City Operating Budget Reviewed

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Newport Beach City Hall
— Photo by Sara Hall ©

In a joint City Council and Finance Committee meeting, city officials reviewed the proposed Fiscal Year 2019-20 operating budget on Tuesday.

The budget is about blending high quality municipal services that residents expect, ensuring a safe and secure neighborhood, and keeping Newport Beach looking great, explained Finance Director Dan Matusiewicz. The ultimate goal is to maintain a prosperous, fiscally sustainable and economically viable city, he added.

“Getting straight to the point, the budget it balanced,” Matusiewicz said as he kicked off his presentation.

Staff reviewed the general construct and underpinnings of the overall budget, including sources and uses of funds, major program enhancements that were incorporated into the proposed budget, as well as proposed budget revisions that were not initially incorporated into the proposed budget.

Revenues and operating expenditures by department were discussed, including major program enhancements incorporated into the budget as well as proposed revisions that were not initially included, City Manager Grace Leung explained in this week’s Insider’s Guide.

“This is my first proposed budget to present for City Council consideration and I am pleased to present a balanced budget that maintains a high level of service to the community and addresses Council priorities,” Leung noted.

The proposed budget for 2019-20 is about $400 million, including $303 million of operating budget expenditures and about $44 million for new Capital Improvement Program project appropriations. The CIP budget will be discussed at the next City Council meeting.

The budget assumes a strong property tax growth rate, while other revenues slow down, he noted. The proposed expenditures remain relatively flat, he added.

They also are continuing an “aggressive” payment schedule of the unfunded pension liability, Matusiewicz commented.

Some airport growth control efforts and the General Plan update have also been funded, Matusiewicz noted. This year, they are also adding “robust” internal and external audit programs, he added.

Out of the approximate $13 million General Fund surplus, the budget includes $2 million for the Harbor & Beaches Master Plan to fund long-term improvements and $6.5 million for neighborhood enhancement projects. The surplus also allocates funds for the Facilities Financial Plan (FFP) and workers’ compensation.

It benefits the community in both the long and short term, Matusiewicz noted.

Revenue from property taxes equal approximately $113.6, nearly half of the entire general fund revenues.

The city is very fortunate to have such a large component of revenue from such a stable source, Matusiewicz commented.

The rest is made up from sales tax, transient occupancy tax (TOT), other taxes, and other sources. Sales tax is “more sensitive” to changes in consumer habits, Matusiewicz noted.

The largest chunk of general fund expenditures are salaries and benefits for city employees, costing about $155.56 million, or 71 percent of all expenditures. Maintenance and operation make up about 28 percent and less than one percent goes to capital outlay.

The proposed budget is available on the city’s website. New this year, there is also a video tutorial online.

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