Gov. Pat McCrory and House and Senate leaders agree this year that the state should start investing in upgrades for the aging ports at Wilmington and Morehead City, but they’re still working out their differences on how much money they ought to spend.
The two ports are modest operations in the tall shadows cast by North Carolina’s competitors. While the State Ports Authority collected $44 million in revenues in 2013, the take in neighboring states ranged from $140 million in South Carolina to $352 million in Virginia.
But Ports Authority CEO Paul J. Cozza aims to double his bulk and container cargo traffic over the next five years. And he hopes to claim a nice little share of the shipping surge expected on the East Coast after the completion in 2016 of a long-awaited project to double the capacity of the Panama Canal.
To make that happen, he’s pushing for more dredging at Morehead City to ward off the severe shoaling that has kept shippers from fully loading their vessels, and other port improvements. At Wilmington, Cozza wants to buy new container cranes, replace a docking berth and deepen the navigation channel to expand the port’s capacity for the bigger “post-Panamax” ships expected to begin steaming through the enlarged canal.
“As you are all aware, the infrastructure at the North Carolina ports is not the most modern,” Cozza told the handful of House members who showed up Tuesday morning for a Transportation Appropriations Subcommittee meeting. “We have not been, as a state, investing in our ports over the last years. To be able to obtain this additional business, we’re going to need some investment.”
Cozza, a former executive with CSX railroad and Maersk Line who took charge of the ports in 2014, was speaking to a sympathetic audience. The House budget allocates $40.7 million for port improvements over the next two years. McCrory and the Senate propose to spend even more.
In past years, the Ports Authority was left to fend for itself, without regular tax-dollar support and with little oversight for what was long an independent board. But the legislature folded the coastal agency into the Department of Transportation a few years ago, and Raleigh began to pay more attention.
$44.3 million Port revenues for North Carolina in 2013
$140.4 million For South Carolina
$292.6 million For Georgia
$352.3 million For Virginia
Former DOT Secretary Tom Bradshaw became DOT’s first ports champion during the Perdue administration, and he loudly deplored what he saw as years of neglect. He failed in an urgent campaign for a state appropriation to build export terminals for the brand-new business of milling wood pellets and shipping them to Europe for fuel. But the Ports Authority made deals with pellet makers for new facilities that will go online at both ports in the next year or so.
Wood pellets account for the biggest component of Cozza’s growth projections, with 2.4 million tons annually expected by 2020.
McCrory made the first pitch for big spending at Wilmington and Morehead City last fall, when he announced plans for twin bond issues to borrow nearly $3 billion for transportation and other infrastructure needs. His list includes $200 million for the ports.
Senate leaders have frowned at much of McCrory’s bond package. Their budget includes a sizeable new line item for port investments: $35 million a year in recurring funds, which means they intend to continue this spending every year.
“We’re going to cover it not only today but in perpetuity,” Sen. Bill Rabon, a Brunswick County Republican who is one of his chamber’s chief transportation budget writers, said in a recent interview. “I think that’s a wiser way to go.”
If we’re going to be in this market, we’re going to have to pay and get our ports back on line.
Rep. John Torbett, Gaston County Republican
House and Senate members have just begun their closed-door negotiations on the many differences between their budget proposals. The budget resolution is expected to determine, or at least indicate, what the legislature will do with McCrory’s bond proposals.
But one of Rabon’s counterparts in the House assured Cozza on Tuesday that the question is not whether the ports will receive a new infusion of state money – but how much money that will turn out to be.
“If you look at either the House or the Senate budget, you see funding mechanisms there for the ports,” said Rep. John Torbett, a Gaston County Republican who co-chairs the House Transportation Appropriations Subcommittee. “I think the awareness of the ports has risen to such a level that both chambers understand that if we’re going to be in this market, we’re going to have to pay and get our ports back on line.”
The State Ports Authority aims to increase its share of all container cargo at South Atlantic ports from 2.9 percent this year to 4.7 percent in 2020. With a healthier financial footing, Cozza said, the ports won’t always depend on tax dollars for capital improvements.
“We can’t keep looking at the state for funds,” Cozza said. “We need to be able to generate our own.”
Money to modernize the state ports
Gov. McCrory’s proposed infrastructure bond package: Borrow $125 million for Morehead City, $75 million for Wilmington.
House budget: $10.6 million in 2015-16 and $30.1 million in 2016-17 in one-time spending for roadway, railway, dredging and other port improvements at the discretion of the state transportation secretary, paid for with gas taxes and other Highway Fund revenues.
Senate budget: $35 million in annually recurring funds, paid for from the Highway Fund.