City’s budget under review

With property taxes in Newport Beach this year projected at more than double the amount collected in 2002, the city is flush with cash. But the city’s expenses keep rising to match its income, and that has some City Council members calling for a closer look at the budget.

The council’s finance committee, which includes Keith Curry, Leslie Daigle and Michael Henn, is preparing to take a comprehensive look at the city’s budget, both the revenue and expenditures.

“In this particular situation, we’ve got a very strong revenue picture and have had for quite a few years here in the city,” Henn said. “The objective for everyone should be to maximize the gap between our revenue and our core expenses for running the city.”

In layman’s terms, council members are questioning whether expenses should be keeping pace with revenue increases.

They’re not pointing the finger at any one area or suggesting a particular remedy, like budget cuts. They’re reserving judgment until they look at the numbers. But the numbers may prove interesting.

Between 2002 and 2007, the city’s annual revenues have gone from about $96.7 million to $147 million — an increase of 52%, according to city figures.

The biggest part of that swell is property taxes. The city annexed Newport Coast in January 2002, which pushed property taxes from $28.8 million in 2001 to $33.5 million in 2002.

As new homes have been built and with high turnover in the housing market that only recently slowed down, property taxes have grown to a projected $70 million this year — up 109% since 2002.

But the burst of revenue hasn’t come with corresponding expenses (for example, as in having to provide services for more residents), and that’s what has some council members looking harder.

General fund expenditures grew from $98 million in 2002 to an estimated $150.4 million this year, an increase of 53%. Even without the capital projects that come out of the general fund, which are significantly higher for 2007 than in 2002, the city’s operating budget has risen 46% over the last five years.

“Especially since the annexation of Newport Coast, the city’s population has only grown a small amount,” Henn said. “Overall, staff levels haven’t changed a lot, but the overall expense structure has increased. I’m sure there are a lot of reasons for that, some of which are under our control and some of which are not.”

Daigle, who first raised the issue with the finance committee, said the committee is just in the fact-finding stage, but if there’s money to be saved on operations, it can go to lasting projects for the city.

“Strategically, we need to be able to say what we need to live on and what we want to put aside for some policy initiatives,” she said.