L.A. Port Seeks a Bigger Budget as Growth Stalls

Just three weeks before Mayor James K. Hahn leaves office, the harbor commissioners he appointed will consider a nearly 16% budget increase, even though revenue has slackened at a port accustomed to strong year-after-year growth.

The proposed Port of Los Angeles budget, which could be approved Wednesday, includes millions of dollars for San Pedro projects spearheaded by the Hahn administration, including $28 million for a major waterfront redevelopment. It also includes 94 new positions.

But the port’s operating revenue for the fiscal year beginning July 1 is expected to be below what the port budgeted for this year, documents show. Port officials have revised their expectation for current-year revenue downward by about $45 million.

The revenue slowdown appears to reflect a flattening in cargo growth at the nation’s largest seaport. Cargo volume at the port, after registering 18% increases in 2002 and 2003, grew a sluggish 2% in 2004 and decreased slightly in the first four months of 2005, according to the port’s website.

By contrast, the port’s biggest rival, the adjacent Port of Long Beach, has experienced a steady increase, Long Beach officials said Monday.

A spokesman for the Los Angeles port said interim Executive Director Bruce E. Seaton and Chief Financial Officer Molly Campbell would not comment on the $693.5-million budget until after commissioners receive an oral report Wednesday.

Port spokesman Arley M. Baker said Monday that a factor in the slackened cargo revenue is that some of the bigger ships owned by China Shipping are now calling at the Port of Long Beach, which has channels large enough to accommodate them. Dredging to be completed in 2007 will allow the larger ships to reach berths at the Port of Los Angeles, Baker said.

The proposed budget represents an increase of more than $93 million over the current year budget of $600.1 million.

Several city officials, asked about the port budget and revenue projections, said they had not yet received copies.

A spokesman for Mayor-elect Antonio Villaraigosa said that he could not immediately comment on the revenue figures.

“Obviously, this is an issue that would concern us, that we would want to be fully briefed on,” said Joe Ramallo, Villaraigosa’s spokesman. “We look forward to taking a close look at the budget.” He noted that Villaraigosa cannot take any formal action on matters such as the port budget until he becomes mayor July 1.

The five port commissioners are appointed by the mayor, and Villaraigosa is expected to replace at least some of the current commissioners, who were all chosen by Hahn.

Hahn’s office declined to comment on the port budget. Spokeswoman Shannon Murphy said, “I think these questions are better suited for the port.”

City Controller Laura Chick expressed surprise at the revenue figures in a statement released through a spokesman. Chick has been a harsh critic of port contracting practices under Hahn.

“Is this the same port that told me and my audit to go away because they knew what they were doing and that they were making money?” Chick said. “Is this the same port that is looking to be open for 24 hours because they have so much business? I’m totally confused, I just don’t get it.”

The port’s $247.4-million capital budget includes such projects as $39 million for a major channel deepening project, $30 million for West Basin area improvements, $11.8 million for “environmental enhancements” and $11.4 million for port security.

Community projects include the $28-million San Pedro waterfront project, $4 million in harbor beautification and $3 million for the Wilmington waterfront.

A spokeswoman for City Councilman Tony Cardenas, who heads the council’s Commerce, Energy and Natural Resources Committee, said the panel would take up the budget once the Harbor Commission passes it.

“It will be my job as chairman to look at these budget issues in depth,” said Cardenas in an e-mail. “Port security and environmental cleanup programs are vital to the port, but we need to find out if other expenditures are one-time or ongoing costs.”

Port Commissioner Thomas Warren said Monday that he believes the spending on environmental and community projects is necessary.

“When you continue to grow and expand, you have to give something back. When you get into environmental things, you have to spend some money,” Warren said. As for the overall budget, he said, “We’re going to balance the budget, but we’re not going to have the profit we had last year or the year before.”

The port settled a major environmental lawsuit in 2003 that has cost more than $80 million to date. It also has embarked on a major initiative to reduce diesel emissions from the port complex, considered the single biggest air polluter in the region, and upcoming costs are expected to be significant.

Budget documents show that the total operating revenue for the 2004-05 fiscal year -- budgeted at $400.6 million -- is now expected to be only $355.2 million. The proposed budget for 2005-06 anticipates $382.3 million in total operating revenue.

The proposed new staff positions include 36 for construction and maintenance, 14 for engineering and construction, 21 for security and 23 “for various administrative and support functions.” The increase would bring to 858 the total number of regular port employees.