Port begins budget discussions

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The Port of Port Townsend’s 2018 budget review showed variations from initial projections due to three major events the Port had not expected this year, which caused a loss in projected income. 

Port commissioners reviewed the 2018 budget and began discussing 2019 budget plans at the Port Public Workshop on Sept. 12.

“In essence, we were on budget, were it not for three unforeseen events,” Director of Planning and current interim Executive Director Eric Toews said. “Not moving ahead with the jetty project, not moving ahead with the bond, and finally, the change in both leadership at the Port and the change in maintenance positions.”

The estimated 2018 budget results showed that the Port was still doing well operationally in revenue and expenses, despite the events and issues that came up during the year and showed higher operating income than in 2017.

 

Variances

The unforeseen events led to variances in the actual 2018 budget from the projected 2018 budget. In net operating income, the Port budgeted about $614,430, but estimated that as of September, the net operating income for 2018 was actually around $567,464, a variance of roughly $47,000, which was more than they projected to spend for operating income. However, estimated operating income of 2018 was more than the 2017 operating income of $376,334.

“In operations, the variance is only about $47,000 from what we originally projected, which is not bad considering all the things that have occurred since the budget was planned last November,” said Director of Finance Abigail Berg, referencing, among other things, the change in staff that occurred in August, when former Executive Director Sam Gibboney stepped down and the Port hired Jim Pivarnik to begin as interim executive director in mid-September.

The Port budgeted a net non-operating income of $1,857,420, but their estimated results for 2018 show a net non-operating income of $1,259,763, a variance of roughly $825,000. This variance was caused by a loss of grant money and a $3.2 million bond issuance that did not occur because the Port decided to conduct further research before going ahead with the jetty replacement project. The estimated 2018 net non-operating income was less than the 2017 actual net non-operating income, which was $1,498,000. 

“Operating revenues look good expenses are up compared to 2017,” Berg said.

When discussing possible budget priorities for 2019, Port commissioners were focused on minimizing expenses and increasing net operating income. 

 

Priorities 

The three main budget priorities for 2019 are increasing income, beginning potential projects and securing money to cover other issues and costs. 

The Port is hoping to increase net operating income by increasing revenues to include a CPI rate increase, leasing available Port properties, reviewing staffing for potential saving and reducing utility expenses.

Potential projects for the 2019 budget include the emergency Point Hudson jetty repair, completing the Jefferson County International Airport runway rehabilitation, workyard resurfacing, stormwater compliance efforts and repairing roofs at Point Hudson.

Other issues and costs include searching for a permanent executive director, as Pivarnik will only be interim executive director for one year, and considering additional debt for anticipated projects or to increase income.

Because of the three events causing budget variances in 2018, commissioners considered the possibility of an emergency fund, to deal with any issues coming up during the year, like potential damage to the jetty. 

They also discussed the possibility there might not be enough money for everything.

“We may not be able to afford to do all that we’re going to do,” Port Commissioner Chairman Steve Tucker said. “We may have to surplus some in order to maintain what we’re trying to do. That’s a short term strategy.”

One way the Port can increase income is by leasing available Port properties, and at the Port’s monthly business meeting later that afternoon on Sept. 12, they selected five applicants to make up a Leasing Policy Advisory Committee. 

Applicants chosen to lead the LPAC were Ernie Baird, who has held a lease at Boat Haven since 1988; Chris Jones, who is the operations manager at Coast Seafoods Hatcher in Quilcene; John Eissinger, a realtor and owner of the Blue Gull Inn Bed & Breakfast; Susan Whitmire, a banker with Kitsap Bank in Port Townsend; and Pete Langley, owner of the Port Townsend Foundry. 

The committee will help advise the commissioners on leasing decisions, and were chosen to represent current Port tenants, private sector commercial and industrial tenants, landlords and local financial and lending institutions. 

One of their biggest challenges will be to increase income for the Port, without driving out current tenants by raising prices. 

“I don’t want to dismantle the Port to try and save the Port,” said Port Commissioner Bill Putney during the Port workshop. “That’s cannibalizing our tenants to save the Port, which is counter productive. But we need to find a way to solve all these problems.”

The Port will have a draft of the 2019 budget at the next meeting Sept. 26.