The Newport Beach city budget for 2017-2018 doesn’t go into effect until July 1, but it’s already getting a lot of attention.
Staff provided a presentation on the budget during a special joint meeting of the City Council and Finance Committee on Tuesday.
“I believe this budget is a solid budget, but it is also a cautious one,” Councilwoman and Finance Committee Chair Diane Dixon stated. “Caution is the word of the day.”
More funds may go toward future endeavors, while less is being spent on the present. Total proposed budget spending is 2.7 percent less over the current year.
The budget itself is balanced with strong revenues and reserves, according to records. The general fund is projected come in at $225.6 million, which includes a $9.2 million surplus from the current year.
City staff recommended spending $225.3 million in the new budget, leaving only a $300,000 surplus for the coming year.
Leading the expenditures is $145.4 million for employee salaries.
From the general fund, the largest expense is $108.8 million for public safety (police, fire, and lifeguards) and $37.7 for public works (infrastructure and public service projects).
Revenues stream are mainly from property taxes at $99.8 million, sales tax at $35.9 million, and Transient Occupancy Tax at $24.3 million. These three taxes represent 76 percent of all general fund revenues and would be a 5.3 percent increase over the current year, according to Finance Deputy Director Steve Montano.
Property taxes will continue to be the city’s largest revenue generator for some time, City Manager Dave Kiff said. Older homes are flipped and revalued at a higher rate each year.
The average home price in Newport Beach is $2.4 million and the median price is $1.9 million, Montano said Tuesday.
“This certainly helps these numbers,” he said.
Still, new home construction will come to an end in about eight to ten years, Kiff warned, and property tax revenue will someday level off. He noted that the city watches tax revenue closely throughout the year.
Much of the presentation involved an explanation of the city’s decision to preemptively pay $9.1 million toward the city’s unfunded pension liability.
“We are paying faster than CalPERS can tell us what to pay. We are avoiding about $15 million in interest, I believe, over the 20-year period,” Dixon told the audience. “No one can predict the future. We are attempting to get ahead of the indebtedness.”
City council did express interest in the possibility of putting the $9.1 million into a Section 115 pension trust, instead of paying CalPERS, whose returns have been less than stellar over the last 10 years.
Kiff said that the current staff recommendation was to send the payment to CalPERS.
Newport Harbor will receive a $6 million infusion of funds, if the proposed budget is approved next month. Joe Stapleton, a citizen member of the Finance Committee and former Harbor Commission member, praised the proposed budget and its attention to the harbor, which he called “our greatest asset.”
“We are so lucky to live in a great city where we have the resources and leadership to preserve that quality of life while maintaining a balanced budget,” Stapleton remarked.
Fourteen ventures are proposed for harbor and beach capital projects next year, totaling $12.8 million.
The budget will get a last minute fitting with the Finance Committee on June 1 before the public hearing on June 13. It may be modified or rejected by city council, but must be approved before the new fiscal year begins on July 1.
Also on Tuesday, the city unveiled a new interactive version of the current budget that allows users to search and analyze the city’s numbers for themselves.
“This new tool opens the city’s ledgers for our citizens to see where their taxpayer dollars are going,” Mayor Kevin Muldoon said. “This is an important milestone for the city’s continued efforts in providing and improving transparency in government.”
Powered by Seattle-based company Socrata, only the current year’s budgets and projects can be viewed at this time. It’s available at newportbeachca.gov/budget.
The proposed 2017 – 2018 Budget Detail is available on the city’s website as well: