10b Presentation 2021 Budget
Item No. 10b_supp Meeting Date: November 17, 2020 Port of Seattle Adoption of the 2021 Budget Commission Meeting November 17, 2020 1 Outline 2021 Budget Process Recap 2021 Key Business Activity Forecasts and Key Initiatives 2021 Operating Budget 2021 Comprehensive Operating & Non-Operating Budget 2021-2025 Capital Plan 2021 Sources and Uses of Funds 2021 Proposed Tax Levy Remaining 2021 Budget Schedule 2 2021 Budget Process Recap Jun. 4 2021 Budget Retreat with the Commission Jul. 14 2021 Budget Development Briefing Jul. 29 Commission Budget Retreat: Industry Analysis and SWOT Aug. 6 Commission Budget Retreat: CIP and Levy Discussion Sept. 22 Aviation Division CIP Study Session Sept. 22 2021 Central Services Operating and Capital Budgets Briefing Oct. 8 Virtual Open House for the preliminary 2021 Aviation Budget and 5-Year CIP Oct. 13 2021 Aviation Division Operating and Capital Budgets Briefing Oct. 13 2021 Maritime and EDD Operating and Capital Budgets and Portwide Rollup Briefing Oct. 20 Preliminary 2021 Budget Document provided to the Commission Oct. 20 Preliminary 2021 Budget Document released to the public Oct. 22 Virtual Open House for the preliminary 2021 Maritime and EDD Budgets and 5-Year CIP Oct. 27 Tax Levy & Draft Plan of Finance Commission Briefing Nov. 10 Introduction & Public Hearing of the Preliminary 2021 Budget Nov. 17 Adoption of the 2021 Budget Nov. 30 File the 2021 Statutory Budget with King County Dec. 15 Release the 2021 Final Budget and Draft Plan of Finance 3 2021 Business Activity Forecasts Aviation Division: Forecast 61% reduction in passengers in 2020 and 30% drop in passengers for 2021 compared to 2019 Take a long-term view on capital planning and projects Maritime Division: Forecast 25% of cruise passengers in 2021 compared to 2019 actuals Expect Grain volume increases by 40% reduction from the 2020 budget Recreational Marina occupancy rate of 95%, same as 2020 Fishing and Commercial Operations occupancy rate average of 86%, same as 2020 Economic Development Division: Commercial Properties target 95% occupancy rate at the end of 2021 4 2021 Key Budget Drivers Implement FlyHealthy@SEA strategies. Open the International Arrivals Facility and Phase 2 of North Satellite Renovation. Complete the Sustainable Airport Master Plan (SAMP) environmental review. Complete the Utility Master Plan. Implement a consolidated service contract for checkpoint queue management, international arrivals support, and ground transportation support services. Support maritime innovation initiatives to discover, promote and help advance promising maritime ventures and startups. Complete design work on Terminal 91 Uplands light industrial buildings. Continue to invest in Community Programs. Help Port small business tenants and partners recover from COVID pandemic. Continue to build internal capabilities through innovation, employee training and development, and process improvements. 5 2021 Community Initiatives Create equitable opportunities throughout the region and invest in healthy communities and environment. Diversity in Contracting Workforce Development Airport Community Ecology Promote economic and WMBE Internship program grants development for the region Equity, Diversity and Maritime Secondary South King County Fund Expand tourism opportunities Inclusion Education Duwamish Valley Community Continue local Community Continue stakeholders Youth Maritime Initiative Equity Program (DVCEP) Advertising Program engagement Career Advancement Center Low Carbon Fuel Policy 6 Changes from 11/10/2020 Added $145K to the NWSA Distributable Revenue and Distributable Cash based on the 2021 final NWSA budget. 7 2021 Budget Highlights Operating revenues down 16.1% to $680.9M from 2020 Approved Budget Operating expenses down 10.0% to $422.7M from 2020 Approved Budget Net Operating Income down 24.5% to $258.2M from 2020 Approved Budget The 2021 capital budget is $508.5M and the 5- year capital spending plan is over $3.7B The proposed tax levy for 2021 is $78.7M, a 3% increase over the 2020 levy of $76.4M 8 2021 Operating Budget for Aviation 9 2021 Operating Budget for Non-Aviation 10 Community Programs Summary 2020 2020 2021 Funded Percent of 2019 Approved Revised Proposed by the the 2021 Added the Orca Recovery Program ($ in 000's) Actual Budget Budget Budget Tax Levy Budget program for 2021. 