Newport Beach leaders signed off Tuesday on a $278-million city budget for the coming fiscal year.
The City Council voted unanimously to approve the spending plan, which includes funding for projects related to the city's aging sewer system, expansion of the wireless network used by police and fire officials along the beach, enhancements to the park near Newport Elementary School and other long- and short-term capital improvement projects.
The budget was reviewed during 11 Finance Committee meetings over the past several months, said Councilman and Finance Committee Chairman Tony Petros. During that time, all city department managers were asked to justify their projected spending for the 2016-17 fiscal year, which begins July 1, Petros said.
Anticipated expenditures from the general fund – the key operating fund in the budget – are $190.1 million. The lion's share of that – $134 million – is proposed for employee salaries and benefits. About $55.3 million is expected to fund maintenance and operations.
The city is spending $124.8 million on employee salaries and benefits in the current fiscal year. The increase for 2016-17 is attributed to cost-of-living adjustments and rising healthcare costs.
General fund revenue is projected at $199.2 million from sources including property, sales and hotel-related taxes.
"The items in the budget that have increased are salaries and benefits and our pension obligations," Petros said. "The balance of this budget, the discretionary parts of this budget, really are flat.
"We have asked [City Manager Dave Kiff] to hold the line on spending, and Mr. Kiff, thank you very much, you have done precisely that. At the same time you've done that, you've presented a budget that's a good road map for us moving on to the future."
The budget includes a reduction of six full-time staff positions, which puts the city at its lowest head count since 2001, Mayor Diane Dixon said. The upcoming fiscal year includes 724 full-time positions. In 2001, the city had 710.
"I don't know how many cities can say that and still operate at the highest level of productivity and efficiency," she said.
The city also earmarked $64.7 million for capital improvements, which include long- and short-term construction projects for streets, buildings, parks and beaches.
Highlights of the capital improvement plan include:
- $23.5 million for street repairs and drainage, including grass replacement in city medians and storm drain water quality improvements
- $12.33 million for facilities projects, including repairs and reconstruction of fire stations, a remodel of the Police Department headquarters and designing the West Newport Community Center
- $13.26 million for parks, Newport Harbor and the beaches, including the eventual replacement of the aging Balboa Island sea walls, dredging of the Grand Canal and access studies for Sunset Ridge Park
- About $6.55 million toward water quality and environmental projects, including the Semenuik Slough dredging and Bayview Heights drainage and runoff treatment
- About $2.45 million for transportation projects, including traffic signal synchronization and Mariner's Mile street configuration and land-use plans
Being on the list for 2016-17 doesn't necessarily mean a project will be completed during that fiscal year, according to budget documents.
After several Newport Elementary School parents and students spoke Tuesday in favor of the city contributing to improvements at the beachfront park adjacent to the school, the council agreed to allocate up to $250,000 for the project in the new budget.
However, the council noted that because the city's lease agreement with the Newport-Mesa Unified School District states the district is responsible for maintenance at the park, the money will be spent only after the district has contributed matching funds.
After debate, city leaders also decided to place $3.5 million in surplus money into the city's sewer fund, which pays for line repairs and other sewer system maintenance.
The fund for wastewater service is quickly running out of money, according to Municipal Operations Director George Murdoch.
In March, the City Council denied a proposal to increase customers' wastewater rates over a five-year period.
Dixon said the surplus money would normalize the sewer fund, meaning that when the council eventually decides to increase wastewater rates, it won't be as dramatic as the rates proposed earlier this year.
"I do not see this as a trend," she said. "I see it as a one-time event."
Council members Ed Selich and Keith Curry spoke against transferring surplus money into the fund.
"I think we need to bring back to the council a fee proposal so we can have our enterprise fund run like a business," Curry said. "Right now it's running at a structural deficit, which is a failing business."
The council also agreed to allocate $150,000 to expand the wireless network used by police, fire and lifeguard officials to communicate during emergencies and other major events, like Independence Day, when the beaches are more crowded than usual. The wireless network currently covers the Balboa Peninsula, but safety officials want to expand it to cover Corona del Mar State Beach.
Dixon said she's pleased with the new budget but emphasized the need for officials to continue to focus on the city's $300-million unfunded pension liability. The city has already executed a plan to accelerate payments to the California Public Employees' Retirement System and is looking into other ways to pay down the amount.
"We will, going forward, have to continue to reconcile and juggle these competing priorities to maintain a quality city in every sense and continue to invest to make this city desirable to live, work and play, but we do have a significant pension liability that needs attention," Dixon said.
Hannah Fry, firstname.lastname@example.org