NEWPORT BEACH : City Bracing for Pain of Budget Cuts

City officials preparing the budget for the coming fiscal year are predicting painful cuts that could result in layoffs and deterioration of some municipal services.

“I predict the big story in Newport Beach this year will not be the Police Department, it will be money, money, money,” Mayor Clarence J. Turner said. “What we are doing is looking at everything--looking at ways to trim costs and provide services at a cheaper cost, and looking at personnel.”

Based on recent figures provided by the California League of Cities, Newport Beach can expect a shortfall in property tax revenue from the state of about $4.8 million for the 1993-94 fiscal year, City Manager Kevin J. Murphy told the City Council earlier this week. That is $800,000 more than officials expected.

On top of that, the city may be forced to slash another $1.2 million to make up for expected shortfalls in fees the city collects for such things as building permits, paramedic service and sales tax.

“The city’s economic picture is worse than it has ever been,” Murphy said.

To prepare for the cuts, Dennis Danner, city finance director, said that the directors of each city department are being asked to not only submit budgets that slash 5% off current spending, but also to prepare second budgets that cut spending by 10%, just in case. These budgets are due Feb. 19.

“When you have a loss of that magnitude, you have to look for ways to increase revenues and tighten the belt as tight as you can,” Danner said. “But if that loss is made strictly through cuts in spending, it would affect the city’s ability to deliver services.”

The city’s spending cuts will probably affect those items that are most expensive--namely capital improvement projects such as street and park maintenance, and also staff salaries and benefits, Danner said. To help cut $4 million from the current fiscal budget, the city eliminated 12 part-time employees.

City officials are encouraging employees to participate in the budget process because some of the cuts may affect them and their jobs.

“The employees got no raise last year, and the chances of getting a raise this year are slim,” Turner said. “That is unheard of in the city of Newport Beach. That is something the employees have got to come to grips with.”

The employees’ associations, for their part, are happy to join the budget process in order to have an opportunity to defend their jobs.

“The city is looking at new revenues and consolidation of jobs or not filling vacant positions,” said Lynn Bakuy, vice president of the Newport Beach City Employees Assn., which represents about 100 clerical staff members and supervisors. “So cutting jobs will hopefully be a last resort.”

Officials acknowledge that most of the budget activity at this point is “best guesses” based on projections.

The city must, as mandated by state law, adopt a balanced budget by June 30. The budget for the coming fiscal year is projected to be between $60 million and $70 million.

To soften the impact of the spending cuts, city officials are poring over a number of revenue-generating measures. Among them are two taxes that will go after tourists--parking meter rates and the hotel bed tax.

Two others being considered are increases in the business license tax, an annual flat tax that has remained at $75 for more than a decade, and paramedic user fees.