Facing global economic and political headwinds, the Port of Vancouver is proposing a smaller spending plan for 2013. It also expects to forgo taking the 1 percent property tax hike it’s allowed under state law.
Port managers are recommending the port’s three elected commissioners approve a 2013 budget of $64.01 million, down roughly 20 percent, or about $16 million, from this year’s projected budget of $80.18 million.
The $16 million cut is coming entirely from the port’s capital projects plan, which is focused on building out its West Vancouver Freight Access project. The freight-rail project is aimed at pumping up the regional economy and is projected to generate thousands of jobs over several years.
The capital spending reduction will delay only certain pieces of the long-planned, $275 million freight-rail project, which remains well under construction, on time and on budget, said Theresa Wagner, the port’s spokeswoman. “We’re just pushing” parts of the project “out a little bit further,” she said. No layoffs are planned.
The decision reflects the port’s cautious approach to next year’s budget as it anticipates less revenue from of a variety of sources, including shipping and cargo-handling fees, and grants and property taxes.
The downward pressure on the port’s revenues stems partly from political uncertainty surrounding wind energy markets and partly from lower demand from China and India for bulk commodities. “We realize that,” said Todd Coleman, executive director for the port. “We’re planning for that.”
Wagner, the port’s spokeswoman, said the port’s revenue remains on a growth track relative to previous years, but the port is “pausing a bit” as it faces some challenges heading into 2013. Once business picks up, she said, “we’ll start adding those capital projects back in.”
In addition to the freight-rail project, port officials said they’re pursuing other initiatives to help grow the economy. For example, the port has a $5.75 million infrastructure grant it plans to invest in its Centennial Industrial Park in hopes of luring new employers — and jobs — by 2014.
Nevertheless, it’s experiencing some political and economic challenges this year that are rippling into next year’s budget.
For example, the port estimates it will bring in $33.15 million in operating revenues by the end of this year, generated from sources including shipping fees and industrial tenant rents.
That’s down by about 11 percent, or $4 million, from what the port initially had budgeted for 2012. That $4 million decrease stems mostly from the looming Dec. 31 expiration of a federal tax credit that makes wind power more competitive with other sources of electricity.
Uncertainty over the fate of that tax credit left some wind farm developers — and their multinational suppliers — sitting idle which, in turn, reduced the port’s income from handling wind energy components.
On top of the wind energy industry turmoil is a generally weaker global economy. As a result, the port is anticipating operating revenues of $33.88 million in 2013 — an increase of merely 2.2 percent over 2012.
It’s not just the port’s operating revenues that face challenges. It’s proposing non-operating income, which includes grants and property taxes, of $25.34 million in 2013. That’s down by about 14 percent, or roughly $4 million, from this year because the port expects to secure fewer grant dollars in 2013.
No levy hike expected
The port’s elected, three-member Board of Commissioners is slated to adopt the final 2013 budget at its Nov. 13 meeting, during which it will take public comments.
One part of their decision is whether to increase the port’s property tax revenue by bumping up its levy by 1 percent, a move allowed under state law.
The port anticipates it will receive roughly $10 million in property tax revenue next year — about the same amount as it expects to receive this year.
And port managers are recommending commissioners approve the budget without increasing the levy by 1 percent.
Wagner, the port spokeswoman, said there’s a sense among port staff and commissioners that the budget as proposed will enable the port to continue to invest in the local economy, without a 1 percent hike in the levy.
And port staff and commissioners also are sensitive to a community that is “still trying to recover from a recession, and we’re not there yet,” Wagner said.