Accounting error takes bite of Port of Seattle's increased earnings

The Port of Seattle nearly doubled its net income last year to $201 million, as revenue increased faster than expenses, and more grant money poured in.

But the strong performance was dampened somewhat by an accounting glitch: a one-time charge of $9.9 million the Port took to adjust for errors in prior-year accounting.

"That's a big number," Commissioner Paige Miller said of the $9.9 million charge on the Port's annual report card to King County taxpayers.

Technically, the Port overstated earlier earnings by undercounting depreciation charges and losses on assets it sold. The Port had noted the discrepancy previously, but hadn't adjusted its formal accounting to reflect it.

Yesterday, auditor Deloitte & Touche advised taking a single charge in 2004 to offset the misstated earnings. Otherwise, the Port would have had to restate its prior years' earnings, the auditor said. That would be a more time-consuming and costly process.

Rudy Caluza, director of accounting and procurement for the Port, told commissioners the unusual error didn't mean the Port's accounting wasn't "clean."

"We're taking proactive steps to stay clean," he added.

He also emphasized the gains in the Port's net income to $201 million from $104 million in 2003.

Those figures reflect, among other things, $59.3 million in tax revenue from King County property owners, up from $57.7 million in 2003.

Operating revenue rose to $377 million from $321 million in 2003.

The rise reflected mainly the opening of new facilities and higher fees at Seattle-Tacoma International Airport. A huge surge in ocean cargo did not create much additional revenue.

At Sea-Tac, "effectively we increased our rates and charges to the airlines," said Dan Thomas, the port's chief financial officer.

Federal grants for seaport and airport security, which the port counts as revenue, also contributed significantly.

Grants at the seaport rose by about $21 million to $109.1 million. Other grants, mainly for the airport, rose to $118.4 million from $32.7 million, the Port said.

The creation of new facilities meant depreciation also rose to $110 million from $85 million the previous year.

At the seaport, grant money helped narrow the loss on operations to $4.5 million last year after depreciation, compared with a loss of $9.2 million in 2003. For the airport, income after depreciation rose to $51.7 million from $40.2 million.

Alwyn Scott 206-464-3329 or ascott@seattletimes.com