Critics Want City to Tap Airport, Port Profits : Government: Steep increases in travel spending by two commissions have prompted calls for tighter controls. Some officials see cash-rich agencies as a way to ease fiscal problems.

Steep increases in travel spending by Los Angeles port and airport officials have prompted calls for tightening controls on the agencies and tapping their profits to help the city out of a deepening financial crisis.

While other city agencies are cutting basic services, the well-heeled, semi-independent port and airport agencies spent a combined $1.1 million last year on entertainment and travel, records show. The outlays have more than doubled in the last six years.

Critics say the travel spending points to a larger problem--the political and financial isolation of the two agencies, which have been awash in cash in recent years and only loosely monitored by elected officials.

“Nobody governs them,” said Councilwoman Joy Picus. “They are ruled unto themselves.”

Taxpayer groups want the City Council to reel in the agencies and begin using airport and harbor profits to ease the city’s fiscal crunch. Some city officials argue that the time has come to consider selling or leasing the airport and harbor to private concerns--a strategy that could reap a huge financial windfall for the city.

Council President John Ferraro, who is among the officials who have taken expensive port-paid trips, said he expects the council to review port and airport travel policies and renew efforts to obtain greater financial contributions from the agencies. “I think the council is headed that way,” he said.

Joel Fox, president of the Howard Jarvis Taxpayer Assn., said the City Council should use newly granted powers under Proposition 5 to begin closely scrutinizing spending practices at the two departments. The measure, approved in June with backing from Fox’s organization, gives the council unprecedented authority over commissions, such as the ones that run the port and airport.

“The only connections we really have, particularly to these appointed government agencies, is through our council,” Fox said.

Harbor and airport officials defend their spending, saying that they have been highly successful in drawing commerce to Southern California.

“One of the reasons the harbor has done well is it is run as a quasi-private business,” said Port Commission President Ron Lushing. “We have grown tremendously in terms of tonnage and revenues and profits, and much of that is due, in our view, to the marketing program.”

In the last six years, cargo moving through the port has gone from 51 million tons to more than 70 million tons, Lushing said, while net income has soared from $58 million to $81 million. “It is important those funds stay with the harbor, to go into development,” he said.

Port and harbor profits, which total tens of millions of dollars each year, are being reinvested in needed modernization and expansion of their facilities, officials say.

“Once the City Council gets their hands in the tills of the airport and harbor, we will no longer be able to count on the economic stability of these two job-producing facilities,” said Bill Chandler, spokesman for Mayor Tom Bradley, who appoints airport and harbor commissioners and regularly joins them on travels around the globe.

It is the success of the “entrepreneurial credo” at the two departments that is “largely responsible for the city’s ability to withstand the impacts of the recession,” Chandler said.

But Councilman Zev Yaroslavsky, head of the city’s Revenue and Finance Committee, said the two agencies “operate like they are not a part of the city of Los Angeles.”

“They are rolling in cash,” he said. “(These) independent departments need to pony up. The way to spend that cash is not by going to Monaco and Japan.”

Historically, there has been little pressure on either department to economize on such items as travel and expensive dinners, critics say. Under the City Charter, both agencies approve their own budgets, which run into the hundreds of millions of dollars. They have been bulging with money and building larger reserves as the facilities have grown into major commercial gateways to booming Pacific Rim nations.

The port last year passed New York Harbor and became the nation’s largest handler of cargo. Los Angeles International Airport, with 45 million passengers, is now the nation’s third-busiest airport.

But under a patchwork of federal regulations, state laws and contractual agreements, the monies generated at the facilities may only be used for airport- and harbor-related expenditures.

At the airport, a controversial, 40-year-old operating agreement with the airlines sets landing fees that cover the department’s annual expenses and guarantees a profit, which has run about $10 million in recent years and can only be used for airport improvements.

While defending regular, far-flung travel by large delegations of city officials and staff, airport general manager Clifton Moore said there is little incentive to cut back.

Even if his agency eliminated the $522,000 it spent on travel last year--up 95% in just four years--it would not help the city, he said. The only effect of reducing expenses, he said, is that airline landing fees would be reduced under existing contracts with the airlines.

“The airlines run the place,” Yaroslavsky said.

The harbor, meanwhile, operates on state-owned lands that were turned over to the city under trust agreements dating to the early 1900s. The port’s profit of $81 million in 1990-91 must be used for port-related purposes. The port spent $615,000 on travel last year--more than any other major West Coast port except Portland--and a record $1.1 million two years ago.

The city is studying the various legal barriers drawn around the two departments, said City Administrative Officer Keith Comrie, the city’s top budget official.

“They were subsidized (by the city) like crazy in the early years,” he said. “Now they’ve both turned around into highly profitable operations and the question is: Can they assist?”

