NEWPORT BEACH : City Income Shows a Continued Decline

A report issued by the Newport Beach Finance Department this week shows the city’s first-quarter finances in a continued slump compared to last year’s income, with lower sales tax revenues a key factor.

The report shows a nearly $400,000 decrease in sales tax returns over the past two years, and general fund revenues that are almost $1 million less than those earned in the first quarter of the 1989-90 fiscal year.

“While projections this early in the year are always highly tentative,” the Finance Department report says, “some disturbing trends are developing. The city’s three major revenue sources--property tax, sales tax and transient-occupancy tax--are very dependent on the economy. The economy in Southern California is still struggling and therefore our major revenue sources may succumb to this sluggish economy.”

The report is the first of a number of monthly statements that the City Council will study to keep a close watch on the city’s fiscal situation. It hopes to ward off economic woes that typically creep into city budgets during tight fiscal times.

The reports were requested last month by Mayor Phil Sansone, who told the council Tuesday that he was skeptical of the report’s claim that the transient-occupancy tax account would increase. That fund is the tax that hotel and motel operators pay on top of sales taxes.

City Manager Robert L. Wynn agreed that the projected increase seemed optimistic when most other cities are predicting a drop in tourist trade and a related decline in the number of people renting hotel and motel rooms.

Wynn added that the city has been enforcing strict on-time payment of those taxes, which may account for the apparent increase from recent years.

“Overall, the general fund is well, but with a recession we have a number of concerns, and this will be monitored on a monthly basis,” Wynn noted.

The city’s annual budget this year is nearly $90 million.