Faces $12 Million Budget Shortfall

Consumers and manufacturers are feeling the pinch of the recession, but so are government budgeters... including those at the Port of Oakland, operator of Oakland International Airport (OAK).

Business and vacation travellers know Oakland is a popular airport alternative to San Francisco International, but the Port of Oakland also depends heavily on freight business. During a recession shipping volume drops, and many shippers reduce the use of air freight in favor of slower, cheaper means.

In Oakland's case, that means despite layoffs and other cost reductions, the port will face a budget shortfall of over $12 million in the coming year. About $11 million of that is blamed on falling aviation revenue, while the maritime division is down about a million dollars.

Marilyn Sandifur, the port's public information officer, tells The Oakland Tribune, "The global economic crisis has redefined what we are able to do. The port's situation is very different today than it was a year ago or even three months ago."

Last year, the Port instituted a hiring freeze, and shed another 40 employees in August, for a total of about 100 positions. At its December 18 meeting, the Board of Port Commissioners voted to temporarily lay off remaining, nonessential staff for 13 days this fiscal year, affecting over half its 575 employees, for a total estimated savings of about $1.3 million.

Other measures approved include limiting expense growth to 1 percent next fiscal year and 3 percent thereafter. Past expense growth has averaged 7 percent. Capital projects will be reduced or delayed. On-airport improvements, which have traditionally been handled by the port to meet the specification of tenants, will be subcontracted to the private sector.

A new concessionaire is being sought to modernize and manage the Outer Harbor Terminal, in exchange for a 50-year contract.

The Port of Oakland will also seek a private developer to manage 168 acres which were formerly part of the Oakland Army Base. The Port once planned to move its intermodal rail yard there, but now hopes to leave the management and risks of that project to the private sector.

Victor Uno, president of the Board of Port Commissioners summed up the Port's situation, as well as that of many businesses and households. "We are working hard to address... overarching financial concerns," he said, "and 2009 will be a very challenging year."

FMI: www.portofoakland.com, www.flyoakland.com/