1) Airport Community Ecology (ACE) Fund * 260 522 522 212 212 100% Extended the one-time Low 2) Duwamish Valley Community Equity Program - 292 292 275 275 100% Carbon Fuel Standard Support 3) South King County Support Program * - 1,500 1,500 1,500 1,500 100% for another year. 4) EDD Partnership Grants 763 960 960 910 910 100% Adjusted the Airport Spotlight 5) City of SeaTac Community Relief *1 1,400 1,400 1,400 1,400 1,400 100% 6) Airport Spotlight Ad Program 1 & 2 program to reflect the current 934 1,148 1,148 382 382 100% 7) Energy & Sustainability Fund * 283 250 150 373 373 100% Fair Market Value of the ad 8) Maritime Blue (formerly Maritime Innovation Center) - 150 150 150 150 100% space. 9) Tourism Marketing Support Program 1,338 1,536 2,842 2,481 1,400 56% ACE/Forterra Fund is nearing 10) Workforce Development 1,771 3,119 4,403 2,682 1,261 47% project completion for Green 11) Diversity in Contracting 883 1,520 1,331 1,510 190 13% Cities partnership and Small- 12) High School Internship Program 529 657 632 500 - 0% matching grants. 13) Equity, Diversity & Inclusion 565 1,346 925 1,062 - 0% 14) Sustainable Aviation Fuels & Air Emissions Program - 40 40 - - 0% Increased the E&S Fund 2021 15) Low Carbon Fuel Standard Support - 150 105 75 - 0% budget to include the National 16) Orca Recovery Program - - - 50 50 100% Renewable Energy Laboratory TOTAL 8,726 14,590 16,401 13,381 7,923 59% (NREL) collaboration project. Notes: 1) Budgeted as Non-ops Expense. 2) Free advertising space provided at the Airport. FAA requires that lost revenue be reimbursed to the Airport. * Program with total designated funding limit. 11 2021 Comprehensive Budget 12 Capital Plan Summary Capital Plan Summary by Division $ in 000's 2020 Fcst 2021 2022 2023 2024 2025 2021-2025 Aviation 501,720 464,234 686,580 673,831 791,875 692,070 3,308,590 Maritime 21,875 26,383 52,663 41,955 49,650 67,675 238,326 Economic Development 10,167 5,874 26,812 31,089 6,711 3,585 74,071 Stormwater Utility 321 1,400 1,520 500 500 500 4,420 Central Services and Other 9,604 10,636 9,082 21,102 26,931 10,490 78,241 Total 543,687 508,527 776,657 768,477 875,667 774,320 3,703,648 13 2021 Sources of Funds 42.9% of the funding sources comes from bond proceeds. Over a third of funding sources comes from operating revenues. The tax levy makes up 4.5% of total funding sources in 2021. 14 2021 Uses of Funds Plan to spend about 35.5% of the funds on capital projects in 2021. 29.5% of total expenditures on operating expenses. 28.5% of the total spending on debt service. 15 2021 FTE Summary A total of 167.6 FTEs Central have either been frozen or Aviation Maritime Econ Dev. Services Total deferred until 2022. 2020 Approved FTE's 1,250.5 259.9 35.6 834.3 2,380.2 Mid Year Approval 2.0 5.0 - 6.6 13.6 College/Graduate Eliminated - - - (0.2) (0.2) Internship program will be Net Transfers - - - - centrally managed in HR Adjusted 2020 FTE's 1 1,252.5 264.9 35.6 840.7 2,393.7 starting in 2021. 2021 Budget Center of Expertise (COE) Eliminated - (3.0) (0.6) (6.9) (10.5) departments have been Transferred (7.8) (2.9) - 10.7 - moved from Central Conversion of Emergency Hires - - - - Services to Aviation and New FTE's 2.0 3.5 1.0 1.0 7.5 Total 2021 Changes 2 Maritime divisions for (5.8) (2.4) 0.4 4.8 (3.0) financial reporting. Proposed 2021 FTE's 1,246.8 262.4 36.0 845.5 2,390.7 Minimal number of new Notes: FTEs proposed for 2021 1) Includes 3.0 FTE for Stormwater Utility in Maritime Division. budget. 2) Total has been adjusted to reflect current financial reporting structure with F&B and ENV COEs transferred to Aviation and Maritime Divisions. 16 Tax Levy Strategy Catch-up on purchasing power: Over the prior decade, inflation significantly reduced the purchasing value of the levy Last year CPI = 2.2%, construction inflation = 5.5% Adopted for 2019: Five-years 2019-2023, annual 3% inflationary levy increase to support investments in the Waterfront Strategy Reviewed annually 2021 represents the third year of the plan; proposed levy of $78.7M in 2021 17 Taxpayer Impact Preliminary estimate indicates that the median homeowner will see an annual increased Port levy payment of $1.58 in 2021. 18 Remaining 2021 Budget Schedule File the Statutory Budget with King County Nov. 30, 2020 Release the 2021 Final Budget Document Dec. 15, 2020 19
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