Sales tax drop worries Newport Beach leaders

June Casagrande

NEWPORT BEACH -- The city’s sales tax revenues have taken yet another

dive -- dipping to 9.71% below last year’s figures.

Officials are worried, but hardly surprised.

“I attribute it to the slowdown in the economy and the slowdown in the

tourism industry, which is important to Newport Beach -- both of those

things are nationwide,” said Dennis Danner, the city’s administrative

services director.

In early October, officials announced that revenues were down 8.5% so

far for the fiscal year that will end June 30. The further decline sets a

gloomy stage for the next budget, which staff members are already working

on.

“When you’re second-highest revenue source is down over 9%, it’s

going to be difficult to make that up. We’re concerned locally about the

impact,” he said

Sales taxes are the city’s second biggest source of revenue after

property taxes. So far this fiscal year, the city has received $8 million

compared with last year’s $8.9 million. A small saving grace, though:

Property taxes, forecasters say, should rise slightly.

That increase stems from a high number of properties that have been

sold this year, Mayor Tod Ridgeway said. Under state law, a home’s value

can be readjusted to market rates only when it changes hands. Because

property tax is often based on assessed value, this could be a perk for

the city.

“Obviously we’re concerned,” Ridgeway said of the sales tax shortfall.

“But we’ve had strong sales tax growth the last couple years in excess of

what we’ve projected. . . . Our largest generator of sales tax is our

restaurants, and it appears that they’re holding their own. As the health

of our restaurants goes, so will the health of sales tax revenues.”

Local officials are focused on national predictions that the downturn

will continue through about the second quarter of next year.

“If the trend continues, it’s definitely a concern,” Ridgeway said.

* June Casagrande covers Newport Beach. She may be reached at (949)

574-4232 or by e-mail at o7 june.casagrande@latimes.comf7 .