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Revenue projection has Port of Olympia poised to slash $700,000 from 2018 budget

The Port of Olympia harbor patrol, shown here responding to a boat fire in 2016, faces deep cuts to its funding next year if the port commission approves an as is budget with no new tax revenue.
The Port of Olympia harbor patrol, shown here responding to a boat fire in 2016, faces deep cuts to its funding next year if the port commission approves an as is budget with no new tax revenue. Harbor Patrol

A number of existing and proposed Port of Olympia programs face deep cuts next year because of the revenue forecast for the port’s operations.

Revenue for 2017 is expected to come in at $11.52 million, which has port officials projecting $11.59 million for 2018. And that is not enough to cover a host of spending that totals around $700,000.

If the port commission — Joe Downing, E.J. Zita, and Bill McGregor — adopts the proposed budget as is Monday, funding to existing programs will be cut, including sea-level rise planning with the city of Olympia ($75,000), the port’s small city fund program ($40,000), the harbor patrol ($24,000) and an expanded contract with the Thurston Economic Development Council ($15,000).

But it doesn’t stop there. Proposed funding for a number of new projects, including a first-year investment of $250,000 for Tumwater’s Craft Brewing and Distilling Center, also would be eliminated.

However, all of that could change if the commission decides Monday to raise the port’s property tax levy to 20 cents per $1,000 of assessed property value from 17 cents per $1,000 this year. How do they do that? By taking advantage of the port’s “banked” tax levy.

Every year during budget season, local governments typically adjust their property tax levy by taking the value of new construction, plus the 1 percent increase allowed by state law. The port, however, has not increased its property tax levy by 1 percent per year for the past decade and has banked that capacity, said Jeri Sevier, the acting administrative director for the port, which oversees the finance department.

As it stands now, the proposed 2018 budget only assumes the value of new construction. The commission will have to decide Monday whether they want to do that, add a 1 percent increase or take it even further and draw down the banked capacity. The commission has the option of increasing the levy by as much as 4 cents per $1,000 — which Sevier said would cover the $700,000 in spending next year.

If the port decides to take only the value of new construction next year, the owner of a $262,000 home would pay about $42.99 a year in property taxes to the port. If the port increases the levy to 20 cents per $1,000, that same homeowner will pay $53.66 a year, according to port data.

The port has levied a 20-cent-per-$1,000 property tax before, Sevier said. In 2013, at the end of the recession, as the assessed value of property fell, the port’s levy rose to 20 cents. But property values have climbed since, resulting in this year’s 17-cent levy.

The port commission wrestled with the port budget during a special commission meeting on Tuesday. Downing was lukewarm on spending $250,000 on the craft brewing center, while Zita expressed support for it, saying it could create jobs.

Downing also wasn’t comfortable with increasing the levy by 4 cents, citing the burden on taxpayers.

“I can’t get behind 4 cents,” he said, adding that he might be willing to do 3 cents, but that wouldn’t cover all of the port’s proposed spending.

“Some of these things will happen, some won’t,” he said.

Log loaders

Despite the potential cuts in spending, the port already has approved a plan to invest in two new log loaders next year at a cost of $1.8 million. The port needs to issue bonds to finance those log loaders, Sevier said.

The log loaders apparently were at the center of a lively debate during Zita’s “community chat,” a gathering that took place before Tuesday’s special commission meeting, according to local blog Little Hollywood.

During the meeting, Zita raised concerns about spending that kind of money when the 2018 budget is tight, while longshore workers at the meeting said they need the new log loaders because existing machines keep breaking down, which is unsafe.

Finding revenue

Marine terminal revenue is usually one of the biggest revenue generators for the port, but given the conservative revenue forecast next year, the commission acknowledged the need to find other sources.

The port’s real estate division is viewed as a way to bring in more money, which led the port to buy three Lacey warehouses in 2016. Two of those buildings have tenants, while a third is vacant. But on Monday, the port plans to announce an agreement with the city of Lacey to turn that space into an area for small-scale industrial start-ups, said Mike Reid, the port’s senior manager of business development.

Buying property instead of leasing could represent a sea change for the port. It’s an idea that Zita supports, and one port staff plan to explore.

“The potential to own and make revenue, instead of leasing, was a good idea worth considering,” she said.

Port staffing

A tight budget means the port is holding the line on hiring. By next July, through a combination of unfilled positions and retirements, the port will have seven fewer employees, Sevier said.

Former port engineering director Bill Helbig now works for the city of Spokane Valley, while business development director Reid has accepted the position of economic development director for the city of Olympia. That position was vacated by Renee Sunde to become president and chief executive of the Washington Retail Association.

Helbig’s position will be filled with existing staff, while the port will hire to fill Reid’s position, Sevier said.

Port budget meeting Monday

The port commission meeting is set for 5:30 p.m. Monday at 626 Columbia St. NW, Suite 1-B, Olympia.

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