Council postpones port tariff approval

The Nome Common Council said ‘no’ to this season’s port tariff revision at a special meeting called to approve the document to get it to shippers.
The revised Port of Nome fees and regulation contains minimal changes in rules, but includes a 10 percent increase in fees applied across the board.
The port tariff turn down hinged on the price increase. A dozen to 15 people attended the special meeting at noon March 3. After hearing from several citizens who took the podium to speak against the increases boosting the cost of living and affecting business costs, council members said they wanted more information on budget, revenues and expenses to back up a vote.

The Port of Nome Commission OK’d the revised tariff Feb. 18 and handed it to the council for approval. The council voted unanimously to hold back until its regular meeting March 28 when the city’s Finance Director Julie Liew would be available for more information.

Several noted that the labor costs and salaries took a large chunk of the budget. The port budget had to accommodate labor from outside the department, for example, services performed by the public works department.

“You have people with questions that want answers,” councilman Matt Culley said. “If it is 10 percent [increase] on the 28th, I’ll vote for it, but I want answers for people who have questions.”

The increase was not to fund operations, but to provide a contingency fund for emergencies, repairs and local matching money to chase federal grants for capital improvements, Joy Baker, port director, told the council.

“I think we all know we need to increase the contingency fund, not when, but by how much,” City Manager Tom Moran said. “The rate increase isn’t to balance the budget, it is to raise a rainy day fund.”

“I like a contingency fund,” Culley said. “I’m a worrier.”

On the other hand, Culley wondered, “Do you think we got too big for ourselves? We spent too much too soon? Maybe we needed to wait buying the land.”

“The land came up for sale, close to the port,” Port Commissioner Charles Lean noted. “We needed to buy it before someone else got it.

“A contingency fund helps us jump on a deal,” Lean said.

He spoke to the need for a contingency fund. “The commission has to look at the port as a self-sustaining business relative to expenses and revenues. The port and harbor operations need a contingency fund to cover washouts from storms, possible failures of valves that are 25 years into a projected 50-year life span, as well as dock faces also 25 years into their 50-year life span. The port has purchased land for additional pad space that needs gravel fill.

“We need a rainy day fund of $42 million. If we are pulling away $110,000 to $150,000 a year, it will take about 12 years to reach $2 million,” Lean said

There needed to be a fund balance, councilman Stan Andersen said. Otherwise, the city would have to raise the mill rate or borrow money to cover an oil spill, for example.

“Don’t we have insurance? Why would the people of Nome have to pay for a spill?” councilman Louis Green Sr. wondered.

“As soon as you use insurance, the rates go up,” Andersen replied.

Baker, speaking by phone, chided those present by informing them that the Nome Port Commission had discussed tariff revisions in two work sessions and a regular meeting, without input from the public.

They didn’t know about the meetings, some said.

“One reason people aren’t here is because they didn’t know about it,” Mark Johnson said. “Not everyone has social media.”

“We need more publicity,” Andersen said.

Johnson advised the commission to look at cutting expenses to raise the contingency fund.

“Everyone has to tighten their belt. If you’re not making the budget, maybe you could look at cost cutting rather than raising fees,” said Johnson, who owns an accounting and tax preparation business.  “A 10 percent increase is very detrimental in affecting port users,” added to a short summer season during which miners and fishers had to earn a living.

 Ken Hughes said the same, that port costs for operations would be settled on the backs of miners and fishermen. Hughes is an officer with Alaska Miners Association. Owners and operators of offshore dredges use the Port of Nome for staging, moorage and storage.

A revenue and expenses study contracted from Northern Economics by the Commission in 2013 advocated a 50 percent increase right away on port rates in order to meet rising operating costs, future development needs and deferred maintenance costs, but acknowledged the increase could be phased in.

The commission decided that a 50 percent increase would be too drastic. Instead, the panel voted to raise the rates by 10 percent in 2013 and then by five percent for each of 2014 and 2015. The council approved the rate hikes. These three increases excluded cargo and fuel operations. The commission went back to a 10 percent increase for the coming open-water season in 2016, but the proposed tariff applies the increase across the board to affect all port usages.

One can note that the five and 10 percent increments were not applied to the 2013 tariff rates in 2014, 2015 and 2016. Each year the tariff applied the rate increase to the previous year’s increased rate, which would make the total increase over the four years around 33 percent? Do the math, anyone?

None in the audience commented on port rules outside of the rate issues. Changes in the tariff concerning use rules are minimal and not final yet.

The Nome Nugget

PO Box 610
Nome, Alaska 99762

Phone: (907) 443-5235
Fax: (907) 443-5112

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