KANISA RUNGJANG UW - Madison

Size: px

Start display at page:

Download "KANISA RUNGJANG UW - Madison"

Hannah Taylor
5 years ago
Views:

1 Port cost comparisons and productivity from public funding: Port of Milwaukee and Port of Green Bay KANISA RUNGJANG UW - Madison National Center for Freight & Infrastructure Research & Education

2 Port cost function implication Implication of cost comparisons of Port of Milwaukee and Port of Green Bay will be applied to Impact of public funding for developing freight facilities of National Center of Freight & Infrastructure Research and Education (CFIRE) Concerns: Efficient public funds allocation and port productivity Objective: - Understand public port expenditures and intergovernmental funds - Marginal analysis and Economy of scale in Multi-output framework - Create analytical model to evaluate partnerships and expected outcome from public investment of the maritime port (Profit maximizing under Duopolistic Cournot-Nash Equilibrium) Outcomes of public funds: improve port efficiency, competitive capability $1 dollars of public funds allocated to port A and port B can create unequal port outcomes Port specialization: Marginal cost, Cost elasticity, Scale of economy

3 Port multiproduct cost function Multiproduct quadratic cost function first developed by Lau(1974) Elaborated by Baumol, Panzar and Willig (1982) Multiproduct cost function for port terminal researches by Jara Diaz, Tovar in Chile (2003) Translog inappropriate cannot define for zero budget in discrete funds Quadratic cost function in multi-output framework: Decomposition analysis by port specialization

4 Efficient distribution of intergovernmental funding P: Federal / State Agency (Upper Level DM) P: Local public port authority (Lower Level DM) Federal Public funding allocation State Port 1 Port 2 Market Competition/Complement : Duopoly Cournot-Nash Equilibrium

5 Case study Port of Milwaukee and Port of Green Bay

7 Harbor Features Feature Green Bay Milwaukee Location Fox river Lake Michigan Kinnickinnic and Milwaukee River Lake Michigan Authorization River&Harbor Acts 1866 River&Harbor Acts 1935 Harbor type Commercial deep draft Commercial deep draft Depth 26 feet for 11.5 miles upstream from entrance 22 feet 0.5 miles upstream of river mouth 27 feet in Kinnickinnic&Milwaukee river 21 feet in Menomonee River U.S. rank 102 nd port over 2.5 M tons in th port over 3.2 M in 2008 Great lakes rank 23 rd in th in 2008 Dredging miles 14 miles (180,000 cu.yard/yr) 3-4 yr dredging cycle Without dredging Stakeholders (U.S. Coast Guard, LCA) Revenue 75 M, 600 Jobs, 18 M personal income City of Brown, Port commission, 13 Terminal Operators Revenue 80 M, 1100 Jobs City of Milwaukee, Port commission >13 Terminal operators, 24 Tenants of port facility in 2009

8 Economic Indication Milwaukee and Green Bay GDP (Construction) GDP (Manufacturing) Wisconsin 111 Construction Green Bay, WI (MSA) 11 Construction Milwaukee- Waukesha-West Allis, WI (MSA) 11 Construction Wisconsin 112 Manufacturing Green Bay, WI (MSA) 12 Manufacturing Milwaukee- Waukesha-West Allis, WI (MSA) 12 Manufacturing Per Capita GDP (All industry) GDP Great Lakes region Green Bay, WI (MSA) Milwaukee- Waukesha-West Allis, WI (MSA) Utilities Construction Manufacturing

Inbound Outbound 1,000,000 500,000 0 2004 2005

9 Waterborne shipment Port of Milwaukee 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 Inbound Outbound 1,000, , Total annual tonnage (short tons)

10 , , , coal 4,500, ,000, ,500, ,000, ,500, ,000, ,500, ,000, , Chemicals and related products Port Competition Total commodity , , , Milwaukee Green Bay 20 Petroleum&petroleum products Crude materials, inedible except fuels

11 Port Competition 1, , , Primary manufactured goods Food and farm products All manufactured equipment, machinery and products Waste and scrap NEC

12 WisDOT Local Assistant Program (HAP) HAP (Harbor Assistant Program) Financial assistant to harbor facilities on Great Lakes and Mississippi River for project that improve or maintain waterborne commerce Eligible : Commercial harbor Grant amount: 80% project cost or 50 % *If USACE financing involves Typical project: Dredging, Disposal Facility, Dock repair/rehabilitation/construction, Dockwall repair, Liquid cargo pier repair

