City financial report is “impressive”
Newport Beach City Councilman Jeff Herdman
The City of Newport Beach recently received its financial ratings report from Fitch Ratings. I was so impressed with the report that I wanted to share some of its findings with you. Below I have taken statements from the report to demonstrate the flavor of the financial condition of our City:
This rating reflects notable financial flexibility and low liability levels.
Consistent tax base performance enhances the city’s strong revenue growth prospects, and a well-controlled expenditure framework.
Conservative financial management will enable the city to maintain financial stability and solid reserves in a potential economic downturn.
The extensive use of pay-as-you-go capital financing and planned pension overfunding to eliminate the outstanding liability support the City’s low debt condition.
The City reliably maintains reserves which generates a low potential decline of the City’s revenues in an economic downturn, and maintains ample fiscal tools to address any future financial stress.
Well-managed long-term liabilities in relation to pension payments to address their city’s unfunded liability. The report provides the following evidence for the above findings:
The local economy benefits from the City’s mature, wealthy tax base and strong employment.
Home values are among the highest in the country.
Unemployment is exceptionally low.
The City benefits from diverse revenue sources.
The City’s mature tax base, stable demographics, high personal incomes, and focus on economic development have contributed to strong historical general fund growth.
The unfunded pension liability constitutes just under one-third of the long-term liability. The City has taken recent action to mitigate the effect of escalating pension costs and eliminate their unfunded pension liability within 20 years, thus placing a low burden on the City in terms of long-term liability.
Conservative budgeting and sound financial policies have resulted in a trend of general fund operating surpluses and strong reserve levels.