11:01am | The Long Beach Board of Harbor Commissioners on Monday approved an $828 million budget for fiscal year 2012 that includes significant investments in development projects to expand trade under a spending plan that includes $630 million in capital improvement projects expected to support nearly 6,000 local jobs, according to a statement from the port.
The 2012 budget includes $59 million for pollution cutting shore-side electrical power for ships, $109 million for the Gerald Desmond Bridge Replacement Project and $231 million for the construction of the Middle Harbor Redevelopment Project.
“The Port is the most important economic partner in our city,” said Long Beach Chamber of Commerce Executive Director Randy Gordon. “Their spending plan is a positive sign for our local economy creating jobs and improving infrastructure while maintaining their place as one of the most green ports in the world.”
But what the budget doesn’t seem to include is the annual tideland oil transfer to the city, the one that was adjusted in Measure D to be calculated on 5 percent of the gross instead of 10 percent of the net.
It appears this year they are not planning on making this payment, something that city officials my take umbrage with. The city officials are talking about putting an item on the July 5 city council agenda to request the transfer, according to a source with the city.
However, according to the port, the request for funds was not made by the city.
“There was no request from the city for a tidelands fund transfer for fiscal year 2012,” said Daniel Yi, a spokesman for the port. “The city’s tidelands fund will be receiving the two transfers from the port for 2011 totaling $24.4 million plus the net oil revenue from the Harbor District estimated at $40 million in 2011, and $37 million in 2011. So the total transfer from the fiscal years 2011 and 2012 will be over $100 million.”
But those payments aren’t what the city is entitled to under Measure D, according to the unnamed source. The measure, which passed in November, changed the way the port passes on part of its revenue to the city. Therefore, potentially millions of dollars could be at stake in this debate.
Aside from the contentious issue of tidelands funds, the budget makes some headway toward a more fiscally sound port operation, according to the statement issued by the port. The budget will cut the non-personnel cost of port operations by 7 percent, following a 12 percent reduction in fiscal year 2011 and 4 percent the year before, according to the port.
“We are seeing some signs that the global recession is easing and our revenues are beginning to recover,” port Executive Director Richard D. Steinke said in a statement. ”We are investing in our future, while living within our means today. Our prudent fiscal management is what gives us the ability to invest and to stay competitive in our industry. We must continue to modernize and ‘green’ our operations.”
The fiscal year 2012 budget represents a 26 percent increase from the previous year, mainly as a result of the increase in capital spending, while container volumes are increasing at the port and operating revenue is expected to grow by about 3 percent in fiscal year 2012, according to the port.
Kristen Monaco, a professor of economics at Cal State Long Beach, said in an e-mail Wednesday that the port’s focus on major capital improvement projects while at the same time reducing operating costs “should help them stay competitive.”
“The disadvantage of being an older port is that the facilities aren’t structured for current terminal operations. The Middle Harbor project will represent a major revamping of terminal space to increase productivity,” Monaco said. “Obviously this project as well as the bridge replacement will lead not only to more efficient … goods movement within the port complex, but also more construction jobs in Long Beach, which are badly needed.
Representatives in the business community praised the port budget, and the possibilities the planned improvements bring to the surrounding area.
The port also expects to issue $300 million in new bonds and draw $60 million from its reserve funds, following through with a construction program underway that will invest more than $4 billion over the next 10 years to modernize facilities, according to the port.
The port’s budget will be included with the rest of the city’s when it goes to the City Council for review. The port’s budget is supported mostly by income from terminal leases and existing reserves.