Item 9b Supp
ITEM NO. 9b-Supp DATE OF MEETING May 19, 2009 Port of Seattle 2010 Budget Planning Briefing May 19, 2009 Overview 2010 Budget Challenges Proposed 2010 Budget Target Zero Based Budgeting/Modified ZBB Process 2010 Budget Calendar 2 2010 Budget Challenges Operating Revenues: May be lower than 2009 Overall economy and the airline/marine industry remain challenging Airport & Seaport traffic yet to improve 2009 Budget reductions ($16 million) not sustainable Payroll Cost Increase Some of the deferred/vacant positions will be filled in 2009 Estimated medical cost increase ($1.9 million or 13%) in 2010 Non-Payroll Cost Increase Deferred maintenance New facilities costs (new cruise terminal, new runway, etc.) New security cost for cruise ships ($600K) 3 2010 Budget Target Option 1 - Keep NOI flat: Challenging at the beginning of the budget planning process due to the timing of traffic & revenue forecasts. Option 2 Reduce operating expenses: Try to absorb/reduce all payroll cost increases Develop options to keep medical costs flat Propose a 5% reduction on O&M costs from the 2009 approved budget for 2010 based on targeted functional reviews 4 Modified Zero Based Budgeting Process Identify major functions and associated costs/benefits by department Conduct analysis & review of major functions Identify areas for potential savings through reduced service levels, alternative delivery or elimination Prepare analysis for further review Final review & decision process Develop budgets 5 2010 Budget Calendar May Develop & communicate modified ZBB methodology Brief the Commission on 2010 budget planning process Prepare preliminary ZBB analysis/decision package June Review preliminary ZBB analysis/decision package Identify areas of savings from programs & services July Quantify the budget savings and compare them to targets Commission briefing on business environment, key budget assumptions and targets 6 2010 Budget Calendar Con't August Budget guidelines released Commission briefing on Q2 financial performance Commission workshops on division business plans September Preparation of preliminary operating and capital budgets Internal division budget reviews Commission tax levy workshops 7 2010 Budget Calendar Con't October Executive preliminary budget reviews Commission budget workshops Operating and capital budgets Draft Plan of Finance & Tax Levy November Release preliminary budget document First and second reading of budget resolution December File statutory budget in the first week of December 8
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