Yaroslavsky’s goal is to force the agencies to contribute 5% of gross revenues to the city general fund--a move he says could add tens of millions of dollars to the city treasury.

Accomplishing that will involve political battles from City Hall to Sacramento and Washington.

The first major engagement will come in the next several months, when negotiations begin to renew long-term airport operating agreements due to expire next year. Los Angeles International Airport now charges 63 cents per 1,000 pounds for aircraft landings at the facility--about one-third of the fees at airports in New York, Dallas and Chicago. A $1 hike in the fees would generate an additional $20 million per year, said Jerry Lee, an Airport Department administrator.

Council members say they will be pushing for higher landing fees, as well as a share of the revenues. Picus, who was perturbed by recent hikes in airport parking fees at the same time landing fees were reduced, said the airport will no longer be allowed to make decisions “based on who they do business with, which are airline companies, (rather than who) they serve, which are the people of L.A. County.”

Airport officials deny that they cater to the airlines, and say they would like to help the city. But they add that legal questions remain about how much money could be diverted to City Hall and they note that airlines are likely to resist higher fees because they are experiencing severe financial problems of their own.

Another proposal to overhaul airport finances goes far beyond revenue sharing. The city has hired an outside consultant to conduct a feasibility study of the sale or lease of the airport to private operators. That study will be completed early next year.

The Reason Foundation, a conservative think tank, has estimated that the city could receive a $1-billion windfall from the scheme--not counting millions of dollars in annual funds that could be generated from putting the airport back on the city tax rolls.

Bradley is reserving judgment, but Ferraro and Picus say the proposal to privatize the airport holds some promise.

Council efforts to tap port finances also face political and legal obstacles. California Lands Commission attorney Curtis Fossum, whose agency loosely regulates state-owned tidelands, said Sacramento lawmakers also are eyeing port surpluses as a means to help solve their budget woes.

Getting a significant share of port money for Los Angeles and other city treasuries would probably take voter approval of a state proposition, Fossum said.

Council members, meanwhile, are stepping up pressure on the port to cough up funds for harbor-related services. The port last year paid about $11 million for such services as city fireboats. This year, it agreed to kick in an additional $2 million, records show, to pay for City Hall clerks, accountants and librarians who work on port-related tasks.

Councilwoman Joan Milke Flores is demanding more money to maintain roads in her harbor area district on the theory that port traffic is an added burden.

But Flores, who sometimes travels at port expense, generally defends the harbor’s spending practices and opposes council efforts to siphon off a percentage of the agency’s profits.

“What the port is doing with the money has worked because they now are the No. 1 port in the country,” she said.

But Comrie said the port and harbor can afford to render significant financial aide to City Hall. And like the city Department of Water and Power, which sends nearly $100 million a year to the city treasury, he predicts that the port and harbor eventually will share the wealth.

“It’s a very reasonable request,” he said. “It’s just a matter of time.”

Harbor Dept., Airport Dept. Expenses

Some Los Angeles City Council members are questioning travel expenses at the Harbor and Airport departments and demanding that the agencies share profits to help the city through its financial crisis. Here’s a look at the two departments.

AIRPORTS / LAX, Ontario, Palmdale and Van Nuys * Number of employees: 1,500 * Total operating budget: $400.5 million * Total operating expenses: $176.6 million * Total operating revenue: $213.9 million * Net income: Approximately $10 million * Total shipments: 1.2 million tons * Reserves for improvements: $83 million * Passengers: 50.9 million * Travel spending: ** 1988: $267,431 ** 1989: $374,913 ** 1990: $393,522 ** 1991: $522,369

HARBOR

* Number of employees: 750 * Total operating budget: $68.2 million * Total operating expenses: $64.7 million * Total operating revenue: $160.4 million * Net income: $81 million * Total shipments: 70.9 million metric tons * Reserves for improvements: 186.7 million * Passengers: 647,170 (cruises) * Travel spending: ** 1988: $583,000 ** 1989: $1,125,000 ** 1990: $535,000 ** 1991: $615,000

The general managers of the harbor and airports are among the most frequent travelers, records show.

* Airport Executive Director Clifton A. Moore was out of town approximately 12 weeks per year in 1989 and 1990, including trips to Africa, Costa Rica, England, Ireland, Singapore, Houston, Florida and Washington, D.C.

* Harbor Executive Director Ezunial Burts was out of town approximately 10 weeks per year in 1989 and 1990, including trips to Canada, Europe, Japan, Jarkarta, Korea, Taiwan and Washington, DC.

SOURCES: Airport and Harbor departments; city controller’s office

Compiled by Times editorial researcher Cecilia Rasmussen