The Port of Astoria will be pinching pennies in 2007-08, still plagued by costs from its 2005 dredging violations.
The agency cleaned out its savings to balance next year's budget and still doesn't have the money to hire a new executive director to replace Peter Gearin, who was fired in February.
At a budget hearing Wednesday, Port Interim Executive Director Ron Larsen announced a projected $23,379 surplus in the agency's general fund by mid-2008. That's after cutting back 26 percent on operating expenses, leaving the director position vacant, and assuming the agency can hire a new attorney at the rate it was paying former counsel Heather Reynolds, who resigned this month.
The committee approved a budget of $8,977,864 and a tax levy of $477,900. The Port's budget in 2004-05 was more than $20 million.
"It's an austere budget - no doubt," Larsen said after the Port's budget committee meeting Wednesday. "I'm trying to get us out of the hole and get some money back in the bank."
More than $800,000 in environmental fines, legal and consulting fees tied to the agency's 2005 dredging violations and an ongoing legacy contamination clean-up caused the Port to sacrifice what would have been $600,000 in surplus revenues last year, said Larsen.
"That's where all our money went," he said. "That's why our cash flow is so low."
According to Larsen, the agency still owes about $125,000 in related legal fees.
"The goal of this year is to pay off existing debt," said Larsen, who said the legal fees need to be paid to "keep our head above water."
"We're broke," Commissioner Larry Pfund said after the meeting. "We're not funding positions that need to be funded. ... We're robbing Peter to pay Paul."
Pfund said he was embarrassed by an ad the Port ran in the newspaper in February claiming the agency was "broke - and proud of it."
"I'm not proud of the condition of our budget," he said. "I think our costs in legal fees were unnecessarily high, and they're not over yet. We've got obligations to continue offering legal protection to some (former employees), and questions are still being asked by investigating agencies. The meter is still running with the attorneys."
The Port hired Tom Imdieke, a former financial manager for the city of Tigard, to build the budget in the absence of a chief financial officer, a position that was also held by Gearin.
After starting the 2006-07 fiscal year with a negative balance of $406,859 in its general fund, Imdieke explained, the Port transferred about $230,000 from a timber revenue savings account to end the year with a positive balance of $146,637.
"Obviously, this budget doesn't leave a large fund balance going into the next fiscal year," he told the committee.
The $322,000 remaining in the agency's Special Revenue Account is earmarked for debt payments to the city of Warrenton for the recent waterline improvement project at the Astoria Regional Airport in Warrenton.
Commissioners elect Kathy Sanders and Bill Hunsinger were invited to sit in on the budget meeting. Sanders asked how commissioners taking office in July could modify the budget if they wanted to direct funds toward hiring an executive director.
"The Commission would have to decide where that money is going to come from to do that," said Larsen.
Sanders asked whether there were any debts that the Port could "pay back slower" to free up funds for the director that position.
Imdieke told her the Port would have to negotiate with its creditors for reduced payments, and given the agency's revenue streams, "I don't think that's going to happen."
"Basically we have no reserve," Sanders said.
"No, you do not," said Larsen.
The Port owes $1.6 million for debt service next year, which includes payments for improvement projects at Pier 1 and at Bornstein Seafoods, among others. If anticipated revenue sources for the next year aren't realized, Larsen reported, the agency will have to consider cutting back on $2.6 million in capital improvement projects such as the Lektro building remodel, dredging and a trail improvement program, reducing infrastructure improvement projects and cutting personnel.
Larsen said hiring new counsel could "very well cost more than we were paying Heather Reynolds."
To boost the $1,548,350 in estimated lease and rental revenues for next year, Commissioner Don McDaniel suggested the agency take a closer look at unpaid rent from its tenants.
As of April 30, the Port was owed $393,855 in overdue bills from tenants on land, in the marinas and at the piers.
McDaniel said the Port needs to put more "pressure" on its tenants and suggested turning unpaid bills over to a collection agency.
Larsen said the Port is instructing its new bookkeeper, Colleen Browne, to start a more aggressive bill collection strategy.
"Colleen's going to be our leg-breaker," Pfund joked.
Hunsinger pointed out the budget does not include any increase in wages for maintenance workers, who he said haven't received a pay raise in years.
"From listening to this past administration, we should have a lot more money than we actually do," Hunsinger said after the meeting. "Where is all the money?"?"