Newport Beach weak on sales tax, report says

NEWPORT BEACH -- The weakest source of major revenue in Newport Beach is

sales tax, according to a recent city report comparing the city’s

revenues and expenditures to the 31 other cities in Orange County.

“Perhaps we’re not capturing enough sales tax from tourism,” said

administrative services director Dennis Danner, who headed the study.

The comparison, an extension of last fall’s five-year financial forecast,

compared such areas as general revenue, property tax, sales tax, public

safety expenditures and general government expenditures.

In terms of bed tax and property tax, Newport Beach ranks second and

fourth, respectively. However, the city spends more on public safety per

capita than any other city in the county. The top-ranking city in the

majority of categories was Anaheim -- not surprising since it’s also the

home of a major tourist attraction in Disneyland.

“I think the real issue is that we need to protect our sales tax,” said

Mayor John Noyes, adding that with the newly renovated Shops in Mission

Viejo, competition on the important source of revenue is growing.

As for Costa Mesa, it ranks lower than Newport Beach in most revenue

categories, except sales tax. Thanks to South Coast Plaza, Costa Mesa

ranks fourth in comparison to other cities in the county.

The city also spends much more on general government -- nearly one-third

more than Newport Beach. Like its neighbor, however, Costa Mesa places a

great deal of importance on public safety and spends almost the same

amount as Newport Beach.

“[The figures] are pretty accurate in terms of quantifying and comparing

revenue from one city to another,” said Costa Mesa City Manager Allan

Roeder. “But on the expenditures side, the accuracy falls off unless you

go through each city’s budget, line by line.”

The conclusion that Newport Beach might need to boost its sales tax

supports last November’s five-year financial forecast, which predicted

the city needed to find additional revenue sources to maintain its high

level of service in the future.

“I wasn’t really surprised about the sales tax,” said Councilwoman Norma

Glover, who requested the study.

Sales tax is a lingering issue in the city, especially with the Irvine

Co.’s recent withdrawal of its Newport Center expansion plans. Glover

said the council should encourage the Irvine Co. to go forward with its

plans to improve Macy’s and Neiman Marcus.

While these improvements might help, Fashion Island still does

significantly less business than South Coast Plaza. Fashion Island did

about $350 million last year; South Coast Plaza did more than $1 billion,

said Councilman Tod Ridgeway.

The study was based on revenue and expenditure data compiled annually by

the State Controller. The most recent figures were from fiscal year

1996-97.

Some new residential developments around Newport Beach -- such as Bonita

Canyon, One Ford Road, Newport North, Castaways and Newport Coast -- were

not reflected in the report. Also, in the last four years, two new cities

have incorporated.

Updated information will be available, pending the release of information

from fiscal year 1997-98 this spring. Danner said he would keep informal

tabs on Newport’s annual ranking.

NEWPORT BEACH

* Newport Beach ranked 13th in population among 31 Orange County cities

Revenues

Amount Rank Per Cap Rank No 1 City

Total Revenue

$101,761,579 6 3 Anaheim

General Revenue

$51,546,084 7 2 Anaheim

Functional Revenue

$50,214,771 5 3 Anaheim

Property Tax

$18,389,466 4 4 Santa Ana

Sales Tax

$13,655,616 8 6 Anaheim

Transient Occupancy Tax

$7,053,397 2 4 Anaheim

Expenditures Amount Rank Per Cap Rank No 1 City

Total Expenditures

$108,864,323 4 2 Anaheim

Public Safety

$37,988,843 4 1 Santa Ana

Culture and Leisure

$13,208,848 6 3 Anaheim

General Government

$6,442,703 7 3 AnaheimCommunity

Development

$6,432,650 6 8 Anaheim

COSTA MESA

* Costa Mesa ranked eighth in population among 31 Orange County cities.

Revenues

Amount Rank Per Capita Rank

Total Revenue

$67,417,022 9 18

General Revenue

$49,907,236 6 5

Functional Revenue

$17,509,581 15 21

Property Tax

$9,629,038 10 14

Sales Tax

$25,525,908 4 3

Transient Occupancy Tax

$3,466,942 5 7

Expenditures

Amount Rank Per Cap Rank

Total Expenditures $74,233,675 9 8

Public Safety $37,005,330 5 4

Culture and Leisure $7,229,990 8 12

General Government $9,270,834 3 4

Community Development $5,628,753 7 15