Proposed Annual Budget Presentation to the Board of Harbor Commissioners April 7, 2017
Today’s Focus • Goals for the FY 2017/18 Budget • Budget Cash Flow • Operating Revenues • Operating Expenses • Next Steps for Approval of Budget • Bureau Budgets • Capital Improvement Program (CIP) Budget 04/17/2017 2 DRAFT - FOR DISCUSSION PURPOSES
Goals for FY 2017/18 Budget • Allocate resources to support objectives of strategic plan • Manage expense growth relative to revenue growth • Maximize positive cash flow 04/17/2017 3 DRAFT - FOR DISCUSSION PURPOSES
Budget Cash Flow Variance Actual Forecast Proposed Prop. – Forcst. ($ in millions) FY 2015/16 FY 2016/17 FY 2017/18 Fav. (Unfav.) Operating Revenues 441.3 461.8 475.4 13.6 Less: Operating Expenses (226.3) (237.5) (256.0) (18.5) Operating Income 215.0 224.3 219.4 (4.9) Less: Debt service (84.4) (87.6) (80.1) 7.5 (gross) Sub Total 130.6 136.7 139.3 2.6 Less: Capital Improvement Plan (148.3) (124.7) (97.7) 27.0 Less: Capital Equipment & Allocations (17.7) (22.0) (30.5) (8.5) Cash Earned (Needs), before Grants & Other (35.4) (10.0) 11.1 21.1 Plus: Capital Grant Receipts 40.5 33.7 10.2 (23.5) Plus: Other Items, Net 1.3 30.2 2.7 (27.5) Cash from Operations and Investments 6.4 53.9 24.0 (29.9) 04/17/2017 4 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 Proposed Budget At-a-Glance ∆% Prop. ∆% Prop. FY 16/17 FY 17/18 FY 16/17 Components Budget to Budget to Adopted Proposed Estimate ($ in millions) Adopted Estimate Budget Budget Cargo Volumes 8,525 8,754 9,000 5.6% 2.8% (TEUs) Operating $452.8 $461.8 $475.4 5.0% 2.9% Revenues Operating $249.0 $237.5 $256.0 2.8% 7.8% Expenses Operating $203.8 $224.3 $219.4 7.7% 2.2% Income Capital Improvement $146.1 $124.6 $97.7 33.1% 21.7% Program (CIP) 04/17/2017 5 DRAFT - FOR DISCUSSION PURPOSES
Operating Revenues and Expenses Past, Present, Proposed, Projected Operating Revenues Operating Expenses Operating Income $529 $550 $518 $518 $516 $475 $500 $462 $453 $447 $441 $426 $450 $410 $407 $402 $401 $397 $400 $219 $253 $240 $257 $231 $350 $148 $204 $224 $197 $191 $210 $192 $221 $213 $215 $300 $285 $250 $278 $272 $265 $256 $254 $249 $238 $234 $200 $226 $210 $210 $205 $205 $200 $150 04/17/2017 6 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 Revenues – $475.4M Other Operating Revenue, $14.4M , 3.0% Clean Truck Shipping Program, $2.4M, 0.5% Services, $396.5M, Rentals, Royalties & Fees, $51.6M, 10.9% 83.4% $10.5M, 2.2% 04/17/2017 7 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 Revenues & Cargo Volumes $475.4M & 9.0M TEUs Δ% Δ% Adopted Forecast Adopted Forecast Proposed Vs. Vs. TEUs in millions FY 16/17 FY 16/17 FY 17/18 Proposed Proposed Cargo Volumes (TEUs) 8.52 8.75 9.00 5.6% 2.8% Δ$ Δ% Δ% Adopted Adopted Forecast Δ$ Adopted Forecast Proposed Vs. Vs. Forecast Vs. Vs. ($ in thousands) FY 16/17 FY 16/17 FY 17/18 Proposed Proposed Proposed Proposed Shipping Services $382,617 $374,034 $396,531 $13,914 3.6% $22,497 6.0% Rentals $41,706 $47,148 $51,603 $9,897 23.7% $4,455 9.4% Royalties & Fees $10,326 $10,430 $10,484 $158 1.5% $54 0.5% Clean Truck Program $2,264 $2,319 $2,388 $124 5.5% $69 3.0% Other Operating Revenue $15,896 $27,907 $14,422 ($1,474) (9.3%) ($13,485) (48.3%) Total Operating Revenue $452,809 $461,838 $475,428 $22,619 5.0% $13,590 2.9% 04/17/2017 DRAFT - FOR DISCUSSION PURPOSES 8
FY 17/18 Operating Expense Categories $256.0M Travel Expenses, Marketing & $0.9M, 0.4% Public Relations, $3.2M, 1.3% Salaries & Materials & Supplies, Benefits, $7.0M, 2.7% $136.5M, *Other 53.3% Outside Srvcs., Operating $34.6M, 13.5% Expenses, $26.9M, 10.5% City Services, $46.9M, 18.3% *Other Operating Expenses include $(13.7) in Indirect Allocations to Overhead. Without Allocations, Other Operating Expenses are $40.6M . 04/17/2017 9 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 Drivers of OPEX Increases (relative to the FY 16/17 Adopted Budget) Operating Expenses Increases (+$7.0M net) • Mandatory Increases: $7.8M • $2.7M Salaries and Benefits • $4.5M City Services • $562K Provisions for Bad Debt Other Increases: $1.6M • $1.2M Cruise Tariff Incentive • $440K Misc. Other Operating Expenses Bike Share & P-Bid Current Reductions ($2.4M) • • ($1.5M) Outside Services (Reimbursable EIR) • ($459K) Utilities & Telephone Services • ($258K) Materials & Supplies • ($76K) Marketing & PR • ($20K) OH Allocations • ($11K) Travel 04/17/2017 10 DRAFT - FOR DISCUSSION PURPOSES
