By Hon. Will O’Neill, Newport Beach Council Member
Economic uncertainty has gripped our nation since March 2020. High inflation and plunges in the stock market (and crypto currency) have rattled us all.
Throughout it all, our city’s budget has remained resilient and focused on providing core services and infrastructure in both the short- and long-term.
Each year brings its challenges and blessings. Clearly we saw more challenges than blessings in 2020 when our projected general fund budget plunged from around $220 million to $199 million.
Thanks to quick and intelligent thinking, our city pivoted and enacted a tiered system of cuts depending on the economic toll the shutdowns would cause. Our city weathered the COVID storm better than most thanks to a combination of high reliance on property taxes and a population willing to support local and keep sales taxes here.
Though we saw a rebound last fiscal year, the revenue trend remained below the line at which we would have expected revenues to grow had COVID not existed. That said, we used surpluses to restore cuts and ensure that core infrastructure and services remained prioritized.
After two years of difficult planning, we have reasons to view our coming fiscal year’s projections with renewed optimism. We also have reasons for concern that the dark clouds of potential recession are on the horizon.
First, the optimism.
We are projecting the largest budget in our city’s history. Our general fund revenues are projected to be nearly $265 million, which is a 13 percent increase over last year. That increase is driven in large part by our main three tax sources: property taxes; sales taxes; and transient occupancy taxes.
Property taxes remain remarkably stable for cities thanks to proposition 13. Brisk turnover and high sales prices have increased our property taxes above anticipated property tax increases. Sales tax and transient occupancy tax revenues have also rebounded. All our core tax revenues have increased without a single tax increase.
Which means that we have the ability to invest in debt reduction, long-term capital improvement projects, and fully funding out reserves for future economic shocks.
We anticipate spending nearly $103 million this coming fiscal year on capital improvement projects. They range from the fun (NB Junior Lifeguard Building) to the important-but-mundane (miles and miles of street repairs).
Finally, we will be rolling forward an anticipated surplus from our prior fiscal year that may exceed $11 million. We won’t know for sure until the Fall, at which time the City Council should have a better view of how our economy has weathered the next few months.
It is an honor to act as a steward for our collective tax dollars and appreciate the stellar efforts of our City Manager, our Finance Director, our Finance Committee members, and our City Council.
Most of all, I appreciate our residents for your trust that must be earned daily.
Hon. Will O’Neill is a Newport Beach City Council Member, Chair of the City’s Finance Committee, and served as Mayor in 2020.
Source: Newport Beach Independent