Another balanced Newport Beach budget

June Casagrande

Last year city budget planners didn’t even bother counting on the car

tax as a revenue source as they laid out their $154.9 million

spending plan. This year, they can prudently expect $4.2 million in

vehicle registration fees.

Yet this year’s projected spending plan, which calculates in that

revenue source, is $155 million -- only $100,000 more than last year.

Calculated the same way as the 2003-04 spending plan, the 2004-05

spending plan would be $150.8 million.

Nickel-and-dime reductions in income from various sources are

taking a bite out of the budget, virtually canceling out the benefits

of the car tax.

Much of the shortfall is a direct result of a

things-are-tough-all-over economy. But some is because the state,

while backfilling the car tax, is making up some of the difference

elsewhere.

Perhaps the best example is the state’s “Educational Revenue

Augmentation Fund,” nicknamed ERAF, which is money the state

withholds from city property tax revenues to pay for education. Last

year, the state skimmed about $6 million from Newport Beach for this

fund, Administrative Services Director Dennis Danner said. This year,

the state will take about $7.35 million -- a $1.35 million loss that

offsets a big portion of the car tax receipts.

“It’s a significant difference,” Danner said.

Another example of state giveth/state taketh away budgeting is

evident in revenues from the State Library Services Act. This fund

source compensates city libraries for the expense associated with

providing library services to nonresidents of their own cities. Last

year, the city received a little more than $400,000 from the state

for these library services. In the current fiscal year that ends on

June 30, the city received about $200,000. Next year, Newport Beach

will get $75,000.

But the state can’t take all the blame for the reduced revenues.

Much of the problem lies with a listless economy. Reduced business

license applications, building permit and plan-check fees and reduced

participation in paid city services such as adult sports programs

also contribute.

“These things add up,” Danner said.

Perhaps the biggest crunch on this year’s budget is the rising

cost of the city’s pension plan. The program will probably cost the

city about $4 million more this year than last and the costs will be

covered with precision reductions in various departments’ budgets.

The capital improvement projects portion of the budget, which

funds desired work such as park development and beautification

projects, will shoulder much of the financial burden. Staff members

on Monday said it’s too early to put a dollar figure on the proposed

capital improvement projects budget.

City departments submitted their proposed spending plans last

month.

Some, such as Recreation and Senior Services, can count on

consumer-paid fees to cover some of their costs.

“In some cases, we’re able to add programs and services if user

fees cover the costs,” said Marie Knight, director of Recreation and

Senior Services.

Still, this year’s spending plan qualifies as a status quo budget

and, as always, it’s balanced.

Staff’s proposed spending plan will be distributed to City Council

members by April 30. Then the political wrangling begins. Council

members will hold talks at study sessions and regular council

meetings beginning in May and ending with the final adoption on June

22.