Port of Los Angeles adopts fiscal year 2016/17 budget
The Los Angeles Board of Harbor Commissioners has approved a $1.17 billion fiscal year (FY) 2016/17 annual budget for the Port of Los Angeles, the company said in its press release.
As in years past, budget allocations closely align and support the four key objectives of the Port’s 2012-2017 Strategic Plan, which include: development of a world-class infrastructure that promotes growth; implementation of an efficient, secure and environmentally sustainable supply chain; improved financial performance of Port assets; and strengthened relationships with Port stakeholders.
The FY 2016/17 budget includes $452.8 million in operating receipts, a principal mechanism for funding day-to-day Port operations. This represents a 5.7% increase over the prior year budget, largely due to anticipated growth in cargo volumes and related shipping service revenues.
Cargo volumes have been on the upswing since service levels returned to normal during the first half of 2015. Implementation of a chassis pool program by the Port’s three major chassis providers, a “Peel-Off” program and continued supply chain optimization efforts are also showing positive results in terms of cargo velocity. This is expected to continue in FY 2016/17, with cargo volumes projected to grow by 1.9% over the prior year budget to approximately 8.5 million TEUs annually.
With many capital improvement programs wrapping up in FY 2015/16, the Port’s newly approved $146.1 million capital improvement plan (CIP) anticipates a 24% decrease relative to the prior year budget. Completed CIP projects in FY 2015/16 included the TraPac Intermodal Container Transfer Facility, TraPac terminal buildings and main gate, the John S. Gibson Intersection/Northbound Interstate-110 ramp access improvements, as well as Interstate-110/State Route 47 connector improvements.
Key terminal projects budgeted to continue in FY 2016/17 include TraPac backland improvements, Yusen Terminals, Inc. berth redevelopment, electrical infrastructure at the World Cruise Center, wharf rehabilitation at the WWL Vehicle Services terminal, as well as wharf improvements at the Port’s liquid bulk terminals.
The FY 2016/17 budget includes operating expenses of $249.0 million, a 3.6% increase over the previous year, and driven primarily by increases in salaries and benefits and a reduction in capitalized expenditures. Salaries and benefit allocations to the Construction and Maintenance division, as well as to Port Police, are expected to comprise more than 40% of gross salaries and benefits approved in the FY 2016/17 budget.
The approved budget enables the Port to meet important financial metrics, including maintaining its AA debt rating, surpassing a 2.0 times debt service coverage, generating at least a 45% operating margin and preserving a prudent level of cash reserves that is consistent with an AA-rated port. The FY 2016/17 budget also supports the creation of 3,940 jobs within the region.
The Port of Los Angeles is America’s premier port and has a strong commitment to developing innovatively strategic and sustainable operations that benefit Southern California’s economy and quality of life. North America’s leading seaport by container volume and cargo value, the Port of Los Angeles facilitated $270 billion in trade during 2015. Port operations and commerce facilitate more than 133,000 jobs (about one in 14) in the City of Los Angeles and 479,000 jobs (or one in 18) in the five-county Southern California region. The San Pedro Bay Ports support nearly 1 million California jobs and 2.8 million nationwide.