Pension liability leaves Newport facing tough choices, officials say
With city officials projecting that Newport Beach’s payments to the state’s public employees pension fund could be up to $16 million more next fiscal year, the city Finance Committee heard a lengthy presentation Thursday about the city’s unfunded pension obligations.
Officials also noted there could be little or no increase, depending on the direction of the City Council, which budgeted about $31 million of its $278-million budget toward pensions in the 2016-17 fiscal year.
How much the city will choose to spend on bringing down its pension debt in fiscal 2017-18 — which begins July 1 — is still being determined, but city officials say it could have the effect of halting some coveted capital projects, including a new library and fire station in Corona del Mar.
During a council meeting Tuesday, City Manager Dave Kiff recommended that the city hold off on finalizing expenditures for the estimated $8-million library and fire station — nicknamed the “fibrary” — and other endeavors until the pension question is fully addressed.
Kiff said he didn’t think it was responsible to spend such funds “when we have such an uncertain debt ahead of us.”
Newport’s unfunded pension liability recently was pegged at $315 million.
Kiff repeated his recommendation Thursday, adding that finding $10 million to $16 million to cut from the 2017-18 budget while maintaining a high standard for city services has been very difficult.
Councilman Will O’Neill said during the Finance Committee meeting that he agrees with most of Kiff’s recommendations but doesn’t want the CdM “fibrary” delayed for five years, as Kiff suggested. O’Neill recommended breaking ground in as little as three years.
Councilwoman Diane Dixon said a dropoff in funds coming into city coffers from developments is expected in coming years.
Though developments aren’t always popular, she said, developer fees have funded many city parks and other amenities that Newport residents have come to appreciate and expect.
Twitter: @BradleyZint
