Commentary: City of Newport Beach is fiscally sound

On Tuesday, the City Council approved another balanced budget for the coming fiscal year. This is the latest in a long line of balanced budgets.

Even during the depths of the recession, we were able to keep providing good services without dipping into reserves for operations. I wanted to share with you some of the key items within this budget.

It allocates a near-record $61 million toward community improvements. This is larger than the amount allocated for the entire police or fire department. Newport Beach’s overall quality of life — and your property values — are tied to how our community looks. The quality of our roads, pipes, parks, medians and community facilities helps make us who we are.

In addition to beautification, we’ll upgrade the last phase of our more than 120 traffic signals so that they are timed and managed to make your travels across town easier.

Overall expenditures will go down, falling from $286 million last year to $278 million this year. We are fortunate in that we have a varied tax base to support these expenditures. Our residents contribute a great deal with property taxes and sales tax from purchases made in town. But our visitors contribute a lot too through our vibrant business community. Dollars spent at our restaurants, auto retailers, hotels and shopping areas will provide more than $52 million to the city’s treasury this year.

Yearly bonded debt costs will be about 4.6% of general fund revenues, or $8.2 million, after a subsidy. Overall, remaining bonded debt will fall to $116.5 million by the end of FY 14-15, which is down from the $123.9 million in place in fiscal year 2011-12. We continue to retain our AAA implied credit rating by the three largest rating companies in the United States.

We will also pay a record $27.4 million toward pension costs. This is a good news, bad news cost item. The bad news is that pension costs continue to grow, driven by the roughly 70% of our pension liability that is attributable to persons long since retired from city service. The good news, though, is that the City Council in 2013 started to fix the amortization period for the liability.

That will repay it within 21 and 25 years, avoiding over $100 million in interest. Additionally, this year employees will pay $7.4 million (of the $27.4 million) from their paychecks toward pensions — another record. This is akin to an 8% to 12% cut in salary for each employee, but it also reflects our staff’s commitment to help with the problem.

Full-time employee counts will fall again, to 727. This is down from a high of 833 in 2009. Getting smaller like this has been challenging and controversial — and involved outsourcing our refuse collection system, our parking meters and lots, street sweeping, and even our police helicopter. I haven’t always supported each effort, but it has allowed us to keep investing in our community while addressing our challenging pension issues.

My goal has been to help preserve the quality of life that we all treasure — that includes how safe we are, how our bay functions, how our neighborhoods look, and our ability to get out and stay active in our wonderful coastal community.

I thank all of our residents, our businesses, our visitors and our city employees and contractors for what each does to keep Newport Beach special.

RUSH N. HILL is the mayor of Newport Beach.