Authorized Positions and Salaries and Benefits Expenses (in millions) 1500 $160.0 Salaries and Benefits Actuals ($ in millions) Salaries and Benefits Expenses ($ in millions) $136.5 $140.0 $118.1 $121.4 $123.6 $129.4 1400 $120.0 $103.7 $104.9 $109.5 Authorized Positions 1300 $95.4 $99.3 $96.8 $100.0 1200 $80.0 Authorized Positions 1,073 1100 $60.0 999 999 997 998 994 994 994 989 989 1000 948 $40.0 900 $20.0 800 $- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Forecast Proposed Fiscal Year 04/17/2017 11 DRAFT - FOR DISCUSSION PURPOSES
Outside Services Budgeted & Actual FY 2008 – FY 2018 (Proposed) ($ in thousands) Outside Services (Actual & Estimate) Outside Services (Budgeted & Proposed) $61,797 $52,085 $39,971 Thousands of $ $38,745 $37,277 $36,598 $36,118 $35,718 $35,217 $35,144 $34,635 $37,937 $32,599 $31,940 $31,905 $30,924 $30,918 $30,810 $29,426 $27,613 $26,860 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Forecast) (Proposed) Fiscal Year 04/17/2017 12 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 Proposed Outside Services $34.6M Division $ % Primary Drivers 21% Environmental Assessment Svcs.: Remediation/Site Environmental $7.3M Restoration, Water Quality, Air Quality , and CEQA Mgmt. Maintenance $5.7M 16% Hiring Hall, Maint. Dredging, Asphalt & Paving, Contract Services for Deferred Maint. Program Improv. Prog. 16% Hiring Hall; Underwater Diving; and Buildings, Wharves, C&M $5.6M Grounds, & Equipment Maintenance Svcs. Information $4.3M 13% Information Systems Consulting, and Hardware & Software Computer Maintenance Technology Security Camera Maintenance and Repair, Equipment & Port Police $2.9M 8% Computer Maint. Support Services & Rentals WF/Comm. $2.7M 8% Cruise Terminal Operations, Real Estate Consulting, Bike Share Program, and Appraisals Real Estate Outside Legal Counsel City Attorney $1.8M 5% 13% Mayoral Trade Missions, Data Acquisition, Financial Services, All Other $4.3M Information Consulting Services, and Others Divisions 04/17/2017 13 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 City Services $46.9M Other, $1.9M, 4% Treasurer, $0.3M, 1% CAO, $0.4M, 1% Fire - LAFD, Controller, $0.6M, $26.6M, 1% 57% Personnel, $1.2M, 2% City Attorney, $5.6M, 12% Recreation & Parks, $10.4M, 22% 04/17/2017 14 DRAFT - FOR DISCUSSION PURPOSES
FY 17/18 City Services – $46.9M Service Details City Department $ % Description Fire - LAFD $26.6M 57% LAFD Fire Services Recreation & Parks 10.4M 22% Parks & Facilities Maintenance (Parks, Aquarium, Museums, Beaches, Lifeguards, Construction Services, Rangers) City Attorney 5.6M 12% In-house Legal Counsel Employee Relations and Records Management Personnel 1.2M 2% Payroll, FMS, and Disbursements Controller 619K 1% CAO 350K 1% Inspector General, Misc. Administration Treasurer 336K 1% Investment and Cash Management Other Departments 1.9M 4% Business Assistance Virtual Network (BAVN), Video Production Services, Lab & Special Testing, Mayor’s Liaison, City Clerk Publications, Printed Materials, and Other Services 04/17/2017 15 DRAFT - FOR DISCUSSION PURPOSES
City Services - Adopted vs. Proposed Δ $ Δ % Adopted Adopted Adopted Proposed Vs. Vs. ($ in thousands) FY 16/17 FY 17/18 Proposed Proposed Fire – LAFD $24,353 $26,610 $2,257 9.3% Rec. & Parks 9,122 10,391 1,269 13.9% City Attorney 5,191 5,553 363 7.0% Personnel 827 1,155 328 39.7% Controller 306 619 313 102.3% CAO 452 350 (102) (22.5%) Treasurer 367 336 (31) (8.5%) Other 1,826 1,888 61 3.3% $42,444 $46,902 $4,458 10.5% Total City Services 04/17/2017 16 DRAFT - FOR DISCUSSION PURPOSES
Historical Expenditures FY 2011 – FY 2018 Salaries & Benefits Outside Services City Services $160,000 $140,000 $136,507 $133,832 $120,000 $123,609 $121,367 $118,053 $ in thousands $100,000 $109,463 $104,910 $103,693 $80,000 $60,000 $46,902 $45,001 $40,609 $37,762 $35,356 $34,058 $33,393 $31,436 $40,000 $36,118 $34,634 $20,000 $31,905 $30,810 $30,924 $30,918 $29,426 $27,613 $0 2011 2012 2013 2014 2015 2016 2017 2018 (Adopted) (Proposed) Fiscal Year Year-to-Year FY 14 FY 15 FY 16 FY 17 FY 18 % ∆ Salaries & Benefits 7.8% 2.8% 1.8% 8.3% 2.0% City Services 5.9% 6.8% 7.5% 10.8% 4.2% Outside Services -13.5% 12.0% 0.0% 16.8% -4.1% 04/17/2017 17 DRAFT - FOR DISCUSSION PURPOSES
Scheduled Next Steps Milestones Timeframe Budget & Finance Committee Budget Hearings April/May 2017 Board Budget Adoption June 1, 2017 04/17/2017 18 DRAFT - FOR DISCUSSION PURPOSES
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