Funds of San Diego, Other Port Districts Under Siege

Gov. Pete Wilson and legislators want to tap the deep pockets of major port districts in California, including San Diego, to raise at least $75 million to help balance the state’s budget.

A joint Assembly-Senate budget conference committee Tuesday agreed to funnel half the ports’ net revenues, which are traditionally used to build piers, terminals and generally upgrade the waterfront, into the state’s general fund.

Under the proposal, the San Diego Unified Port District would be forced to send $10 million of its $20-million reserve to Sacramento.

Cynthia Katz, assistant director of the state Department of Finance, acknowledged that Wilson is backing the revenue-sharing proposal, saying that “the state should receive part of the profits” in part because the ports have developed into thriving businesses on state tidelands.

But port officials in San Diego, Los Angeles and elsewhere condemned the move as a power grab that ignores their long-term needs. They say giving Sacramento their money could delay local expansions, dim the prospects for thousands of new jobs and make California ports less competitive.

“Our ability to make capital improvements and to do things at the airport (Lindbergh Field) and keep these things in good repair are seriously jeopardized if those funds are not available,” San Diego port district spokesman Jim Anderson said.

A spokeswoman for San Diego Mayor Maureen O’Connor said she is also disappointed with the prospect of losing district funds to Sacramento.

“We think it’s terrible,” said Chris Cameron, O’Connor’s assistant. “It’s local money, and it should stay in the local area.”

Besides San Diego and Los Angeles, the proposal would include ports in Long Beach, Oakland and San Francisco.

At issue is whether port profits should be poured back into local harbor projects or be sent to the state’s general fund for other vital purposes such as education and prisons, according to Alan Lind, a consultant to the Assembly Ways and Means Committee. Lind estimated that revenues from California ports could reach $90 million a year.

Assemblyman Thomas Hannigan (D-Fairfield), a member of the budget conference committee, said the ports “have excess revenues” and, “unlike other occupants of state lands, pay no compensation to the state.”

However, Anderson said the San Diego Port District has accrued a $20-million reserve--money it has in excess of normal operating expenses--to finance future improvements that benefit the public and provide jobs.

Among those planned by the district include replenishing sand in Imperial Beach and an ambitious $68-million, three-part plan to refurbish terminals, replace an aircraft apron, move the fuel farm and change traffic exits at Lindbergh Field. Most of these projects are already under way, Anderson said.

“Our ability to keep doing things like this would be jeopardized,” he said.

City officials--especially O’Connor--have long eyed the port’s reserve account as a way to shore up the municipal budget. The $489-million budget the San Diego City Council adopted for 1992-93 will require nearly $40 million in reductions over last year’s level of service, officials say.

Independent of the budget proposal, city officials have been working with the port to be reimbursed for municipal fire and police services used on tidelands. In June, the port agreed to pay the city nearly $1 million a year for helping with emergencies on Port District land.

But O’Connor had been hoping to tap into the port’s reserves even further before the state decided to beat her and other cities to the punch as a way to close an anticipated $11-billion gap by the end of the 1993 fiscal year.

Steve Dillenbeck, executive director of the Port of Long Beach, said the proposal is “very, very shortsighted.” Under the proposal, he said, Long Beach could stand to lose as much as $35 million--money that would otherwise be used for new piers and other projects to attract shipping tenants.

He said the Legislature set up the port 80 years ago “to be self-sustaining and not to be a drag on the taxpayers.” Now, he said, “they want to cut our legs off.”

Julia Nagano, a spokeswoman for the Port of Los Angeles, voiced a similar complaint, saying the legislative proposal “could prove to be devastating because of the long-range ramifications.” She estimated the Port of Los Angeles could lose as much as $40 million.

Some port officials fret that if the proposal is enacted into law it will undermine their ability to finance improvements. They cited a warning issued last week by Standard & Poor’s, which rates port bonds, that said the proposal “could significantly limit the ports’ financial flexibility and the ability to generate appropriate reserves for financing capital programs.”

Among the projects that could be affected is a proposed $500-million transportation corridor between the ports of Los Angeles and Long Beach and downtown Los Angeles.

Despite the conference committee action Tuesday, the prospects for the revenue-sharing proposal are unclear. Assembly Speaker Willie Brown last week stripped a similar proposal from another bill, but Monday the San Francisco Democrat left open the possibility that it would be included in a final budget compromise.

E. A. Melendez, a lobbyist for the Port of Long Beach, said the proposal’s opponents have a harder fight now that the Wilson administration has joined some lawmakers in supporting port revenue sharing.

“It makes our job a little more difficult,” he conceded.

Times staff writer Greg Krikorian contributed to this report.