NEWPORT BEACH : City in Relatively Good Budget Shape

Higher-than-expected hotel tax revenues and conservative spending in city departments have left Newport Beach in better fiscal shape than many municipalities around the county, and officials say they will probably not make an annual year-end budget adjustment.

“Even though sales taxes were down, other revenues were up, so our estimates are the same,” City Manager Robert L. Wynn said. “Financially, we’re on track with our budget.”

Cities typically make year-end changes to budgets passed in June or July to reflect a more realistic economic picture than earlier estimates provided. In a recession, cities often find the outlook bleaker in December than they had envisioned in summer, which could lead to stricter economic policies such as layoffs or cutbacks.

Wynn said that the city would wait until the December books are closed before making a final decision on whether to revise its budget projections, but added that the city is “leaning toward no adjustment.”

The city’s optimistic fiscal picture comes after a first-quarter report last month showing the city’s sales tax revenues at a two-year low. The report showed sales tax revenues down $400,000 from the previous two years, and put the city’s general fund at $1 million less than the previous year.

Still, Wynn said conservative spending by department heads and strict enforcement of transient occupancy taxes--which are the taxes hotels charge guests above sales taxes--have helped balance the budget.

Department heads, Wynn said, have been spending only about 50% of their budgets, which has helped make up for low sales taxes.

Wynn said sales tax revenues will probably continue to be low because consumers have been cautious in their spending.

The city will make a final decision on whether to adjust the budget in mid-January.