NEWPORT BEACH : Interim City Budget of $90 Million OKd

The City Council approved an interim, $90-million budget Monday, but officials fear further slashes will be needed after the state approves its spending plan in coming weeks.

Newport Beach, which was easily able to trim $10 million from next year’s budget without layoffs and service cuts common to most cities facing troubled fiscal times, is now working on alternative budgets that would cut up to 5% more from each department and could include employee layoffs, if in fact state cuts are passed on to cities.

“I have never seen a period of greater uncertainty,” said City Manager Kevin J. Murphy.

Most cities fear the state will approve its budget in coming weeks by taking municipal revenue, forcing already cash-strapped cities to trim their budgets further.

Newport Beach officials are worried that further drastic state cuts may force the city to lay off employees and cut services.

In achieving its $10 million in budget cuts, Newport Beach has instituted a hiring freeze, made across-the-board cuts in administrative costs and reduced the amount it generally sets aside for reserve funds.

Further, it has not funded requested items such as new vehicles and video equipment for the Fire Department, and is approving money only when lack of the requested equipment would infringe on service.

The general fund comprises about $50 million of the budget, and about $30 million of that is spent on police, fire and other protective services.

Like most cities, Newport Beach relies heavily on sales tax revenue, which comes mainly from the Fashion Island shopping center and the city’s varied restaurant districts. That revenue has been about $7 million less than usual in the last year.

The City Council has tentatively set a special meeting for July 2 at 5 p.m. to discuss further cuts to the budget, provided the state has reached a decision on its budget by that time.