Newport bracing for budget woes

June Casagrande

An estimated $34 billion state budget deficit could mean six- or

even seven-digit setbacks for the city.

City leaders are anxiously awaiting Jan. 10, when Gov. Gray Davis

plans to release more details of his strategy to deal with the

deficit. Though it’s possible that the governor’s remedy won’t take a

dime from the city’s bottom line, observers are estimating that the

city will feel a hit of anywhere from about $400,000 to $8 million.

“So far, we’re looking all right, but we’ll have to wait until

Jan. 10 before we can know more,” Assistant City Manager Dave Kiff

said.

In some of the gloomier scenarios, the residents of Santa Ana

Heights could see their multimillion-dollar redevelopment nest egg

raided by the state.

State executives have already proposed making up some of their

deficit by targeting redevelopment agencies, such as the one in Santa

Ana Heights. Specifically, the state has proposed taking away some of

the agencies’ set-asides for low- and moderate-income housing. Santa

Ana Heights has $15.4 million stashed to meet its housing

requirement. The state could take a portion or all of that money.

Less likely, but more ominous is the possibility that the Davis

administration could look at redevelopment agency funds set aside for

infrastructure and general improvements.

Santa Ana Heights has $30 million earmarked for upgrading their

aging community, including building a fire station and a community

center. The money accumulated from property taxes was redirected from

agencies such as school districts and the county into the

redevelopment bank account.

If the state takes all or a portion of Santa Ana Heights’

redevelopment funds, improvements to East Santa Ana Heights, which

will be annexed to Newport Beach next year, would have to be paid for

out of the city’s general fund. Building a fire station and fixing

sidewalks, sewer lines and other things would cost the city about $5

million.

City leaders are also waiting anxiously to see whether the state

will take a bite out of the vehicle license fees it collects on

cities’ and counties’ behalf. Even if the governor decides not to

take any of this money, the state legislature could make such a

change to the governor’s proposed budget anytime before the budget is

approved in the summer. Newport Beach is slated to receive about $2.8

million in vehicle license fees this year.

Most likely at this point is that the state will take between

$400,000 and $500,000 in various payments it normally makes to the

city to fund local transportation projects and libraries and to cover

the cost to the city of meeting state mandates such as the state’s

open meeting law.