October 17, 2013

More on the Olmsted Lock and Dam project that was included in the Continuing Resolution (the “Kentucky Kickback” as it has been dubbed) that was signed into law late last night, ending the government shutdown.

First off, we are opposed to its inclusion. This matter should have been dealt with in the final appropriations bill, or even better, in the Water Resources Development Act – which has passed the Senate and passed in committee in the House, and is scheduled for floor time in the House next week. Even worse, the House increased the authorization to $2.3B, but the CR and the Senate bill increased budget authority for the project even more to $2.9 billion. Proponents of the measure argue that it would have cost $70 million or $140 million in cancelled contracts if this increase hadn’t happened before the second quarter of FY14. Please. Give me a break. This project is more than 300 percent over budget, and we’re supposed to worry about a less than 5 percent increase? Besides, this can hardly be the only thing that will cost more because of the shutdown.

Answering another question, this is not an earmark by the Senate definition. This provision was requested in the President’s Budget request. But that’s a technicality, it should not have been in the bill. The whole point with CRs is to keep them tight and limited, every additional thing you add creates pressure to add more, and pretty soon you’re writing an appropriations bill. There has been a lot of finger pointing and 'not it's about who put this provision in the bill. In the end, it doesn’t really matter. It shouldn’t have been in the bill and Sen. McConnell had a great deal of sway over the process. If he didn’t want it in the bill, it wouldn't be there.

Last wrinkle. Now that they’ve got the increased authorization, they are going after the cash. Right now the project funding is half from the treasury, half from the industry financed trust fund. The Senate bill I mentioned makes the lock project 100 percent federal. The House bill next week will make it 75 percent federal. This is getting expensive for taxpayers.

Here is a link to the budget justification sheet for the project. The provision from the budget request is below, as well as the provisions from the House and Senate WRDAs and Energy & Water appropriations for FY14.

October 16, 2013

Like others, reading through the Continuing Resolution (CR) passed by the Senate, we flagged a section that didn’t match the version passed by the House in late September:

“Sec. 123 of . Section 3(a)(6) of Public Law 100-676 is amended by striking both occurrences of '$775,000,000' and inserting in lieu thereof, '2,912,000,000'.”

Public Law 100-676 was the Water Resources Development Act of 1988. And here’s the applicable section:

(6) LOWER OHIO RIVER, ILLINOIS AND KENTUCKY.—^The project

for navigation. Lower Ohio River, Locks and Dams 52 and 53.

Illinois and Kentucky: Report of the Chief of Engineers, dated

August 20, 1986. at a total cost of $775,000,000, with a first

Federal cost of $775,000,000, and with tile costs of construction

of the project to be paid one-half from amounts appropriated

from the general fund of the Treasury and one-half from

amounts appropriated from the Inland Waterways Trust Fund.

After initial authorization, the project bumped up against the 902 (a provision in WRDA 86) cost containment caps that stipulate if a project exceeds 120 percent of its authorized cost, it has to be reauthorized by Congress. Olmsted pretty quickly ran into problems and it’s current cost cap is $1.7B (see p. 7 of this Corps powerpoint from this summer)

The CR increases the project authorization from $1.7B to $2.918B. Note that an authorization is not an appropriation. Project funding would have to come from subsequent appropriations.

Even though the project was about to run out of authorization, this provision should not have been included in such a consequential piece of legislation. It appears that Sen. McConnell took advantage of his position to slip in this bit of parochial pork. While this could be considered business as usual, it is shocking that with the country teetering on the edge of default a lawmaker would try to pull a fast one on the American people.

There are other pieces of legislation to deal with this issue. And there are other important projects and policies that are not in this bill. This will only increase voter cynicism about the process, if that is even possible.

We’ll keep you posted.