13 WisDOT share for Harbor

14 HAP share by ports

15 WisDOT HAP

16 2. USACE Dredging Investment USACE (U.S. Army Corps of Engineer) Public funding for USACE dredging Annual or Periodical contract for harbor dredging Cost varies 0.10 to $/yard depend on placement/dredge area

17 USACE shared by states and by ports

18 USACE dollars per ton shipment

19 Total expenditures (budget summary report) recover through revenues Port of Milwaukee/Port of Green Bay 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Port of Green Bay Expenditures Port of Milwaukee Expenditures Port of Green Bay Charges of services Por of Green Bay Revenues Port of Milwaukee Charges of Services

20 Port of Milwaukee Expenditure 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , Special funds Operating expenditure Fringe benefits Salaries and wages

rental 0% vehicle repair services 0% non vehicle equipment rental 1% other operating services 7%

21 Operating expenditures: Port of Milwaukee 2010 reimburse other departments 5% loans and grants 0% general office expense 1% construction supplies 3% energy 6% other operating supplies 1% vehicle rental 0% vehicle repair services 0% non vehicle equipment rental 1% other operating services 7% professional services 13% tool and machinery parts 0% IT services 1% infrastructure services 20% property services 42%

22 Correlation of investment to maritime industry Port of Milwaukee correlation Salary Fringe Operating Special HAP USACE HAP+USACE

23 Correlation of investment to maritime industry Port of Green Bay correlation Salary Fringe Operating HAP USACE HAP+USACE

24 Impact of investment to maritime industry Port of Milwaukee

25 Impact of investment to maritime industry Port of Green Bay F= F=1.12x10^-11 F=1.59x10^-13 t=0.991 t=2.4x10^-5 t=1.59x10^-7 F95% = 5.32 t95%=2.306

Port of Green Bay revenues trend 932.8 K 932.8 K 932.8 K 932.8 K 61.8 K 62 K 62 K 62 K 70 K 81 K 81 K 101.

26 Port of Green Bay revenues trend K K K K 61.8 K 62 K 62 K 62 K 70 K 81 K 81 K K 85 K 110 K 95 K Property tax Other state grant Tipping and lease fees Foreign trade zone Harbor fee special rev. funds used Contributed capital amortization Other miscellaneous Harbor dredging transfer-in O&M fund reimbursement Interest 217 unrestricted cash transfer (overhead) 217 unrestricted cash transfer (operating cash) 217 unrestricted cash transfer (salaries)

00, 1% Harbor dredging transfer-in, 0.00, 0% 217 unrestricted cash transfer (overhead), 0.00, 0% Property tax, 0.

27 Green Bay revenues 2001 by revenue category 217 unrestricted cash transfer (salaries), 0.00, 0% 217 unrestricted cash transfer (operating cash), 93,485.00, 8% Interest, 2,146.00, 0% O&M fund reimbursement, 10,600.00, 1% Harbor dredging transfer-in, 0.00, 0% 217 unrestricted cash transfer (overhead), 0.00, 0% Property tax, 0.00, 0% Other state grant, 0.00, 0% Tipping and lease fees, 62,000.00, 6% Foreign trade zone, 6,000.00, 1% Other miscellaneous, 4,550.00, 0% Harbor fee special rev. funds used, 0.00, 0% Contributed capital amortization, 932,754.00, 84%

28 Cost comparison

29 Marginal cost

30 Scale economy

31 Cost comparison coal specialization (mw1, mw4, gb)

32 Cost comparison crude material

33 Cost comparison primary manufacture goods

34 Cost comparison coal & crude material

35 Cost comparison crude mat.& prim. manu. goods

36 Cost comparison coal & prim. manu. goods

37 Cost comparison coal, crude mat. & prim. manu. goods

38 Estimated port cost and policy making Public funds and port multi-output can be examined by quadratic cost function Estimated cost function indicates the differences of marginal cost and economy of scale of Port of Milwaukee and Port of Green Bay in last decade Statistical estimate is restrictive in limited data acquisition of port budget By the implication of multi-output quadratic cost function, Port profit maximizing level can be defined under the competitive environment

EFFECTS OF EXTENDING AND EXPANDING ENERGY-EFFICIENCY TAX DEDUCTION FOR COMMERCIAL BUILDINGS

EFFECTS OF EXTENDING AND EXPANDING ENERGY-EFFICIENCY TAX DEDUCTION FOR COMMERCIAL BUILDINGS Prepared by Regional Economic Models, Inc. (REMI) Agenda Overview of 179D tax provision Energy efficiency and