8c Presentation 2019 Budget
Item No: 8c_supp Meeting Date: November 27, 2018 Port of Seattle 2019 Budget Reading & Final Adoption Commission Meeting November 27, 2018 1 Outline 2019 Operating Budget 2019 Comprehensive Operating & Non-Operating Budget 2019-2023 Capital Improvement Plan (CIP) 2019 Staffing Summary 2019 Sources and Uses of Funds 2019 Proposed Tax Levy Remaining 2019 Budget Schedule 2 2019 Key Initiatives Serve regional demand and maintain our global gateway. Serve regional demand Continue to improve Support Cruise passenger Build capabilities through for air service at Sea-Tac safety & security growth process improvement Support the airport Continue to improve Advance real estate Strengthen the Port's capital improvement customer service development projects Centers of Expertise program Serving increased demand is a key budget driver 3 2019 Key Initiatives Create equitable opportunities throughout the region and invest in healthy communities and environment. Diversity in Contracting Workforce development EPA Grant for work with Promote economic and WMBE Continue internship program near-Port communities development for the region Equity Program and expand career Energy and Sustainability Expand tourism Priority Hire connected learning grants opportunities Expand stakeholder Supporting Fair Works Sustainable Aviation engagement Center at the Airport Fuels Budget resources support community priorities 4 2019 Budget Highlights Operating revenues are budgeted at $753.3M, $82.8M or 12.3% higher than 2018 budget, and $67.7M or 9.9% above 2018 forecast Operating expenses are budgeted at $453.9M, $31.0M or 7.3% increase from 2018 budget, and $34.4M or 8.2% above 2018 forecast Net Operating Income is budgeted at $299.4M, $51.8M or 20.9% above 2018 budget, and $33.2M or 12.5% above 2018 forecast The 2019 capital budget is $1.0 billion and the 5-year capital spending plan is over $3.1 billion The proposed tax levy for 2019 is $74.2M The 2019 budget reflects the Port's growth and continued investments for the region 5 Additional Budget Change As noted in the first budget reading, a Environmental Program Manager position was approved for Public Affairs after we submitted the briefing package. This is a limited duration hire (for one year and nine months) to support the Airport Community Ecology (ACE) Fund program and near- Port Environmental Justice (EJ) communities stakeholder engagement. For the 2018 new hire, the total budget is $137K for 2019. Additional change made to the budget 6 2019 Operating Budget - Port wide 2016 2017 2018 2018 2019 Budget Change Budget vs Forecast ($ in '000s) Actual Actual Budget Forecast Budget $ % $ % Operating Revenues 598,467 632,031 670,479 685,592 753,255 82,776 12.3% 67,663 9.9% Operating Expenses 325,285 372,982 422,885 419,417 453,861 30,976 7.3% 34,444 8.2% Net Operating Income 273,182 259,049 247,594 266,175 299,395 51,800 20.9% 33,220 12.5% A record $753M of operating revenues for 2019 7 2019 Comprehensive Budget 2017 2018 2018 2019 Budget Change ($ in 000s) Actual Budget Forecast Budget $ % Explanations Revenues 1. Aeronautical Revenues (Net) 264,114 301,082 303,769 365,604 64,522 21.4% Cost recovery under SLOA IV. 2. Other Operating Revenues 367,917 369,398 381,823 387,651 18,254 4.9% Higher revenue from the Airport, Maritime & EDD businesses. 3. Tax Levy 71,702 72,000 72,000 74,160 2,160 3.0% Increased by 3% in 2019. 4. PFCs 88,389 91,787 93,095 95,185 3,398 3.7% Higher enplanement forecast for 2019. 5. CFCs 25,790 22,161 22,161 23,482 1,321 6.0% Increase due to more for debt service cost. 6. Fuel Hydrant 7,000 7,023 7,023 7,022 (2) 0.0% Essentially the same as 2018. 7. Non-Capital Grants and Donations 6,705 5,504 3,000 2,655 (2,849) -51.8% Less state grant in 2019. 8. Capital Contributions 30,112 41,379 41,379 49,345 7,966 19.3% More TSA grant for the Checked Baggage Screen Project. 