drives on the state's roads and highways. We all know the only certainty ahead is a growing population, increased consumer demands, more automobile registrations, and more suburban growth across California.

So why is it that that we don't have a formula for these critical public projects other than a one-time borrowing plan on the November ballot?

One problem is that there is a huge disconnect between how we actually fund infrastructure and how people think we fund infrastructure. In truth, there are only a few examples of "user fees" that actually fund infrastructure investments. Real user fees are revenues that are generated by those who use the infrastructure, such as tolls or other charges for use of roads, bridges, rails, or ports. California's ports are already a model of success as virtually all of the infrastructure at the state's major ports has been funded by private dollars.

Our ports are funded with private sector investments in the billions of dollars (more than $7.4 billion on marine terminals alone in 2003), financed primarily through port revenue bonds. These bonds are paid off through the collection of user fees and tariff charges paid to the ports by terminal operators leasing the port facilities and the shipping companies whose vessels call at our ports.

Port investments have supported ever-increasing levels of international trade and jobs. Their strong financial performance and the consistent operating record of their tenants U.S. and foreign-owned terminal operators enable our ports to be locally-accountable public agencies yet pose no financial risk to taxpayers. This operational partnership has improved port cash flow and alleviated liquidity constraints on the basis of legal, clearly-defined user fees.

Despite or perhaps because of their record in paying their way some in Sacramento continue to call for more and more fees around port operations. One current proposal, SB 760, would impose a $30 tax on every standard 20-foot container or its equivalent that moves through the San Pedro Bay Ports. The dollar amount is arbitrary and should simply be called a container tax. Supporters of the container tax know full-well that these fees will be passed through the supply chain until the consumer pays, so it is simply a consumption tax under a false and misleading label.

Legally indefensible
"Container fees" seem to be the default solution of choice for some politicians. However, these "fees" are commercially problematic and legally indefensible. Various container "fee" mechanisms have already been found to be unconstitutional. So the new round of thinly masked container taxes will simply enrich a cadre of attorneys for years to come proving that the "fee" itself was never more than an exercise in political expediency.


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