The Port of Olympia Commission held a second review of its 2024 budget on Monday, November 6. The budget is tentatively scheduled for a public hearing on November 13, according to the staff’s presentation to the committee.
The Port of Olympia’s projected revenue for 2024 is $15,634,640, nearly the same value at which 2023 revenue is expected to close — $15,663,158. Projected revenues for 2024 are all slightly up year-over-year among the port’s various enterprises, except for its properties segment, which is expected to deliver 34% lower revenue compared to 2023.
In terms of the bottom line, 2024 profits across all businesses are expected to fall below the estimated profits from 2023. Before depreciation costs, these businesses are expected to deliver the following profits in 2024:
Compared to projected figures for 2023, the figures above are all down by 63%, 54%, 46%, and 110%, respectively. Taking into consideration depreciation costs, all business segments are expected to incur the following losses:
Notable cost drivers include general and administrative expenses, which are up by more than 19% across all Port of Olympia sectors. Interim Director of Finance Tad Kopf said to the commission that staff will explain these increases further in its next presentation.
Another notable expense increase is maintenance cost for the airport, which is at $1.14 million, up by 47.5% compared to the 2023 adopted budget.
Kopf said that deferred projects are adding to maintenance expenses on top of new projects for 2024. He said that a $130,000 asphalt repair project at two airport facilities and a $80,000 stripping activity was not completed in 2023, so the project costs are being transferred to 2024’s budget.
Regarding the airport’s asphalt repair project, Kopf said they were unsuccessful in getting a contractor to bid on the project. As for the stripping project, Kopf said the port discontinued its agreement with its contractor due to subpar performance.
Kopf said that other new maintenance expenses for the airport include a $115,000 repainting project for airport facilities; a $60,000 line item for repainting fuel tanks; a $125,000 renovation of the Washington State Patrol facility, which will be reimbursed over time; a $17,000 landscaping contract for Cleanwater Center, a proposed “urban commercial corridor” along Capitol and Tumwater boulevards; and a $6,000 expense for an airport truck’s transmission replacement.
The agenda for next week’s meeting has not yet been published as of press time.
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BobJacobs
Please. Please. Please.
Stop talking about "profits". There are no profits. As is usual, all four business operations show a LOSS; see the chart in the article.
And please do not talk about "profits before depreciation" because it is irrelevant; depreciation is an expense.
Port officials have tried for years to conceal their losses by ignoring overhead and depreciation, but those are expenses and the bottom line is RED.
Thar's without considering the opportunity costs of the port's net assets.
Those losses are covered by our public assets of one kind or another. In other words, this is a "reverse Robin Hood" operation, taxing all of us to provide services almost exclusively to people better off than most of us -- boat owners, airplane owners, large shippers, and renters of major real estate.
Let us hope the new Port Commission will improve on this situation.
Bob Jacobs
ps The operating revenue numbers look high. I wonder if the chart is showing tax income and operating revenue. That is another trick that has been used by ports to hide losses. And it is not allowed by accounting regulations.
Thursday, November 9, 2023 Report this
jimlazar
Even the losses shown above, by business unit, understate the real losses for each unit.
The Port continues to conceal the actual extent of their financial losses in each business unit.
The table in this story does not include interest on the debt the Port has incurred for capital projects. The Port owes about $30 million in debt, incurred for capital facilities that help generate revenue.
That's fine, but it's important to attribute the debt service paid by the Port to the various functions for which the debt is incurred.
The Port Budget, on page 127 (see link below) shows annual interest expense for 2024 as $1.1 million. But they lump it all together, rather than showing that debt service by business unit.
What happens to these net-losses for each business unit if that interest is spread between the businesses on the same basis as depreciation (interest and depreciation are both costs associated with recovering the capital investment, but not necessarily in precise proportions).
If that $1.1 million in interest expense was distributed among the categories above, on the same basis as depreciation expense, it would:
a) add about $600,000/year in red ink to the Marine Terminal. Meaning the "real" budgeted loss for the Marine Terminal is more like $1.7 million.
b) About another $300,000 would be attributed to the airport, meaning an $800,000 loss.
c) About $200,000 in interest attributable to Swantown, meaning a $500,000 loss.
d) Finally, about $100,000 attributable to the properties, meaning a $350,000 loss.
That's a lot of red ink. I understand why the Port is trying to conceal this: it looks bad. But we have three new Commissioners taking office soon, and I hope they demand more transparency in the Port budget and quarterly financial reports than has been the practice in the past under now-departed manager Sam Gibboney.
It's time to turn the page at the Port of Olympia, and see honest budgeting, honest financial reporting, and respectful treatment of the public and our taxes.
The full budget can be viewed at https://portolympia.com/wp-content/uploads/2023/11/2024-DRAFT-Budget.pdf
Thursday, November 9, 2023 Report this