9. Interest Income 12,174 15,713 25,670 30,903 15,190 96.7% Slight increase in rates and higher cash balances. Total 873,902 926,047 949,920 1,036,007 109,961 11.9% Expenses 1. O&M Expense 372,982 422,885 419,417 453,861 30,976 7.3% New budget initiatives and average pay increase. 2. Depreciation 165,021 163,309 163,309 168,676 5,367 3.3% More new assets come into service in 2019. 3. Revenue Bond Interest Expense 97,748 122,544 105,000 129,429 6,886 5.6% More bond issuance assumed in 2019 increased interest expense. 4. GO Bond Interest Expense 13,891 13,501 13,501 12,689 (812) -6.0% Decreased debt service on GO bonds through amortization. 5. PFC Bond Interest Expense 4,931 4,437 4,437 3,606 (831) -18.7% Decreased debt service on PFC bonds through amortization. 6. Non-Op Environmental Expense 4,464 2,250 40,147 5,000 2,750 122.2% Revise costs estimates for ERL balance and superfund sites. 7. Public Expense 4,588 10,794 11,200 21,009 10,215 94.6% Safe & Swift, Seattle Heavy Haul, Vanderlande Screening Lanes. 8. Other Non-Op Rev/Expense 10,441 473 1,200 1,415 942 199.4% Total 674,066 740,193 758,212 795,685 55,492 7.5% Revenues over Expenses 199,836 185,854 191,709 240,322 54,468 29.3% A strong financial position for the Port in 2019 8 Capital Plan Summary Capital Plan Summary by Division $ in 000's 2018 Fcst 2019 2020 2021 2022 2023 2019-2023 Aviation 574,425 935,454 576,576 515,061 394,108 278,868 2,700,067 Maritime 28,638 33,455 70,415 149,853 12,713 14,936 281,372 Economic Development 3,777 8,221 29,796 21,350 3,960 3,830 67,157 Stormwater Utility 1,913 1,800 2,550 2,319 2,150 2,150 10,969 Central Services and Other 11,848 22,507 10,917 11,872 11,740 33,813 90,849 Total 620,601 1,001,437 690,254 700,455 424,671 333,597 3,150,414 Capital projects have been prioritized by staff. The capital plan does not include Port share of the NWSA capital spending between 2019 and 2023. The Port continues to invest in the region with a 5-year capital plan of over $3 billion 9 FTE Summary Central Aviation Maritime Econ Dev. Services Total 2018 Approved FTE's 1,040.4 171.0 36.0 907.1 2,154.5 Mid Year Approval 8.0 - 1.0 13.0 22.0 Eliminated - - (2.0) (1.5) (3.5) Net Transfers 3.0 1.0 - (4.0) - Adjusted 2018 FTE's (note 1) 1,051.4 172.0 35.0 914.6 2,173.0 2019 Budget Eliminated - (1.0) - (0.8) (1.8) Transfer - (1.0) - 1.0 - New FTE's (note 2) 54.4 3.0 1.0 25.5 83.9 Total 2019 Changes 54.4 1.0 1.0 25.8 82.1 Proposed 2019 FTE's 1,105.8 173.0 36.0 940.4 2,255.1 Notes: 1) Includes 1.0 FTE for Stormwater Utility in Maritime Division. 2) Includes 1.0 new FTE for Stormwater Utility in Maritime Division. FTEs driven by Commission priorities and growth initiatives 10 Sources of Funds Rental Car Customer Fuel Hydrant Passenger Facility Facility Charges Receipts Charges 1.5% 0.5% 6.1% Other Receipts Tax Levy 0.2% 4.8% 82% of funding Grants and Capital Contributions sources come from 3.3% bond proceeds and Operating Revenues operating income. 48.3% The tax levy makes Proceeds from Bond up less than 5% of Issues 33.4% the funding sources in 2019. Interest Receipts 2.0% Total Sources: $1,559.2M The Port has diversified funding sources 11 Uses of Funds Operating Expenses 23.4% Plan to spend more Capital Expenditures Bond Redemptions than half of our 51.6% 9.8% funds on capital Interest Payments projects in 2019. 9.5% Operating expenses are less than a quarter of total expenditures in 2019. Other Expenses Payment to NWSA 0.5% for Capital Public Expense Expenditures 1.1% Total Uses: $1,941.9M 4.2% Capital spending comprises more than half of Port expenditures 12 2010-2019 Tax Levy & Millage Rate The Port has gradually reduced the tax levy amount from 2010 to 2018 13 Actual vs. Maximum Allowable Levy The Port has forgone $521M in tax revenue since 1991 14 Remaining Budget Schedule File Statutory Budget with King County Dec. 3, 2018 Release the 2019 Final Budget Document Dec. 14, 2018 Statutory budget to be filed with the County on December 3 15 Port of Seattle 2019 Budget Reading & Final Adoption Commission Meeting November 27, 2018 16
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