Long Beach (KLGB), California: Airport Is Billed $11.5 Million In Charges From Other City Departments

March 26, 2013 – The Long Beach Airport uses a number of different city services to manage its operations, including public safety, engineering, and billing and collection, among others. The airport, like all city departments, is charged for these services based on a methodology and calculation that attempts to define what is a fair share. A group of outside consultants assists the city in determining the allocation basis, helping to ensure that every department pays an equitable share for the services it receives from other departments. “Somebody has to pay for city hall,” said JC Squires, CPA, manager of finance and administration at the airport. “We get our piece of everything, just like everybody else does.”

For example, the airport will pay more than $3.5 million in the current fiscal year – October 1, 2012, through September 30, 2013 – for police services and about $5.4 million for fire services. These charges primarily cover personnel hours, but also include resources and equipment costs.  View the chart.

In all, the airport will contribute almost $11.5 million to city coffers for things like general city overhead costs (support for city hall, city management, city council and mayor); technology services (acquisition, maintenance and repair for computer systems, printers, phones, servers, data back-up, software, cabling, programming, etc.); park bureau charges (the airport runs an advertising campaign using parks department locations and publications to reach customers); and fleet services (acquisition, maintenance, repair and fueling services for vehicles, trucks, tractors, trailers and all rolling stock).

“The airport pays the fully burdened cost for all services it receives,” said Long Beach Airport Director Mario Rodriguez. “In accordance with federal regulations, airports, in general, are allowed to pay up to all costs for services received.” Moreover, the Federal Aviation Administration Authorization Act of 1994 prohibits the diversion of airport revenue to pay for city services not related to airport operations. Therefore, for all intents and purposes, the airport cannot contribute any more or less than it receives. “There’s no burden to the community, whatsoever,” Rodriguez said.

The Long Beach City Council recently requested that financial management produce a report addressing “a potential policy and plan by which public safety enterprise fund services and weighted costs are addressed appropriately by all departments.” The goal is to review whether revenue-producing city departments, such as the airport and gas and oil department, adequately bear the full weight of costs for the public safety services they receive. Finance Director John Gross told the Business Journal the budget office is currently preparing a response, though no timeline has been set for reporting back to the council.

But, according to Squires, this kind of review already takes place – at least as it concerns the airport. “We worked with financial management the last two years going over their cost allocation and direct charges with each department to make sure that, under FAA rules, we can only pay for services received,” he said. “We’re pretty confident we’re paying for the services we’re receiving. I don’t think we’re getting gouged.”

Story and Photos:  http://lbbusinessjournal.com