Recession Leads Port Officials to Trim Budget : Spending: Harbor Commission seeks to cut costs by 5%, but announces no plans to lay off workers as sagging economy brings drop in revenues.

With a cautious eye on the economy, the Los Angeles Harbor Commission has approved a 1991-92 budget that for the first time in recent memory calls for a decrease in spending at the nation’s busiest port.

The $433.8-million budget, which is $20 million, or 5%, lower than the 1990-91 budget, does not include layoffs or other drastic cost-cutting measures in the fiscal year that begins July 1. And as in prior years, it includes a huge financial reserve of $224 million.

Nevertheless, port officials said the spending plan, approved Monday, will cut capital spending and operating expenses to reflect some sober new realities for the Harbor Department after a decade of staggering growth.

Those realities include a recession that has abruptly halted the port’s heady economic expansion of the 1980s, and the need for financial restraint at a time when the uncertain economy--and competition from other West Coast ports--make it unacceptable to conduct business as usual.

“We just felt it was time for a little austerity and belt-tightening,” said Jim Preusch, the port’s chief financial officer. “The economy is a little bit soft and we felt it was a good time to hold the line on spending wherever possible.”

As such, the budget cuts are designed to offset a 4.6% drop in revenues from shipping and wharfage fees and other income sources.

The cuts include reducing the number of employees at the Harbor Department through attrition. The new budget cuts 16 vacant jobs from the current 806 positions, and port officials hope to eliminate 40 more jobs as they come open by next year.

Additionally, the budget calls for spending $108 million--$11 million less than in the 1990-91 budget--on capital projects, including dredging, building new container terminals, and buying new cranes and other equipment.

In most cases, Preusch said, the cut in capital spending reflects the end of a cycle of development projects at the port. One example, he said, is the new 100-acre container terminal being built for NYK Lines of Japan. Last year, that $100-million facility, spanning Berths 212 to 216, was budgeted for $58 million. But this year, with the terminal nearing completion, port officials have budgeted only $14.5 million to finish the project.

Still, Preusch and other port officials conceded that not all of the budget adjustments had been anticipated. Indeed, they said, the conservative approach to spending next fiscal year was driven by factors that were unforeseen or beyond the port’s control.

The loss of Hanjin Shipping Line to the Port of Long Beach, for example, had a significant effect on the port’s operating revenues. Although no specific dollar figure was immediately available, port officials noted that Hanjin was among the dozen biggest tenants at the Port of Los Angeles and that its loss will translate into a sizable drop in revenues from shipping services--by far the largest single source of operating revenues for the port.

More significant, however, has been the effect of the recession, which the port has weathered largely by virtue of its location as a gateway to the nation’s fastest-growing region.

Throughout the 1980s, the port saw its cargo tonnage grow by 10% a year. But the past fiscal year has been marked by a flattening out of new business at the port as the market for new cars and other goods has declined. Current projections call for this fiscal year’s tonnage to match what it was in 1989-90--about 2 million containers with cargo valued at $55 million.

Although those numbers would still leave the port ahead of others nationwide, they have prompted uncharacteristic caution among Harbor Department officials as the new fiscal year begins.

Still, Preusch and other port officials remain guardedly optimistic that trade will rebound in the coming months. In the meantime, Preusch said, port officials are playing it safe.

“It’s a real cautious budget,” he said, “that is in tune with the times.”