$954.1 Million Budget Reflects Port’s Long-Term Vision Under its Newly Adopted Five-Year Strategic Plan: Competitive Operations, Strong Relationships and Financial Strength

SAN PEDRO, Calif. — June 7, 2012 — The Los Angeles Harbor Commission today adopted a 2012-13 fiscal year (FY) budget of approximately $954.1 million for the Port of Los Angeles -- a 2.3 percent or $22.5 million decrease from the current FY adopted budget -- effective July 1, 2012. The modest decline reflects conservative estimates of relatively flat operating revenues while the economy remains in recovery and controlled operating expenses aligned with the Port’s financial priorities adopted in its 2012-17 Strategic Plan.

“We are entering a new era in international trade, and this budget reflects our values and priorities for remaining America’s No. 1 trade gateway,” said Harbor Commission President Cindy Miscikowski. “While the budget is a one-year document, our focus is long-term.”

“Our goals are to sharpen our competitive edge, build on strong relationships with our employees and partners, and fine-tune our financial practices to maintain the Port’s position in a dynamic global economy,” said Port Executive Director Geraldine Knatz, Ph.D.

In the current fiscal year, the Port has maintained its leadership position as the nation’s busiest container gateway. Despite continued economic challenges in the U.S. and around the world, the Port saw a 1.4 percent increase in containerized cargo in Calendar Year (CY) 2011 compared with the prior year. The Port also retained its AA Bond rating.  This is the highest credit rating for any stand-alone U.S. port and reflects confidence of the rating agency in the financial strength of the Port.

The Port’s 2012-13 FY budget anticipates operating revenues of $398.6 million, about the same level compared with the current fiscal year. It projects an $8.3 million or 4% increase in total estimated expenditures from the current fiscal year. Despite the slight increase, total expenditures for 2012-13 remain lower than the adopted budget for 2011-12.

Vital to maintaining competitive operations, a capital budget of $285.7 million has been approved. Infrastructure investments for FY 2012-13 include $132 million in development projects at existing terminals such as the TraPac Container Terminal, the China Shipping Container Terminal and the APL facility at Berths 301-306. Another $80.4 million is allocated for transportation projects to improve the movement of goods and vehicular traffic within the Port and on surrounding roads and highways, and $19.2 million is dedicated to L.A. Waterfront development projects.

Planned capital improvements are projected to generate approximately 4,640 jobs during FY 2012-13, while the operational budget is expected to support 1,864 jobs. 

Continuing its commitment to environmental stewardship, the Port anticipates dedicating approximately $16.1 million in FY 2012-13 to green programs and initiatives. About $6.3 million will be spent on Clean Air Action Plan measures, which includes $2.0 million for the Vessel Speed Reduction Program and an estimated $450,000 to launch the Environmental Ship Index incentive program encouraging ocean carriers to deploy their cleanest vessels to Los Angeles. The budget also includes the Port’s annual investment of $1.5 million in the bay-wide Technology Advancement Program to advance green innovation.   

The FY 2012-13 budget reflects the Port’s commitment to maximizing its resources by continuing to pursue available grants. In the new fiscal year, the Port is due to receive $81 million in state and federal grant reimbursements, more than half of which supports critical security projects that protect the harbor community and the economic interests of the Port and its stakeholders. Overall, the Port manages approximately $437 million in active grants.

In alignment with its Strategic Plan and Financial Policy, the 2012-13 budget is based on compliance with the Port’s fiscal standards of maintaining a minimum debt service coverage of 2.0X, minimum unrestricted cash reserves of $235 million, and a minimum operating margin of 45 percent.

The Port of Los Angeles is America’s premier port and has a strong commitment to developing innovative strategic and sustainable operations that benefit the economy as well as the quality of life for the region and the nation it serves. As the leading seaport in North America in terms of shipping container volume and cargo value, the Port supports more than 830,000 regional jobs and $35 billion in annual wages and tax revenues.

The Port of Los Angeles – A cleaner port.  A brighter future.