The measure approved by the Senate Finance Committee would authorize the state to issue bonds to cover the federal government’s share of the estimated $300 million dredging project, if necessary.
Senators said it’s about assuring businesses that South Carolina will be able to accommodate the super-size ships expected regularly on the East Coast in 2014 after the widening of the Panama Canal.
The Charleston port has lost import and export business to its closest and fiercest competitor – Savannah, Ga. – over the last few years, and the state can’t afford to lose more, said Senate Finance Chairman Hugh Leatherman, the bill’s main sponsor.
“This is so crucial to the future of our state,” said Leatherman, R-Florence.
The House’s proposed $6.5 billion budget for 2012-13 already sets aside $180 million to fund the state’s share.
Sen. Larry Grooms said the state needs to assure companies the project will proceed, no matter what happens with the federal budget. It’s about marketing the port’s future capabilities amid the project’s study phase, while Savannah gears up for construction, he said.
“If we can’t complete the mission and give confidence to the international community that we will be the place for the South Atlantic market, capital will flow elsewhere and the jobs will flow elsewhere,” said Grooms, R-Bonneau. “We want our Ports Authority to be able to show the money’s in hand.”
The feasibility study for Charleston is set for completion in late 2014 at the earliest. Construction is set for completion in 2020, up from the initial federal timetable of 2024, said Ports Authority spokeswoman Allison Skipper.
But removing the funding question could further speed up the project and send a “very clear message” of state commitment to the port’s future, she said.
The state could pay up front, then seek reimbursement on the federal share, she said.
The state hasn’t issued capital improvement bonds since 2000. The port bonds, if issued, would not add to the budget, due to declining debt payments and refinancing by the treasurer’s office. But the additional debt would mean payments would not decline as rapidly, according to state budget advisors.
The total state debt, as funded through the state’s general fund and college tuition, is $1.86 billion. The state is spending $199 million this year to cover principal and interest payments – well below the legal limit of 5 percent of general fund revenue, according to the state treasurer’s office.
The bond bill is co-sponsored by 26 of the Senate’s now-45 members.
Sen. Kevin Bryant, R-Anderson, cast the lone no vote. He warned senators he will hold up the measure on the floor.
“I can’t think of a more important project for the state of South Carolina,” he said. “I’m 100 percent in support of the first part of this bill. I don’t think we ought to cross our fingers and hope the feds follow through. But I’m 100 percent against borrowing.”
He said legislators should fund the project without adding to the state’s debt for the sake of future generations.
Sen. Billy O’Dell, R-Ware Shoals, threw the line back at him.
“This is more of a marketing technique. We could issue the bonds if we need to,” he said. “I think it’s wise because, in thinking of the future of our children and grandchildren, if we don’t have this method, their futures could be pretty dim.”
By 2014, officials expect there will be 1,200 mega-size ships worldwide that are bigger than what can currently fit through the Panama Canal, which can handle ships with a draft of 39½ feet.
Charleston’s harbor is currently 45 feet at low tide, but the longer, deeper and wider ships draft up to 48 feet. The so-called Post-Panamax ships already are arriving in Charleston, at the rate of five a week, but are limited to a two-hour high-tide window, Skipper said.
The dredging project would deepen Charleston’s harbor to 50 feet.
That compares to a depth of 47 feet along the 38 miles of the Savannah River between Georgia’s port and the Atlantic Ocean, as called for in the Army Corps of Engineers’ final report last week. That project’s expected to cost $652 million.
As the nation’s fourth busiest container port, Savannah has the shallowest waterway of any major U.S. port.
South Carolina Ports Authority officials argue Charleston could become the premiere port for the Southeast as the region’s only Post-Panamax capable port not tidal restricted, able to handle two-way traffic 24 hours a day.