City staff projects $12 million revenue uptick, outlines $344 million preliminary operating budget
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Summary
City staff told the Newport Beach City Council on Jan. 31 that revenues for the coming fiscal year are projected to be $12,000,000 (3.5%) higher, driven largely by property-tax growth, while preliminary operating expenditures are expected to rise about $8,000,000. Staff presented a $344,000,000 starting operating budget and a multi-year pension payoff plan.
City finance officials on Jan. 31 told the City Council that the city's baseline fiscal picture for the next year shows modest growth but also pressures that will shape the budget process.
"Revenues are projected to be $12,000,000 higher, representing a 3.5% increase over the current year," Finance Director Jason Aleman said. He told the council more than half of that growth is expected from property taxes, with $7,000,000 of the increase tied to property tax and another $1,000,000 expected from sales tax.
The presentation laid out a preliminary operating budget of $344,000,000 and staff projected operating expenditures growth of 2.4% (about $8,000,000). Aleman cautioned that sales and transient‑occupancy taxes can be volatile; he noted transient‑occupancy tax receipts are projected to decline about $350,000 next year after an anomalous tourism surge tied to regional wildfires in a prior year.
Staff also described capital planning and pension strategy. The preliminary capital baseline includes $33,000,000 set aside for capital and a baseline allocation of $40,000,000 toward reducing the city's unfunded accrued liability (UAL), plus a $5,000,000 discretionary contribution from year‑end surplus. "The pension paydown strategy is reviewed annually," staff said, noting CalPERS investment returns were above actuarial assumptions so far this fiscal year but that future returns are uncertain.
A member of the public asked why the $12,000,000 headline revenue increase did not fully match the $8,000,000 increase in general fund expenditures. Aleman answered that roughly 70% of expected growth comes from property, sales, and TOT receipts and the remaining growth is from a variety of other fee and service revenues.
Next steps: staff described the figures as preliminary, with the finance committee and council to consider program enhancement requests and make adjustments through the formal budget process.