11. 12. Computed annual cost of Federal aid to navigation on the Mississippi River from mouth of Ohio River to New Orleans, La., year 1954-Continued 9. Annual capital cost at 3.92 percent_. 10. Maintenance, operation, and care, 5-year average: Mississippi River Commission___. $6, 584, 692 New Orleans district Army engineers__ $5, 002, 575 2 Tonnage on this section of the river is reported separately by 2 districts and contains inseparable duplications, therefore is not included herein. Source: Annual reports of the Chief of Engineers, U. S. Army. SCHEDULE VII Computed annual cost of Federal aid to navigation on the Illinois River,1 1. Capital costs: 2. year 1954 Adjusted Federal cost of new work to June 30, 1939 2 $34, 225, 017 3. 4. 26, 442, 862 5. 6. Cost of new work 1940-54, inclusive___ 5, 157, 372 10, 324, 480 7. 8. Adjusted Federal cost of new work to June 30, 1954- 49, 706, 869 9. Maintenance, operation, and care, 5-year average: Annual capital cost at 3.92 percent__. 1, 948, 509 1 Includes only Federal expenditures on Illinois River from Grafton to Lockport. 2 H. Doc. No. 159, 79th Cong., 1st sess., year 1944, p. 668. 3 See schedule IV, computed annual cost of Federal aid to navigation on the Mississippi River from reservoirs at headwaters to mouth of the Missouri River, year 1954. See schedule IV, duration of cost of operation and care of dam No. 26 on the Mississippi River between reservoirs at headwater and the mouth of the Missouri River, year 1954. Source: Annual reports of the Chief of Engineers, U. S. Army, H. Doc. No. 159, 79th Cong., 1st sess., year 1944; Waterborne Commerce of the United States, Calendar Year 1954, Department of the Army, Corps of Engineers. SCHEDULE VIII Computed annual cost of Federal aid to navigation on the Ohio River, year 1954 Computed annual cost of Federal aid to navigation on the Ohio River, year 1954-Continued Deductions: Dams No. 1 to 6, inclusive__. $6, 266, 435 Allocations to tributaries (sheet 2 of 5) 11, 909, 053 21. Total open-channel works 1890-1954, in- Total capital outlay useful to navigation 22. Annual capital cost at 3.92 percent_. 14,711, 777 124, 823, 081 4,893, 065 24. $123, 850 25. Less allocation to tributaries (sheet 3 of 5)- 48, 822 36. $0.219 Per ton-mile (line 30 divided by line 33). Source: Annual reports of the Chief of Engineers, U. S. Army; Waterborne_Commerce of the United States, Calendar Year 1954, Department of the Army, Corps of Engineers; and H. Doc. No. 159, 79th Cong., 1st sess., year 1944. Allocation of capital cost of selected dams on the Ohio River to tributaries, 1 Based on miles of equivalent 9-foot channel provided in each waterway. Reported under Kanawha River project. Source: Annual reports of the Chief of Engineers, U. S. Army; H. Doc. No. 159, 79th Cong., 1st sess., year 1944. Derivation of cost of operation and care of Gallipolis lock and dam, Kanawha River project, year 1954 1. Cost of operation and care of all locks and dams on Kanawha 2. 3. project: Average 1937-40, inclusive____ Average 1950-54, inclusive__ 4. Percent 1950-54 average of 1937-40 average $175, 244 $342, 133 195. 23 5. Cost of operation and care of Gallipolis Dam, average 1937-40_. $63, 438 $123, 850 Source: Annual reports of the Chief of Engineers, U. S. Army; H. Doc. No. 159, 79th Cong., 1st sess., year 1944. Allocation of estimated cost of operation and care of locks and dams on the Ohio River to tributaries, year 1954 Source: Annual reports of the Chief of Engineers, U. S. Army. H. Doc. 159, 79th Cong., 1st sess., year 1944. Derivation of the cost of operation and care of selected locks and dams on the Ohio River, year 1954 1. Cost of operation and care of all locks and dams on the Ohio River: 1 2. 3. Average 1936 to 1940, inclusive. Average 1950 to 1954, inclusive. 4. Percent 1950 to 1954 average of the 1936 to 1940 average.... 5. Cost of operation and care of selected locks and dams: $2,573, 383 6,660, 408 258.82 1 Excluding Gallipolis Dam reported under Kanawha River project. Source: Annual reports of the Chief of Engineers, U. S. Army. H. Doc. 159, 79th Cong., 1st sess., year 1944. 70818-56-pt. 6 Basis of allocation of costs of Ohio River dams to tributaries The objective of this study is to develop a reasonable estimate of the annual cost of Federal aid to navigation on certain inland waterways, evaluated in terms of the volume of traffic using each waterway. The costs which have been determined for each of the selected waterways do not represent the full cost of Federal aid attributable to navigation, but rather, only that portion of Federal expenditures for waterway improvement which can be readily ascertained and reasonably assigned to navigation. Limitations of available data preclude a more accurate ascertainment of such costs. No accounting has been made herein for aid from governmental agencies such as Coast Guard and Weather Bureau. Among the Federal agencies which publish expenditure records on an individual project basis, the Corps of Engineers of the United States Army is of primary importance since most waterway improvements have been provided by them. The corps' records must necessarily be supplemented by those of the Tennessee Valley Authority in determining costs pertaining to the Tennessee River. In addition to expenditures, the annual report of the Chief of Engineers includes complete statistics of traffic volume on all inland waterways. One of the most comprehensive studies ever made of Federal aid to domestic waterways is embodied in a report of the Board of Investigation and Research entitled "Public Aids to Domestic Transportation." That report hereinafter is referred to as the BIR study, and was published in September 1944 as House Document No. 159, 79th Congress, 1st session. As far as was practicable, the methods used and figures shown in that document were incorporated into this study. The method prescribed in the BIR study consisted of the following basic steps: 1. Computation of a total capital cost of improvements useful to navigation in the year under study. 