City to expect $8M in losses

Newport Beach faces a projected $8-million deficit budget gap this fiscal year because of slumping sales and hotel tax revenues, city officials said Wednesday.

City Manager Dave Kiff says he’s reviewing various ways to keep the city out of the red by trimming municipal expenses to stave off the projected shortfall. The strategies include offering early retirement to some municipal employees, extending the city’s computer replacement program, and trimming travel and meeting expenditures.

“I’m not taking anything off the table. I’m starting with the widest range of options,” Kiff said.

Kiff will likely ask the City Council for permission to offer an early retirement incentive package for city employees who qualify.

Trimming the city’s payroll by not replacing workers who retire could also help the city run more efficiently in the long run, Kiff said.

“We can use this as a management tool to see how we could be doing things better,” he said. “We do see an opportunity in the financial crisis.”

The city also could look at asking its employees to take on more of the costs of their health-care benefits and similar cost-saving measures, Kiff said.

The latest sales tax figures from the second quarter of 2009 show that revenue fell about 8% from the second quarter of 2008, said Dennis Danner, administrative services director for Newport Beach.

Transient occupancy taxes, which the city collects from hotels, were down about 23% for the second quarter of 2009, Danner said.

“We’re talking the second quarter of 2008 — before the financial meltdown occurred,” Danner said. “We kind of expected it to be down some more, and we’re just reacting to the information we have received.”

Newport Beach also could look to the private sector to provide some city services in an effort to trim costs, Kiff said.

The city is considering a pilot program that will outsource part of the city’s street sweeping services to a private contractor.

Newport Beach had projected sluggish sales tax revenues and flat hotel taxes this fiscal year.

The city had slashed city department budgets by 2% and cut back on spending for capital improvement projects to make up for this fiscal year’s frigid economic forecasts.

The projected $8-million gap is in addition to Newport Beach’s $6-million loan to the state of California. Newport Beach and other California cities and municipalities are lending Sacramento the cash to plug the state’s massive budget gap.

The $6 million will likely come out of the city’s reserves.