GBCPA Press Release
FOR IMMEDIATE RELEASE
August 12, 2003
CONTACT: Larry Tobin, 281-326-1687
 

 More than half of the cumulative reported income of the Port of Houston Authority from 1995 through 2002 came from the property taxes of Harris County taxpayers, according to a financial analysis released by the Galveston Bay Conservation and Preservation Association (GBCPA).
Despite Port claims about cargo volumes, only 28 percent of its reported net income for that period was operating income, with the balance coming from state subsidy and net interest income. And the amount of the total tax levy paid by property owners in Harris County has climbed steadily over the same years.
In a comparison of ports, the Port of Houston Authority ranked fifth in revenue and eighth in number of containers moved. But it ranked head and shoulders above all of the nation's ports in its level of "general obligation debt," an amount of $331.6 million. The taxpayer cost to retire these general obligation port bonds is $529.5 million, including $178.9 million in interest, as reported in the Port's Comprehensive Annual Financial Report for 2002.
Larry Tobin of GBCPA recently conducted an analysis of the Port's high dependence on taxpayer funding for capital projects because GBCPA has led opposition to the Port's proposed new container terminal at Bayport.
"We are looking at these numbers because a permit has been issued for a private company to develop a Galveston Bay container port at Texas City, which will fulfill regional container needs for many years," said Tobin. "Yet the Port of Houston Authority insists it needs a publicly funded facility at Bayport."
 

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 Port Is Draining Taxpayers, 2 of 3
 

 "Capital projects funding for the Port of Houston Authority as reported to Harris County Commissioners Court is expected to increase by $544.3 million by 2008, not including work on the Houston Ship Channel," Tobin added. "The costs and debt burden are expected to be paid to a great degree by taxpayers. Where is the fiscal responsibility in this? Why are taxpayers being asked to shoulder an unneeded burden when the demand will be met by private sources?"
Harris County port taxes are a component of real property taxes paid by all property owners except those that are exempt--such as the Port of Houston Authority. The Port's funding from the port tax levy was $15 million in 1995. By 1998 it had climbed above $25 million, and by 2002 it had more than doubled to $35 million.
"It's a very cushy arrangement to claim large reportable net income when income from operations represents only a small portion of total income, and all risk and debt burden is passed to the obligated taxpayer," said Tobin.
Through ad valorem tax levy, Harris County property owners paid the Port of Houston Authority a cumulative total $208.6 million for fiscal years 1995-2002, according to Tobin's analysis. Net revenue from operations during the same period was $83.8 million, and the Port's other two income sources were $8.22 million in state subsidies and $38.6 million from "financial intermediation"--net earnings from interest on their sizable liquid investments in bonds and other financial instruments.
In a January 2003 press release, Port Chairman James Edmonds claimed "record-level operating revenue of nearly $108.5 million in 2002." According to Tobin, however, the Port's net operating income for 2002 was only a little over $1.5 million. This represented net operating income of about one nickel ($0.0542) per short ton, based upon the Port's traffic statistics.
 

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 Taxpayers Sustain the Port 3 of 3
 

 By comparison, the annual tax levy to pay general obligation debt service was $1.24 per short ton across the Port's facilities.
"This is debt service that the Port does not pay but proudly records as an income source and a contribution to their bottom line," Tobin said. He also pointed out that the $1.5 million in net operating income is strikingly similar to the $1.3 million price tag of the media campaign the Port launched in January.
"It seems the operating revenue last year was just about sufficient to cover the glowing TV and newspaper ads we have been seeing since then," said Tobin. A December newswire said the media campaign was "aimed at building local and national awareness of the port's connection to consumer needs."
The percentage breakdown in Tobin's study of contributions to Port income shows that more than 50 percent of net income in six of the past eight years came from the property tax subsidy. In 1995 and again in 2002, more than 80 percent of net income was from property tax. Operating revenue made up less than 10 percent of 2002 net income. Graphs reflecting the detail can be viewed at http://www.gbcpa.net/financial_reports_and_trade_data.htm.
"This is an agency consuming a great deal of public money," Tobin said. "Many U.S. Ports do not require a property tax levy to support their capital financing, and Texas City will soon be one of them. But in Houston, responsible port operations of that kind are a long way off. And the big losers are Galveston Bay and all the people who pay property taxes in Harris County."
Most of the docks along the Houston Ship Channel are privately owned, many handling liquid petrochemical cargo and other bulk cargo. They are not reflected in these figures, which cover only the Port of Houston Authority's publicly operated docks.
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 Galveston Bay Conservation and Preservation Association
P.O. Box 323, Seabrook, Texas 77586 Phone: 281-326-3343
Website: www.gbcpa.net E-mail: gbcpa@ev1.net