Council adopts 2024-25 budget, focus on public safety, department performance metrics, capital improvement program

By SARA HALL

City Council this week unanimously adopted the budget for the upcoming fiscal year, which focuses on public safety, department performance metrics and the capital improvement program.

Councilmembers voted 7-0 on Tuesday (June 11) in support of the recommended budget for FY 2024-25.

“This is a well-balanced budget, not just on revenue and expenditure, but on present and future needs,” said Mayor Will O’Neill, who has served 10 years on the Finance Committee.

The budget is a primary reason why he ran for council in the first place, he added, after he had joined the committee and saw room for improvement. They were facing “dire straits” when it came to unfunded pension liabilities, he noted, and they have since significantly increased the funded status.

A lot of work went into this, he said, commending the effort from city staff. It’s also nice to have an uncontroversial budget with agreement on priorities and goals, he added, noting a previous split vote on the budget.

He also thanked all of the citizen members who have served on the Finance Committee over the years. It’s a meaningful challenge to work through a budget of this size and complexity, he said.

“Coming in and making sure that we’re taking care of our long-term debt, taking care of the unfunded pension liability, so that future councils aren’t being forced into bad decisions because of decisions we’re making today, matters. And then saving money for future projects we know are coming, really matters,” O’Neill said. “Ultimately, I think we’re really most proud of a budget like this as we maintain the priorities that we’ve always set for ourselves.”

Those priorities include maintaining the core functions of the city and public safety.

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Photo by Mary Hurlbut

Newport Beach City Council this week adopted the fiscal year 2024-25 budget for the city

The budget process is a robust and coordinated effort across all departments, and includes various opportunities for public input, explained Finance Director/Treasurer Jason Al-Imam.

On May 28, council held a joint study session with the Finance Committee to review the proposed FY 2024-25 operating and capital budget. After discussions at that meeting, no changes were made to the budget as presented, he noted. The Finance Committee met again on May 30 to finalize the budget recommendation.

The operating budget totals $440.5 million and the capital budget totals $54.3 million in FY 2024-25, for a total of $494.8 million. Capital spending of $297 million is anticipated over the six years covered by the CIP, subject to change with each future annual budget process.

 Staff explained that the budget includes:

–A stable local revenue base with projected FY 2024-25 property tax revenues growing at an estimated 4% over the prior year due to the Proposition 13 inflationary adjustment, changes in ownership and new construction.

–A healthy level of reserves that include a general fund contingency reserve of approximately $66 million, which is equal to 25% of the city’s GF operating budget.

–Continuation of an aggressive pension payment plan with a level dollar payment of $40 million and the intent to allocate an additional $5 million from the FY 2024-25 remaining surplus of revenues over expenditures, which based on current projections will see the city’s unfunded pension liability eliminated in FY 2032-33.

–The FY 2024-25 budget as proposed includes 775 full-time positions, an increase of nine full-time position from the prior year revised position totals, three of which are conversions of existing part-time positions to full-time positions. Part-time positions would decrease by a total of 2.9 full-time equivalent positions (FTEs) for a total of 146.5 part-time FTEs.

The budget continues to be balanced, with revenues exceeding expenditures and a general fund surplus projected at $5.3 million, Al-Imam said.

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It also includes $40 million that’s allocated toward paying down the city’s pension liability, plus a recommended additional $5 million appropriation from the surplus (for a total payment of $45 million). This is approximately $14 million more than what is required to be paid, Al-Imam noted. The paydown strategy is anticipated to result in eliminating the city’s pension liability in FY 2032-33.

The budget also reflects an updated savings program for long-term capital needs, he added.

The capital improvement program serves as a plan for the provision of public improvements, special projects, ongoing maintenance programs, and the implementation of the city’s master plans. The presentation also focused on the proposed CIP budget of $90.25 million.

Projects in the CIP include improvements and major maintenance on arterial highways, local streets and alleys; storm drain and water quality improvements; harbor, pier and beach improvements; park and facility improvements; water and wastewater system improvements; transportation safety, reliability and traffic signal improvements, and planning programs and studies.

The budget also continues to address the city’s core priorities: Maintaining a prosperous, fiscally sustainable and economically viable city (preserving city’s financial health and managing debt); providing high quality municipal services that residents expect (responding to citizen needs and delivering public services); keeping Newport Beach looking great (maintaining public space and infrastructure), and providing a safe and secure neighborhood (investing in public safety).

Performance metrics across all departments will also be reflected in the final budget document, Al-Imam noted, which fulfills one of the elements set forth in the fiscal sustainability plan. The performance metrics were identified as part of an ongoing commitment to ensure high-quality and efficient delivery of city programs and services, he explained. Finance department staff facilitated workshops with department liaisons to discuss, prepare and determine metrics that aligned with the city’s key goals. According to the staff report, it’s an on-going process intended to measure and set goals.

Councilmember Robyn Grant appreciated staff including the performance metrics.

“That’s a very large step towards additional transparency,” she said.

They also assist both councilmembers and the public in understanding where the dollars are going and what each department is doing, she added.

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Sara Hall covers City Hall and is a regular contributor to Stu News Newport.

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