Growing revenue means hiring, fewer debt payments for Newport

Newport Beach’s proposed spending plan for the upcoming fiscal year makes room for new staff and accelerated payments to the city’s pension obligations.

The City Council took its first look at the $282.4-million preliminary budget during a study session Tuesday. The spending plan represents a growth of $3.8 million over last year’s revised budget.

Projected general fund revenue is up $10.8 million from the previous fiscal year, to $191.74 million. Property tax revenue, projected at $87.9 million — an anticipated increase of 4.7% from last fiscal year — remains the city’s largest source of revenue, followed by sales tax receipts and transient occupancy taxes.

City staff projects a 13% increase in sales tax income and 6.4% increase in transient occupancy tax revenue this fiscal year, according to budget documents.

Anticipated general fund expenditures are $183.5 million, up $2.3 million from last year’s revised budget. The lion’s share of the budget — $124.8 million — is expected to go toward employee salaries and benefits.

This fiscal year, the city has budgeted to hire three new police officers and a sergeant to increase patrols on the Balboa Peninsula at an approximate cost of $800,000. The expense of the officers is anticipated to be funded through a 25-cent increase in parking rates for the majority of meters on the peninsula, budget documents show.

Salaries and benefits for four new staffers to work Marina Park, which is expected to open in 2016, are also reflected in the spending plan. Overall, salary costs are expected to increase by $1.2 million this fiscal year.

The city will spend $21.5 million this fiscal year to set in motion the council’s plan to more quickly pay down the city’s $257-million unfunded pension liability. Unfunded pension liability is the projected difference between the amount the city will owe in retirement benefits and the money it will have to fund them.

The $9-million increase in payments will allow City Hall to get caught up on the debt 11 years faster than if it stayed with its previous 30-year payment schedule, according to the finance committee.

New spending on capital improvement projects is set at $25.1 million, along with $41.6 million reallocated from last year’s budget. The money will go toward the replacement of the city’s sea walls, repairs to the Newport Pier, various street improvements and Semeniuk Slough dredging.

The city will put $3.4 million into its reserve fund.

The council will conduct a public hearing on May 26. The 2015-16 fiscal year begins July 1.