Newport Beach approves $402-million budget for upcoming fiscal year

The Newport Beach City Council this week approved its budget for the upcoming fiscal year — a total sum of $402 million.

About $330.9 million will go toward the city’s operating budget and about $71 million is earmarked for the city’s capital improvement budget for fiscal year 2022-23, which begins July 1.

City staff noted in a report prepared for Tuesday’s meeting that the operating budget reflects a 7% increase over the budget adopted for last year, which was about $309.1 million.

Reserves are holding steady at $58.8 million.

Property tax revenues — the largest source of income for the city — are expected to grow by 6.4%, according to the report. Property tax accounts for the vast majority of general fund revenues, followed by sales tax and the city’s transient occupancy tax. The latter was the most severely impacted of the three by the pandemic, but city staff noted the revenues from short-term residential stays have reached record highs compared to hotels, which still have not yet climbed back to pre-pandemic levels.

The budget is expected to result in a surplus of $7.5 million and general fund operating revenues are estimated at $265 million.

Noted in the expenditures was the potential for adding 11 new full-time positions to the city. Personnel costs are a significant portion of the general fund’s expenditures — 59.7%, or $163.4 million, for salaries and benefits — as outlined by city budget manager Shelby Burguan during a study session in May.

Mayor Kevin Muldoon, concerned about adding more city staff, cast the lone dissenting vote on the budget, saying that he was proud of the work that had been done to preserve the reserves and pay down debts.

“But I cannot support a budget that’s going to increase our staff and, even if we weren’t afraid of a looming recession, I still would not likely support increasing full-time positions due to the uncertainty of new individuals joining the CalPERS’ system and their unreliable investment strategies and constant requirement that the city make up the difference,” Muldoon said.

Councilman Will O’Neill, who is also chair of the city’s finance committee, thanked those who worked on this year’s budget, describing Newport Beach’s financial position as “remarkable” two years after the initial onset of the pandemic caused it and other cities to reevaluate their budgets for fear of economic impact.

O’Neill noted the city was able to address both short-term and long-term issues that cropped up in addition to now being able to fully fund projects like the junior lifeguard headquarters and the library lecture hall — both projects that had to be postponed.

“Being able to talk about that is a big deal and being able to get to a point where we have a lot more renewed optimism matters,” said O’Neill. “That said, we need to be paying a lot of attention to the fact that there are a lot of economic indicators that are concerning and we need to remember that that concern hits us because it hits our residents and the visitors that come to our city.”

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