Sounding Off: Money problems continue in Newport

Running for public office is invigorating and rewarding, even when you lose. Last September I offered some ideas to put the city of Newport Beach on a fiscal glide slope for our future economic stability. I did so out of the belief that a fiscally sustainable government enterprise is critical to ensuring that the unique, beautiful and special Newport Beach of our past continues for generations to come.

At $150 million, I suggested that the new cost of the new City Hall was ridiculously expensive and the project needed to be drastically scaled back. Local politicos and pundits berated me for challenging the process. I was told to trust the politicians and city staff — and that they knew what they were doing.

Ronald Reagan once said, "Government always finds a need for whatever money it gets."

That's why, in late December — the deadline to qualify for the Obama Bonds (Build American Bonds) — the City Council rushed to approve a borrowing limit of $128 million for the project's construction .

It's my understanding the construction bids are coming in excessively over budget. But we've been told that the "community" demanded the espresso bar, the footbridge over Avocado, the 16-acre park, the nature habitat and LEED certification (a new-age term that means it will cost more).

It's a $150-plus-million-dollar project, and the land was free.

Reagan was right.

City finance committee minutes of last November indicate that construction bids will be revealed at the Tuesday council meeting. It should be quite a show.

Newport Beach has the highest public employee to population ratio of any city in Orange County. We have nearly one employee per 1,000 residents at a cost of $125 million per year in salary and benefits.

I suggested it was time to get serious about privatizing many of services provided by City Hall. There is no need for an "urban forester" costing us $116,000 annually in salary and benefits. Paying $80,000 per year for trash collection employees is a luxury we can no longer afford.

The private sector picks up trash in every other jurisdiction in Orange County, and they pay for the right to do it. Imagine that — the private sector will write a check to pick up our trash.

Last October, CalPERs released the 2009 update of its annual status of the city's pension fund. I was curious why it wasn't publicized until last week.

Now we know why the report wasn't disclosed: Newport Beach has a $134 million unfunded pension liability — an increase of 44% over last year. Does anyone think 2010's will be any better?

When added to our $60 million unfunded liability for lifetime employee health insurance and $128 million for City Hall, we're starting to talk about real money.

I want to be fair; the current City Council is trying to work through the unfunded pension liabilities. They inherited labor contracts from prior councils that were too rich and generous. Prior council members couldn't resist the allure of campaign donations from the labor unions, while negotiating their contracts. It's time for the city to move to a 401(k)-type retirement package.

Let's see if they have the courage to implement real pension reform. And abstaining or calling in sick for the key vote won't work this time.

Don't be lulled into complacency by the press releases coming out of City Hall crowing about Newport's Wall Street rating agency prowess. These are the same rating agencies that missed the entire sub-prime lending crisis, not to mention the Orange County bankruptcy.

At $322 million in unfunded pensions, health insurance and City Hall debt, we're talking real money here.

Reagan was right. It's a good thing that we are honoring him with a statue; maybe the statue will remind us of his words.

ED RENO, a Newport Beach resident, ran for election to the City Council in November.

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