The local government agency expects a small surplus for the upcoming fiscal year after investing proceeds into waterfront projects.
The Port of San Diego will close out its fiscal year $38 million richer than anticipated and is projecting another 12 months of financial stability.
The local government agency, which controls the real estate in and around San Diego Bay, adopted a budget Tuesday with a slim anticipated surplus of $127,800 for fiscal year 2025, which starts on July 1. At the agency’s board meeting Tuesday, port commissioners also unanimously agreed to a spending plan for a portion of the fiscal year 2024 surplus.
The 2025 budget assumes revenue of $315.7 million alongside $229 million in expenses and an additional $86.5 million in allocations for debt payments, specific projects and longer-term commitments.
In total, the port identified $350.2 million in financial obligations for the upcoming fiscal year, although the appropriated sum incorporates funds previously set aside in prior budget cycles.
The small anticipated surplus reflects the agency’s desire to direct proceeds back into waterfront projects.
“Thanks to a post-pandemic economic recovery that has resulted in strong performance from our tenants, the San Diego Unified Port District is at a ballast point; we are enjoying a balanced budget and prosperity,” Tracy Largent, the port’s chief financial officer, wrote in her message in the agency’s budget book. “Therefore, as we approach fiscal year 2025, we are taking the opportunity to reinvest in our waterfront and our region by focusing on our plans, parks, people, and the planet.”
Formed by the state in 1962, the San Diego Unified Port District spans 34 miles of coastline from Shelter Island to Imperial Beach. The land was granted to the agency to hold in trust on behalf of Californians; it includes tidelands in San Diego, National City, Chula Vista, Imperial Beach and Coronado. The agency is a self-funded, non-taxing entity governed by a board of seven commissioners who are appointed by their member cities.
The port makes most of its money from its real estate portfolio and maritime operations, with the two business divisions anticipated to collectively bring in $191.2 million and account for more than 60 percent of total revenue in the upcoming fiscal year. The agency also generates revenue from parking fees — or an estimated $20 million in fiscal year 2025.
A number of other miscellaneous revenue sources, including investment income and grant money, round out the balance sheet.
The port will, for instance, pocket nearly $28 million in revenue, or 8.9 percent of the fiscal year’s total revenue, from its Economic Recovery Program. The program, approved by the board in 2021, represents 40 different projects that will be funded using federal stimulus dollars. The district received a total of $110.3 million in coronavirus American Rescue Plan Act funds but split the stimulus proceeds across multiple fiscal years.
The port’s largest expense is its staff, with the agency budgeting $130.3 million for personnel costs. The sum reflects salaries, benefits, retirement costs and payroll taxes for 653 staff positions, including 183 in the Harbor Police Department. Other obligations include $35.4 million for contractual services, $15.4 million in maintenance needs, $12 million in operating costs for port facilities and more than $1 million for anticipated travel expenses.
Spread throughout the fiscal year 2025 budget are roughly $30 million in environmental-related allocations to electrification and air-quality projects, $30 million in park-related commitments, and $20 million for technology and infrastructure upgrades to enhance public safety, with the agency pointing to the investments as a reflection of its values.
The port’s willingness to fund electrification efforts, as identified in its Maritime Clear Air Strategy (MCAS) policy document, was commended by Bertha Rodriguez, a policy advocate with the Environmental Health Coalition, who spoke during Tuesday’s public hearing.
“Ultimately, the port has made bold policy commitments with the MCAS and shown great follow through, with millions of dollars dedicated to projects that electrify and lower emissions,” Rodriguez said.
The port, which takes a conservative approach to budgeting, expects to close the 2024 fiscal year ending June 30 with a $38 million surplus.
The unexpected surplus is the result of an $18 million cash infusion from an environmental legal settlement with agro-chemical company Monsanto, high-performing investments, better-than-expected operating revenue and grant money, Largent told commissioners.
On Tuesday, port commissioners directed staff to allocate $31.4 million of the surplus to a dozen different projects and funds.
The allocations included $10 million for the Balanced Capital Plan, a reserve fund that stores money for capital improvement projects in each of the port’s member cities. Other allocations include nearly $2 million for the Harbor Police Department headquarters, $3 million for a future wetland mitigation bank called Pond 20 and $1.1 million for signage at the Chula Vista Bayfront. The agency also set aside $5 million for grant-matching programs.