Item No. 9b_supp         .
Meeting Date: July 14, 2020
Port of Seattle
2021 Budget Development Briefing
Commission Meeting
July 14, 2020

1

Budget Challenges In Times of Uncertainty
The Port is experiencing unprecedented declines in activity across the
aviation and maritime sectors as a result of the COVID-19 pandemic
2020 operating revenues are expected to decline more than 20%
compared to budget, and a significant portion of customer and tenant
payments have been deferred to provide relief, stressing cash balances
Considerable uncertainty remains regarding the depth and duration of the
current downturn, the recovery trajectory and the Port's revenue outlook
for 2021
At the same time, the Port must continue to implement new health and
safety measures, meet needs for essential services and support the
region's recovery

2

2020 Early Actions
Reduced operating and capital expenditures by $70 million,
including re-prioritization of capital projects
Hiring freeze
Tapped levy resources to increase funding for community
benefit investments to support job retention and creation
Provided tenant and customer relief
Received $192 million of CARES Act funding for Sea-Tac airport
Secured $150 million bank letter of credit for added liquidity
3

2021 Budget Objectives
Support the health and safety of our community
Meet the region's need for essential Port-related services
Provide a platform for economic activity that will lead the
region to recovery
Position the Port on a sustainable financial path

4

2021 Budget Strategies
Budget very conservatively given the uncertain revenue outlook
Fund only the most essential programs and services at a
sustainable level
Reduce non-essential expenditures and look for ways to increase
revenue
Position the Port to continue leading the recovery and prepare for a
return to growth mode
Build in flexibility and options in the event that business conditions
change dramatically

5

Budget Guiding Principles
Continue investments that enhance the health of our communities and
promote equity
Continue to ensure the safe and efficient operation of Port business
gateways to support the viability of our customers, tenants and suppliers
Devote sufficient resources and continue to implement practices to ensure
the safety of employees, customers and the public
Strive to preserve employment to the greatest extent possible
Continue to assess the short- and long-term effects of COVID-19 on Port
industries, operations and facility needs
Maintain a long-term strategic view of capital improvements with a priority
on investments that generate revenue and provide long-term, sustainable
community and economic benefits

6

General Budget GuidelinesOperating
Limit personnel cost growth
Continue current hiring restrictions through 2021 and sharply limit
new FTEs to the most critical needs
Minimize discretionary spending including travel and outside
training
Scale back contracted services to those most essential to maintain
operations
Offset new expenses with savings in other areas
Seek new revenue opportunities
7

General Budgeting GuidelinesCapital
Maintain active construction to help stimulate recovery across the region
Incorporate potential impacts of COVID-19 on future operations and facility
needs
Prioritize projects according to the Guiding Principles and the timing of
new construction should consider updated demand forecasts, cash
preservation needs and opportunities to perform work while business
activity is low
Continue project planning, design and environmental reviews to provide
the option to proceed if grant funding becomes available; timing of actual
construction will depend on the Port's financial outlook
Consider potential added costs related to COVID-19 and the local bidding
environment in preparing and updating project budgets

8

2021 Budget Process Overview
Environmental Assessment
Assess business environment and industry conditions
Conduct SWOT analysis
Update operating and capital forecasts
Budget Preparation
Develop budget assumptions and drivers
Identify key financial metrics and budget targets
Issue budget calendar and departmental guidelines
Prepare operating and capital budgets in accordance with principles and guidelines
Budget Reviews and Approvals
Conduct internal department and division budget reviews
Publish the preliminary budget document to the public
Commission review and approval of budgets/capital plans
Final Steps
File the Statutory Budget with King county
Publish the final budget document to the public
9

2021 Budget Calendar
(Commission Items in Blue)
5/29  2021 Budget Planning Discussion with ELT
6/04  Commission Retreat on Budget and Recovery Plan
7/14  2021 Budget Process and Schedule Commission Briefing
7/15  2021 Budget Guidelines available
7/29  Commission Budget Retreat with industry expert presentations
8/06  Commission Budget Retreat on Tax Levy and 2021 Commissioner priorities
8/11  Capital Planning Commission Briefing
8/17  08/21: Executive review of Central Services Department Budgets/New Requests
9/09  Executive review of combined Central Services Budget
9/10  Executive review of Maritime and EDD Operating & Capital Budgets
9/11  Executive review of Aviation Operating & Capital Budgets
9/14  2021 North Harbor Budget to the NWSA
10

2021 Budget Calendar
(Commission Items in Blue)
09/22  Central Services Budget and Port wide Budget Overview Commission briefing
10/09  POS/NWSA ILA Service Directives due to the NWSA
10/13  Operating Divisions Commission Budget Study Session
10/20  2021 Preliminary Budget Document available to Commission
10/22  2021 Preliminary Budget Document available to the public
10/27  Tax Levy & Draft Plan of Finance Commission briefing
10/28  NWSA Budget study session with Managing Members
11/10  Introduction of preliminary 2021 Budget and public hearing
11/11  NWSA Budget adoption by Managing Members
11/24  Adoption of 2021 Budget
12/03  File the 2021 Statutory Budget with King county
12/15  Publish the 2021 Final Budget to the public

11