Newport Beach adopts $440.1M budget for fiscal year 2023-24

Newport Beach finance officials announced Tuesday the city is projected to come into the upcoming fiscal year with a “strong” structural budget surplus of $11 million.

About $10 million of that surplus, which does not come from one-time revenues, was recommended for allocation by the city’s finance committee to be put toward the city’s CalPERS UAL payment, the Facilities Financial Plan Fund and the Capital Improvement Program Fund, which the City Council approved as part of a larger motion to adopt the budget for the fiscal year that begins July 1.

This year’s budget totals about $440.1 million, with approximately $410.7 million of that earmarked for the city’s operating budget and about $29.4 million for its capital budget. City staff said the aims of the budget this year remain consistent with all previous years: maintaining economic viability, providing high quality city services, maintaining Newport Beach’s aesthetics and public safety.

In a report prepared for the meeting, city staff noted the operating budget this year is a 7% increase over the previous year’s budget, which was $330.9 million.

Operating revenues for the general fund are projected at $304.1 million, which staff said is 8% higher than they were for fiscal year 2022-23 and about 3% higher than revenues projected for this upcoming year. That growth, city officials said, is supported by the local economy in addition to Newport Beach’s real estate market.

Property taxes, which account for one-half of the general fund, are expected to grow by $4.5 million in the upcoming fiscal year, though sales taxes are expected to remain flat, according to the staff report. Sales tax is the second-largest contributor to the city’s finances, followed by the transient occupancy tax, which accounts for about 10.5%. The latter is expected to generate around $32 million in revenue.

Total operating expenditures are expected to reach $293.9 million. The bulk will cover salaries and benefits for city employees, followed by contract services, internal service charges and operating transfers out — around $34.5 million, according to the staff report — to other funds to address long-term obligations.

“We’ve delivered a solid budget this year that’s spending a lot of time and effort on the priorities that we all want to make sure we’re taking a look at [it]. Really high service levels,” said Mayor Pro Tem Will O’Neill, who also chairs the city’s finance committee. “By far, the largest amount of our dollars go toward people, salary and benefits, so we remain a service organization. So, I just wanted to say that we’ll continue to focus on that. The debt pay-down continues to be significant and serious and as we continue to see uncertain markets as we near the fiscal year end, that’ll be continuing to be all the more important as we look at the pension issues.”

O’Neill also noted the importance of setting aside money for capital improvement projects, especially as projects bids have continued to come back at higher than projected amounts due to inflation and continued supply chain issues.