Page 6: of Maritime Reporter Magazine (March 15, 1985)

The battleship, USS Iowa (BB 61) on sea trials. Ingalls Shipbuilding photo

THE FY 86 NAVY PROGRAMS

By David H. Carroll

For the U.S. maritime industry, and for the U.S. Coast Guard, the fiscal year 1986 budget sent to Con- gress by President Reagan was lit- tle short of disastrous. For the U.S. shipbuilding industry and its vari- ous suppliers and subcontractors, though, there was much good news mixed in with the bad.

The reason is that, once again, the

Administration is cutting back on

Coast Guard programs, and has an- nounced plans to further reduce federal assistance for the hard- pressed U.S.-flag merchant marine.

But funding for naval shipbuilding will stay above the $10 billion level annually for at least the next five years, and will probably not be reduced much, if any, by a Congress seeking to reduce soaring budget deficits in any way possible.

The Maritime Administration (MarAd) budget story is short and bitter, and contains no real sur- prises. Not only is there no hint of reviving the CDS (construction dif- ferential subsidy) program, but the

ODS (operating differential subsi- dy) program also is being cut back— from $329.5 million in FY 1985 to $299.5 million requested for FY 1986. Moreover, the FY 1986 ODS funding was requested only "to meet the federal government's obli- gations on existing contracts; no new contracts are anticipated" after current contracts expire.

Adding more salt to the wound, from the maritime industry's point of view, is the administration's deci- sion to seek a limitation of $900 mil- lion "on loan guarantee commit- ments for Federal Ship Financing."

Of that total, moreover, $300 million will be held in reserve, for use only if "needed in the interest of national security."

Members of Congress supportive of the U.S. maritime industry have promised to seek some legislative relief for the industry, but there seemed little hope, as the FY 1986 budget hearings began, that any ad- ditional funding for merchant ma- rine programs will be approved dur- ing the current session of Congress.

The outlook was somewhat brighter for the U.S. Coast Guard, which also has not fared too well under Reagan Administration. Con- gress has in the past forced through higher funding for USCG programs than the administration had re- quested, and may well do so again.

The Coast Guard, although smallest of the uniformed services, is also perhaps the most ubiquitous, with small units and detachments in vir- tually every state that has any siza- ble body of water. Its boating safety program, search and rescue opera- tions, and similar activities make the Coast Guard part of the civilian community and account in large part for its strong support in Con- gress.

It will need all that support, and then some, to overcome the obsta- cles posed by an FY 1986 USCG budget request that, although con- ceding an increased workload for the Coast Guard in almost all mis- sion areas, seeks both a funding reduction (particularly when infla- tion is factored in) and cuts in civil- ian as well as military manpower for the multi-mission service.

Following are the specifics: The overall Coast Guard budget in FY 1985, the current fiscal year (which started on 1 October 1984), will be an estimated $2,517.7 million when final receipts are in; only $2,509.4 million—about $8.3 million less, in other words—is requested for FY 1986. The biggest reduction is in the

ACI (acquisition, construction, and improvements) account, slashed from $346.0 million allocated for FY 1985 to $303.1 million requested for

FY 1986. Included in the new ACI request is funding for, among other things, construction of one river ten- der and the renovation/moderniza- tion of three 210-foot medium en- durance cutters and the polar ice- breaker USCGC Northwind (WA-

GEB-282).

Largely overshadowing the bleak shipbuilding outlook for the Coast

Guard and U.S.-flag merchant fleet was the continued good news in nav- (continued on page 10) 8 Maritime Reporter/Engineering News