Newport Beach cautious over coming budget

Mathis Winkler

NEWPORT BEACH -- There’s no need to panic. At least not for now.

City officials, who have begun a monthlong process of preparing

Newport Beach’s budget for the 2001-02 fiscal year, said this week that

they shouldn’t have trouble balancing the books.

“We give [budget] ceilings to [city] departments,” said Dennis Danner,

the city’s treasurer and administrative services director. “If everyone

remains within the ceilings, we won’t have to dip into reserves at all.”

But a stumbling economy and soaring energy prices have Danner worried

about things to come.

“I’m concerned about the future,” he said.

Not that Danner hasn’t uttered words of caution before. In a five-year

financial forecast presented in 1999, Danner said that by 2004, city

officials would have to find additional sources of money to keep things

in the black.

While Danner said it was still too early to give exact numbers for

available funds during the next fiscal year, he said he’d expect revenues

to rise by about 1.4% compared with this year.

That’s less than half of the increase last year, which clocked in at

3.27%.

Danner’s predictions for the city’s income from property sales are

even more drastic.

In 2000-01, property tax revenues increased by 11% and sales taxes by

more than 10%, Danner said.

Admittedly conservative in his estimates for the coming year, Danner

now predicts a 4% property tax increase and a 3% increase in sales taxes.

Hotel taxes are expected to stay the same, he said.

“That’s quite a difference,” he said, adding that this year’s high

increases were due to a high level of development. The proposed

annexation of Newport Coast, expected to happen early next year, could

bring up property tax levels again.

While agreeing that a recession could possibly force Newport Beach to

tap its reserves, Councilman Tod Ridgeway said it was still too early to

tell what the city’s financial picture would look like next year.

Danner “must be conservative by nature,” Ridgeway said, adding that he

didn’t see a big threat to property and sales taxes.

The newly opened California Adventure theme park at Disneyland would

probably keep hotel taxes up as well, Ridgeway said.

Councilwoman Norma Glover said the new Bush administration and

California’s energy crisis probably made it difficult to correctly judge

finances at the moment.

“People are a little reticent right now to get a feeling for both of

those,” events, she said. “But that could easily change.”

Individual city departments are preparing their budget requests, which

City Manager Homer Bludau will review next month, Danner said. Bludau

will hand them back to the finance department for budget preparation in

April.

City officials then will present a preliminary budget to City Council

members and the public in May. After holding public hearings in June,

council members are expected to adopt the final budget in time for the

new fiscal year, which will begin July 1.