DON'T SPEND PORT FUNDS ON UNRELATED PROJECTS.

Byline: Russell J. ``Rusty'' Hammer Local View

IT wasn't too many years ago there was an explosion of concern - and litigation - about efforts to divert money from the ports of Los Angeles and Long Beach (1996-2000) to fund unrelated projects.

The mayor then was Richard Riordan, and the issue was an increase in funding for public safety personnel in the city of Los Angeles. There wasn't any question about the need for additional funding to put more police on the streets.

The problem was that port funds were not the right place to pull resources. The reason: For almost 100 years we have had a clear separation between port resources - and the financial risks that go with port operations - and public benefit programs.

Fast-forward to 2002. City and state leaders are again in the midst of creatively funding budget shortfalls for state and local government.

This time the threat is in the form of state legislation, AB 2769, which is disguised as a bill to enhance the local environment but is in fact a clear effort to divert money from the ports to fund programs that have nothing to do with trade - or the environment.

Ultimately, AB 2769 is a threat to the ports' abilities to serve as the economic gate to the Pacific Rim.

The port of Los Angeles is America's largest port and moves more than $80 billion worth of cargo each year. In fact, 1 of every 24 jobs in Southern California is related to the port of Los Angeles (259,000 jobs).

Annual tax revenues generated from the port and paid to the state of California are approximately $1.4 billion. The issue is not whether the ports pay their fair share of taxes but rather should the ports pay more than their fair share of taxes?

The shipping industry plays an absolutely vital role in the backbone of the Los Angeles economy. Not only is the port of Los Angeles part of the lifeblood of Los Angeles, it has been an integral part of our history since 1911.

Almost every industry, from the entertainment industry to the toy industry, depends on the port of Los Angeles for its livelihood. We are living in hard economic times, and the port's role in our future is as important today as ever.

The proponents of AB 2769 argue that this is a limited use of funds that would be earmarked for specific programs and is there any better use of money than putting police on the streets?

But just like the situation in 1996, the real issue is not the value of a particular program but whether it makes sense to transfer a funding obligation to the ports. If we start down this track, where do we stop? A $10 million obligation today is tomorrow's $1 billion ``necessary use of funds.''

If AB 2769 is signed into law, everyone in Los Angeles will suffer the consequences.

If port dollars are diverted from port operations, shippers will likely be forced to increase their rates, passing the costs on to consumers, or they will simply ship their goods elsewhere. We will all end up paying higher prices for food, electronics, clothing, toys and all the products that pass through the port each day. Even before 9-11, the port police were fighting an uphill battle against cargo theft and smuggling. In today's world where ports are most vulnerable to terrorist attacks, port revenues should be retained in the ports to pay for increases in police and related services.

All too often, lawmakers do not appreciate the big picture. In this case, City Hall is trying to take money away from the ports, where economic uncertainty is already driving importers and exporters to ports on the East Coast.

Given that the dockworkers have been working without a new contract since July 1 and labor negotiations have broken down again, it is clear why local companies are making arrangements to ship their goods to and from state ports. AB 2769 sends the wrong signal that California lawmakers are not serious about the ports' role in the world economy.

This legislation would set a dangerous precedent for state and local government and the port of Los Angeles.

In 1996, it took the courts and then Lt. Gov. Gray Davis' leadership as a member of the State Lands Commission to stop an effort to siphon funds from the ports. Now, as governor, Davis has it in his power to help protect California's economy by vetoing AB 2769.