1995-96 City Budget: Aviation Department Airport Revenues Taking Off

Between the forced financial anemia that has plagued most city budgets this fiscal year and the grandiosity of Bergstrom's $400 million in bonds financial package, the Aviation Department's proposed 1995-96 total budget of $19.6 million may induce nothing more than yawns. It's hard to get worked up over the relatively modest budget, especially since, as Peter Rieck, economic development manager at Robert Mueller Airport, points out, "The Department of Aviation is an enterprise fund - we generate all the revenue for our budget."

Mueller is raking in enough cash that revenues are helping foot the bill for Bergstrom operations. In 1994-95, it's estimated that Mueller brought in almost $23.4 million and spent only $17 million, $5.6 million of which went to finance pre-operation expenses at Bergstrom. For 1995-96, Mueller expects to make $25.5 million and spend $19.6 million, including $4.4 million to help out with Bergstrom costs. (Those costs include, according to the budget document, "the maintenance and operation of the facility until the new airport opens." They do not include the construction costs of the new runway and terminal complex, set to begin this year; the $179 million for these projects will come from bonds and other sources.)

Those numbers don't add up, you say? If the airport expects to make $25.5 million this year, but only needs $19.6 million, is the money that's left over going into a secret slush fund for the mayor's 1996 presidential bid? Not quite. No one at the city can touch airport revenues, since FAA regulations bar the funds from being used towards anything but airport-related costs. Instead the left-over funds, estimated at $5.8 million for 1995-96, will go to the Airport Capital Fund, which will again help finance bond debt and operations at Bergstrom once it opens. Last year the Aviation Department was able to contribute $9.5 million to this fund, officials say, because the department started the year with a balance of more than $4 million.

One will notice that as the estimated revenue at Mueller has gone up, so have the operating expenses. The major cash cow at Mueller is expected to be a $3.1 million increase in parking and concessions revenues, due to heavier traffic. This accounts for most of the revenue growth. On the expenditure side, Mueller will save $714,629 because of a decrease in bond debt service, since the Aviation Department will get a lower interest rate on its Bergstrom bonds than the 7.3% it got on Mueller bonds in 1989. But that savings will be more than wiped out by the need for increased administrative and service support, also due to heavier traffic at the airport, as well as basic needs like $500,000 to replace aircraft rescue and fire fighting vehicles, which will be transferred to Bergstrom when the new facility opens.

As for the portion of the budget set aside for Bergstrom, the Aviation Department has found ways to save $1.2 million in managing expenses over last year, even while hiring three new maintenance employees, transferring an administrator from Mueller, and transferring an architect from Brackenridge Hospital, for a total cost of over $150,000. Almost all of the savings can be attributed to the fact that the utilities and maintenance fees of existing buildings have been much cheaper than anticipated. "Initially, we budgeted quite a bit for [those things]," says Leslie Browder, financial manager with the Aviation Department. "We found out the utilities and maintenance - the daily electricity use, water and wastewater - was much less than we thought."

Browder says department officials hope to save additional funds in the future by using existing hospital and administrative facilities left over from Air Force Reserve Base use - and perhaps even finding a way to squeeze some Bergstrom revenue into the city's general fund. Certain areas - including parcels adjacent to highways 183 and 71 - may be "carved out" from the airport and developed by the city, Browder says. If city officials can figure out a way to do this without Federal Aviation Administration (FAA) funding, which would require the revenues from the property to go into the airport fund, the city could keep the money it generates from selling the property or using it in some other lucrative capacity.

But not every budget figure connected to the airport move paints a rosy picture. One cost buried in the complex budget document is more than $800,000 in funds to study what to do with Mueller after it yields operations to Bergstrom in 1998. This money, according to Browder, "includes redevelopment work and then environmental cleanup." So will Mueller continue to be a financial drain on the city even after it closes? "Probably, to some extent," says Browder. "There'll be some maintenance and security expenses that will continue after it closes."

Current plans call for the hiring of three service employees and one new employee for a training program, at a cost of over $100,000. Then there's the $833,000 to study what to do with Mueller. "At this point in time, there's no specific thing in mind for Mueller," says Rieck. "The city has appointed a task force to develop goals for the redevelopment of Mueller, to encourage public participation." Rieck says in the worst case, financing of Mueller may continue for a year after it closes. "In the best case, you may have the property turned over to a new entity or even sold...on the other hand, the city may decide to hold on to the property for 20 years and turn it into Central Park."