Newport Beach officials present balanced $348M general fund budget with $40M pension paydown

City staff presented the proposed FY 2026–27 operating budget to the City Council and Finance Committee on May 26, outlining a citywide operating budget of $475.5 million and a general fund operating budget of approximately $348.4 million.

Administrative Services Director Jason Aleman said the all‑funds budget represents about a 3% increase over the prior year and that the capital improvement program (CIP) totals $95 million, roughly half of which is rebudgeted from current projects. He told the council the water enterprise contemplates a $10 million loan from the Orange County Water District that staff will bring forward for council approval in the coming weeks.

Deputy Finance Director Peter Kemp said the proposed general fund is up $26.7 million, or about 8.4%, from the current adopted budget. Kemp said the single largest driver of the increase is scheduled personnel cost growth (about $19.6 million), followed by internal service adjustments and capital transfers. The proposed budget includes a $40 million baseline allocation to pay down the city’s unfunded pension liability and staff recommended an additional $5 million supplemental appropriation at fiscal‑year end.

Kemp also summarized proposed program enhancements totaling roughly $1.5 million in the general fund and $3.5 million across all funds, including additions such as one firefighter‑paramedic on a ladder truck, two police officers (one assigned to Fashion Island and one to Corona Del Mar), expanded library digital resources, a new lead harbor safety officer funded from Tidelands, and rate studies for water and sewer systems.

Council members praised the long‑term planning behind the budget and asked for follow‑up details. Council member Grant requested a clearer comparison to CalPERS performance; staff said monthly direct comparisons are difficult and recommended relying on fiscal‑year reporting. Council member Weigand pressed staff to confirm whether transfers of employees (for example park patrol to police) would affect bargaining unit assignments; staff said human resources and bargaining groups will be consulted and that staff will report back with details.

Members of the public also raised concerns. Jim Mosher said the public needs clearer documentation of proposed line‑item revisions that will accompany the budget when it returns for approval in June and flagged a city policy that allows the city manager to increase certain line items by $10,000 without council action. Laura Curran thanked staff for improved online transparency but reminded the council that many items in the program enhancements still require separate approvals before funds are spent.

The council did not take a final vote on the overall budget at the May 26 meeting; staff will return with the budget adoption item and any proposed revisions for formal action in June.