news story / By John C. Osborn

Red Tide

Bay District seeks life preservers in face of plummeting budget

(July 1, 2010)  The Harbor, Recreation, and Conservation District Commission meeting last Wednesday (June 23) represented both the burning optimism and the sobering reality of the economic storm facing Humboldt County, particularly its port. Few public entities have managed to weather the “Great Recession” here unscathed, but the fateful financial future facing this public agency is nothing short of dire.

Consider that the docks have been silent too long for comfort, so long as to send waves of concern throughout the business and government world. Unless viable business projects come to fruition, the district potentially faces the dreaded Chapter 9 — bankruptcy. This doesn’t necessarily mean death, but it certainly is a potential catastrophe, one that could lead to major reorganization and interference by the state and judicial authorities.

Commissioner Mike Wilson explains the realities of the bay District’s fiscal situtation BY JOHN OSBORN

GALLERY >

“It doesn’t mean that we drop dead,” said Harbor Commissioner Pat Higgins at Wednesday’s meeting. “It’s far more desirable that we be proactive.”

So what is pushing the district to the brink? A number of factors, many of which stretch back years. The commission has been in the red since 2007, and with each year its reserve funds have slowly trickled away. If current trends continue, reserves will slip below the $1 million mark, leading bonds currently held by the district to default.

The demise of the Samoa Pulp Mill in 2008 sent a noticeable shock wave through the district’s finances. The amount of money collected through a pilotage tariff fell from $105,157 in fiscal 2006/07 to a projected $25,000 this fiscal year, with no anticipated change for next year’s budget. Also, the loss of several grants obtained in years past lowered revenue by about $1 million.

The general collapse of previously privately owned services over the years — such as the Marina, bar pilots and boatyard — has forced the district to assume fiscal responsibility, and an ongoing debt load from dredging the Bay entrance and a boating loan continues to cost a little over $300,000 a year.

The district has also made rather dramatic cuts to address this financial meltdown. Last year, the two remaining bar pilots, Captains John Powell and Tim Petrusha, took a 50 percent pay cut, while the Director of Martime Commerce, Wilson Lacy, took a 40 percent one. All three contracts were on the table during the Wednesday meeting, leading to a rather contentious debate amongst commissioners who wanted flexibility verses giving employees job security.

Despite the services of bar pilots being rarely used in recent times, the state mandates that each port have must have two on hand. Otherwise, ships may not enter port due to the complexities and training involved with the job. Considering how strapped the district is for cash, Commissioners Higgins and Mike Wilson wanted more flexibility by making the bar pilot contracts at-will, with one-year terms that would be renegotiable as shipping increases. Commissioner Ronnie Pellegrini and Richard Marks felt the pilots needed assurances to remain in their position, especially after taking such a huge pay cut. Ultimately, they were kept on as at-will employees.

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