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Port of Seattle 2011 Budget Planning Assumptions August 17, 2010 Background 2009 - Took early and proactive steps to reduce costs; O&M expense $28M below budget 2010 - Reduced $11 million of additional costs relative to 2009 budget through Zero Based Budgeting Implemented a voluntary separation program and eliminated over 110 positions (6.2% of the total workforce) Currently tracking well against 2010 budget 2 Overall Budget Assumptions Economic downturn and uncertainty will drive conservative budgeting for 2011 Process will incorporate Commission guidance on budget Revenue assumptions yet to be finalized Continue to focus on managing O&M costs 3 Historical Port Financial Performance $Millions 600 500 458 479 477 448 449 417 400 300 275 226 224 237 246 263 200 224 221 191 204 203 214 100 0 2005 2006 2007 2008 2009 2010 Budget Revenues Expenses NOI 4 Preliminary Payroll Assumptions* Average pay for performance of 2.5% (may be revised based on market data and overall budget considerations) Market based salary range increase of 1.5% (minimal cost impact) Medical cost increase of 3-4% with self-funding approach Compares to projected 12% increase if fully insured Projected pension (PERS) contribution increase from 5.31% to 8.7% effective 7/1/11 (7% blended rate in 2011) *Non-represented employees 5 Preliminary Operating Budget Modest increase in payroll costs Conservative "baseline" budget Some short-term cost increases due to deferred maintenance at existing facilities and certain new initiatives focused on maintaining our competitiveness and positioning the Port for future growth 6 2011 Budget Calendar August 2011 Budget Guidelines released Commission briefing on Q2 Performance Commission workshops on division business and capital plans Commission workshops on budget assumptions 7 2011 Budget Calendar September Prepare preliminary operating & capital budgets Internal budget reviews by each dept & division Executive preliminary budget reviews (9/15 9/17) Commission capital budgets workshops on 9/28 8 2011 Budget Calendar October Operating budget Commission workshop on 10/5 Preliminary budget document available to the Commission on 10/19 Draft Plan of Finance Commission workshop on 10/26 Release 2011 Preliminary Budget and Draft Plan of Finance Document to the public on 10/28 9 2011 Budget Calendar November First reading of budget resolution on 11/9 Second reading of budget resolution on 11/23 December File statutory budget on 12/2 Release 2011 Final Budget and Draft Plan of Finance Document to the public by 12/15 10 Port of Seattle 2011 Budget Planning Assumptions August 17, 2010
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