Port's viability depends on change

April 01, 2005|By Melvin A. Steinberg

THE PORT OF Baltimore is such a unique entrepreneurial entity and plays such a vital role in Maryland's economy that the time has come to restructure its operation and create a quasi-independent entity to enhance its performance. Controversy swirling around the recent resignation of the port's much-admired executive director, James J. White, only heightens the need to act.

Three years ago, I led a transition team for Gov. Robert Ehrlich Jr. that was examining Maryland's transportation agencies. The team found that two of those agencies - the port of Baltimore and Baltimore-Washington International Airport - operate in such highly competitive markets that increased management flexibility is needed. We recommended that these quasi-entrepreneurial agencies be removed from control of the state Department of Transportation.

We further suggested that the business operations of the port and the airport be joined with the Maryland Transportation Authority, which runs the state's toll roads and bridges, to create the Maryland Meta-Transportation Authority (MMTA). This would resolve a number of concerns and difficulties arising from the current reporting relationships with Transportation Department hierarchy.

The MMTA would be governed by a board appointed by the governor, with the advice and consent of the Senate. The transportation secretary would preside over the board in an arrangement similar to the port's current setup. The MMTA would be run by an executive secretary. Three professional administrators (toll facilities, port and airport) would report to the executive secretary. Such a change in governance would improve the chances of attracting a top-flight maritime manager to run the port.

The transition team's study shows the port could not function well as a "stand-alone" authority. While in most years Baltimore's public piers and terminals generate sufficient revenue to pay operating expenses, this income is not sufficient to cover all of the port's enormous capital needs.

One solution would be to join the port and BWI - which also has huge construction projects - with the state's revenue-flush toll facilities operation. This merger makes sense. The toll facilities operation already owns Seagirt Marine Terminal and significant portions of Point Breeze. It also is financing the bonds for the massive new airport parking garages.

Three years ago, the transition team said the Transportation Department was too big and unwieldy. It specifically noted that the transportation secretary's span of control over roads, bridges, tolls, autos, trains, buses and ports was too broad to allow knowledgeable and informed decision-making on all aspects of this $3.7 billion department. In short, the transportation secretary has so much on his plate he can't possibly put his time and energy into the essential task of cultivating new markets for the port of Baltimore and BWI.

As it is, these "business-oriented" agencies - whose existence depends on winning new customers for the port and airport - must battle for limited government funds against other Transportation Department entities with captive audiences, such as the Motor Vehicle Administration and the Maryland Transit Administration. These agencies don't have to worry about losing shipping lines or airlines to aggressive East Coast competitors with larger budgets.

Clearly what's needed at the port and airport is a governance structure that encourages entrepreneurial decision-making.

The long-term viability of Baltimore's port as an economic development engine is already in doubt. Norfolk, Va.-area ports at the mouth of the Chesapeake Bay have a huge geographic advantage so close to the Atlantic Ocean.

Moreover, the sharp drop in the value of the dollar could affect the amount of vehicle imports aboard roll-on, roll-off ships; the vehicles are a crucial cargo for Baltimore. And needed port expansion will require substantial capital outlays, not only on the piers and terminals but for highway and rail improvements to keep Baltimore's port competitive.

This proposal calls for just the business-side portions of the Maryland Aviation Administration and the Maryland Port Administration to be shifted into the new MMTA. The Transportation Department would retain control over regulatory and policy aspects of the two organizations.

Still, there should be some modest savings attributable to merging certain administrative functions from the three operations. Intricate financial issues would have to be addressed through further study. There's also a need to evaluate similar governance structures at other state-run ports across the country.

The bottom line remains that change at the port is not only necessary but essential. Too much depends on strengthening the port as a generator of jobs and economic value for us to permit its current governance problems to persist.

Melvin A. Steinberg was lieutenant governor of Maryland from 1986 to 1994, state Senate president from 1983 to 1986 and a state senator from Baltimore County from 1966 to 1986.

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