Md. port agency expects deficit of up to $4.1 million

February 21, 1991|By John H. Gormley Jr. | John H. Gormley Jr.,Sun Staff Correspondent

ANNAPOLIS -- The Maryland Port Administration expects to incur a deficit of up to $4.1 million this year, port officials told legislators yesterday.

In testimony before the House subcommittee with oversight responsibility for the port, MPA Executive Director Brendan W. O'Malley said he expects the deficit to be between $3.3 million and $4.1 million for the fiscal year that ends in June. That would be the third straight year in which the port agency has operated in the red.

The MPA's deficit was $1.4 million in fiscal 1990 and $3.96 million in fiscal 1989.

Mr. O'Malley said he hopes the MPA can reduce its deficits but that he does not expect to see the port turn an operating profit for years to come. For fiscal 1992, the MPA is projecting a deficit of $1.9 million.

"We had a tough year in 1990," Mr. O'Malley told the legislators. "We had a strike in the beginning and a strike at the end."

O. James Lighthizer, the state's new secretary of transportation, said after the hearing that he thought significant changes were required at the port agency to stem the deficits.

MA "Clearly, the state of Maryland has put tremendous amounts of

money in this. It's past time to show results," he said. "I recognize the need for decisive action."

Because of the effects of the strikes and the loss of business from lines that either left the port, diverted service elsewhere or went out of business, revenue fell more than $2 million short of projections, Mr. O'Malley said.

The port's continuing financial problems prompted the legislators to question whether the state's taxpayers are realizing a proper return on their investment in the port and whether the state should continue to spend money on what appears to be a losing proposition.

"I can't justify doing this," Delegate Timothy F. Maloney, D-Prince George's, chairman of the subcommittee, said of continued capital spending for the port.

"At what point do we think about throwing in the towel on the port?" said Delegate Peter Franchot, D-Montgomery, suggesting that the time may have come to consider a less ambitious concept of the port. "I'm not saying pull the plug; I'm saying rethink it."

Mr. O'Malley conceded that the port of Baltimore will never pay back in revenue what would be considered a reasonable rate of return in the private sector.

The port will pay the state $3.5 million this year for the more than $200 million the state Transportation Authority provided to build the Seagirt Marine Terminal, far less than what a commercial private lender would demand. "A reasonable rate of return would be $20 million," Mr. O'Malley said.

Almost no publicly owned ports pay back their cost of capital, he said. Governments provide the funds anyway because of the spinoff economic benefits of port activity.

"The port is in a good position for growth," Mr. O'Malley said, warning that now is not the time to give up,just when the investment in Seagirt is about to start paying off.

Mr. Maloney said he thought the state was well past the point where further investment could be justified. He said he expected the port agency to be denied any further funds for capital projects unless the investments were tied to a specific business commitment.

That last provision would allow the state to build new facilities for a steamship line -- for example, in return for a long-term commitment by the line to do business in the port.

In an effort to retain Maersk Line, the biggest steamship line in the port, the state is offering to provide Maersk with its own terminal.

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