2. Amortization of such cost over a 50-year period allowing for interest of 3.5 percent on unamortized investment, and using a sinking-fund method to determine annual charges. 3. Computation of a 5-year average cost of maintenance predicated on the assumption that any one year's maintenance would be of benefit to navigation for an average of 5 subsequent years. 4. Evaluation of annual capital and maintenance costs in terms of traffic volume. For most waterways the capital cost of improvements was computed from the "Cost and financial summaries" in the annual reports of the Chief of Engineers, United States Army, which are reported for fiscal years ending June 30. The corps reports show separately the expenditures for navigational purposes and expenditures for other than navigation except on multiple-purpose projects such as that on the lower Mississippi River. These summaries allow for accounts receivable and accounts payable without any allowance for interest and amortization on capital. Within each summary since 1922, the expenditures have been broken down between new work and maintenance, a separation not quite identical to but closely similar to the usual differentiation between an expenditure for capital facilities and one for ordinary maintenance. The cost shown for new work is cumulative from the first Federal improvement of each waterway unless there has been a complete revision of project, such as there was incident to the improvement of the Tennessee River. Thus certain adjustments were necessary to arrive at a cost for only those improvements useful to the year 1937 to which the BIR study pertains. The adjustments of the cost summaries were based on the following suppositions: 1 1. That the divisions of expenditures between new work and maintenance from 1872 to 1922 was in the same ratio as shown by the cumulative statement to June 30, 1922. 2. That expenditures for new work on waterway improvements may be amortized over a 50-year period. 3. That the interest rate applicable to long-term Federal investments may be taken as 3.5 percent. 4. That all expenditures shown for rivers and harbors were of direct aid to transportation except that the costs reported for a few multiple-purpose projects are assigned only in part to navigation. These summary tabulations of Federal outlays officially designated as having been made for navigation may overstate the amounts of public aid to transportation, insofar as some costs may actually have been incurred, or relatively incidental benefits may have been conferred, for other purposes which cannot be segregated. 5. That annual expenditures shown by the Army engineers for maintenance, a term which is used by them to cover all operating expenses, actually benefit traffic for 5 succeeding years and should be spread accordingly. Each of these suppositions were predicated on results of intensive investigation and research. Cost of new work over 50 years of age, i. e., prior to 1890, was eliminated from the cumulative cost of new work to 1939 on the basis of appropriations. The formula used is as follows: Appropriations since 1889 Cumulated cost of Cumulated appropriations to 1939 new work to 1939 Estimated cost Any facilities less than 50 years old which were known to be obsolete, were also eliminated from the cumulative cost of new work. Data concerning the cost of such facilities were estimated from the published project records or supplied by the Army engineers in special communications. The cumulative cost of facilities useful to navigation in the year 1939 as determined above, were then amortized at the rate of 4.2 percent, a rate which by the sinking-fund method allowed for interest of 3.5 percent on unamortized investment and an amortization period of 50 years. This produced an annual charge for capital to which a charge for maintenance was added to produce the total cost of Federal aid for the year 1939. The annual maintenance charges were computed by averaging the maintenance costs reported for the years 1935 through 1939. The term "maintenance" includes repairs of structures, channel work to hold dimensions that have once been obtained, operating expenses at locks, and other recurrent expenditures. Most of the project reports separate maintenance costs for locks and dams and for open-channel work. As these costs vary considerably from year to year, as do the availability of funds for maintenance, the use of a 5-year average was considered appropriate. The traffic units incorporated therein were the ton and ton-mile units of freight carried on each waterway, as reported in the Chief of Engineers' annual reports. In most cases the ton-units included all commodity traffic, ferry traffic, and passenger traffic. Costs were assigned to passenger traffic on a ton-mile equivalent basis, allowing for 4 passengers to the ton for regular passengers and 12 to the ton for ferry, recreational, and excursion passengers. All passenger traffic 1 H. Doc. No. 159, 79th Cong., 1st sess., year 1944, p. 334. These statistics are reported for the calendar years only, while the cost data are for the fiscal years ending June 30. Because of that fact either of the two methods was feasible in determining unit costs: (1) Costs incurred between June 30 and December 31 could be assigned to the traffic of the following year, or (2) costs from January 1 to June 30 could be assigned to traffic of the preceding year. Under the first method traffic would get some benefits from improvements not yet charged while under the second traffic would be charged with some improvements not yet made. Unless either traffic costs varied greatly from year to year, the use of either method would produce approximately the same unit costs. The first method was used by the BIR and has been adopted for use in the present study. |