Port of Seattle
2010 Budget Planning Briefing
May 19, 2009
ITEM NO. 9b-Supp
DATE OF
MEETING May 19, 2009
2
Overview
• 2010 Budget Challenges
• Proposed 2010 Budget Target
• Zero Based Budgeting/Modified ZBB Process
• 2010 Budget Calendar
3
2010 Budget Challenges
• Operating Revenues: May be lower than 2009
– Overall economy and the airline/marine industry remain challenging
– Airport & Seaport traffic yet to improve
• 2009 Budget reductions ($16 million) not sustainable
• Payroll Cost Increase
– Some of the deferred/vacant positions will be filled in 2009
– Estimated medical cost increase ($1.9 million or 13%) in 2010
• Non-Payroll Cost Increase
– Deferred maintenance
– New facilities costs (new cruise terminal, new runway, etc.)
– New security cost for cruise ships ($600K)
4
2010 Budget Target
• Option 1 - Keep NOI flat: Challenging at the
beginning of the budget planning process due to
the timing of traffic & revenue forecasts.
• Option 2 – Reduce operating expenses:
– Try to absorb/reduce all payroll cost increases
– Develop options to keep medical costs flat
– Propose a 5% reduction on O&M costs from the 2009
approved budget for 2010 based on targeted functional
reviews
5
Modified Zero Based Budgeting
Process
• Identify major functions and associated
costs/benefits by department
• Conduct analysis & review of major functions
• Identify areas for potential savings through reduced
service levels, alternative delivery or elimination
• Prepare analysis for further review
• Final review & decision process
• Develop budgets
6
2010 Budget Calendar
May
• Develop & communicate modified ZBB methodology
• Brief the Commission on 2010 budget planning process
• Prepare preliminary ZBB analysis/decision package
June
• Review preliminary ZBB analysis/decision package
• Identify areas of savings from programs & services
July
• Quantify the budget savings and compare them to targets
• Commission briefing on business environment, key
budget assumptions and targets
7
2010 Budget Calendar – Con’t
August
• Budget guidelines released
• Commission briefing on Q2 financial performance
• Commission workshops on division business plans
September
• Preparation of preliminary operating and capital budgets
• Internal division budget reviews
• Commission tax levy workshops
8
2010 Budget Calendar – Con’t
October
• Executive preliminary budget reviews
• Commission budget workshops
– Operating and capital budgets
– Draft Plan of Finance & Tax Levy
November
• Release preliminary budget document
• First and second reading of budget resolution
December
• File statutory budget in the first week of December
