Long Beach city council to consider tapping more port profits
The Long Beach City Council is considering a move to tap the city-managed Port of Long Beach's annual profits to help offset the city's cash-starved general treasury.
The move, which would require a voter-approved change to the city charter, is proposed by Long Beach 5th District City Council member Gerrie Schipske, and seeks to boost the amount the city could demand from the port from 10 percent of the port's annual profits up to 20 percent. The port, which is managed by the city's Harbor Department, reported a 2007 profit of $143 million and will transfer $14.2 million to the city under the provision this year.
In the early 1980s Long Beach voters amended the city's charter to allow the 10 percent request from city for yearly port profits. In 1995, facing a devastating one-two punch of a general decline in the national economy and the closure of the Long Beach Naval Station and Shipyard — a major source of direct and indirect jobs for the city — city officials began requesting the 10 percent to boost city revenues. The city council has made the request every year since.
While the port, which operates as a semi-autonomous city agency, has the option to deny the request, it has never done so in the past. State law mandates that the port money going to the city must be retained in a separate Tidelands Fund that can only be used in the tidelands and port areas. The adjacent port of Los Angeles, managed by a similar Los Angeles City Hall department, has a similar port-to-city fund transfer procedure.
Schipske's proposal seeks to raise the city's request to a maximum of 15 percent of the port's profits for tidelands area uses and an additional 5 percent available to the city's general treasury. The non-tidelands transfer would require state legislation in order to be enacted and Schipske's proposal calls for the city to draft such legislation that the city's state legislature contingent can introduce at the state level. Schipske believes the city is entitled to the extra 5 percent to make up for property tax collected by the state from Long Beach residents that are no longer returned to the city's coffers.
In 2002, city council members floated a similar proposal to boost how much the Long Beach city hall could receive from the port to 25 percent of annual port profits. The proposed charter amendment, however, never made it to the ballot.
Last year the city reported that tidelands facilities and services paid for by the Tidelands Fund ran an operating deficit of nearly $19 million. The city also has about $58 million in tidelands capital improvement projects awaiting funding.
In the past, the port has plowed all of its annual profits back into port development. However, due to threatened litigation from environmental groups over port-generated impacts, both Long Beach and neighboring port of Los Angeles officials have put off any new development for more than four years.
In the past several years, in an effort to appease these environmental groups and avoid possible litigation over future port development, a sizable amount of Long Beach port profits have gone toward environmental programs addressing port-generated pollution. With these large portions of port profits already committed to a five-year 'green' program, an increase in the annual transfer to City Hall could impact the amount of funds available for potential development.
Industry experts have predicted that if the ports of Long Beach and Los Angeles do not begin development of facilities soon, the existing port facilities may run out of capacity within the next several years, resulting in severe congestion that could lead to large amounts of cargo being diverted to other ports. ' Keith Higginbotham