By Mayor Pro Tem Will O’Neill
As our national economy roils and our state projects a $22.5 billion deficit, the Newport Beach budget continues to strengthen our civic foundations with a healthy outlook.
Our budget’s core strength is based first and foremost on our property tax valuation. When I first joined the Newport Beach Finance Committee in 2015, the city council’s adopted budget anticipated $87.8 million in property tax revenue. Seven years later, our city council adopted a budget anticipating $131.4 million in property tax revenue.
Not one dime of that increase is due to a tax increase. Not once in my time on the City’s Finance Committee (member since 2015, Chair since 2019) have we increased the tax rate on your property tax bill.
Instead, that increase has been due to Newport Beach real estate growing in value thanks in part to solid and sustained local investment in public safety and core infrastructure. And thanks to Proposition 13, the increased valuation has not forced out long-time residents on a fixed income.
Thanks to a strong resurgence in consumer spending coming out of California’s lockdowns during the 2020/21 pandemic, our sales tax has tracked our local businesses’ success.
Not surprisingly, Newport Beach’s sales tax is largely generated from three main industry categories including autos and transportation, general consumer goods, and restaurants and hotels.
I really cannot emphasize enough the value of shopping local rather than online as often as you can. Newport Beach receives more sales tax when you do, which allows for additional resources to be spent on core essentials like public safety, infrastructure, parks, beaches, etc. Additionally, you ensure that storefronts stay full, community charities have sponsors, and local employment enhances human flourishing.
Our hospitality sector has also come back stronger than expected after the steep drop-off in 2020. The newly-overhauled VEA coming on strong and the anticipated opening of the Pendry this year will nicely complement already outstanding local offerings.
Inflationary pressures have increased our labor costs, which account for our budget’s largest expenses. As a service-driven organization, the City recognizes and appreciates the hard work of our employees. We continue to speak with our labor groups about ways to recruit and retain people at the quality levels expected by our residents.
We are also continuing to spend tens of millions of dollars each year to bring down the civic center debt and our unfunded pension liabilities. While Newport Beach continues to be ahead of most cities with our accelerated paydown schedule, the state’s investment arm – CalPERS – continues to shift its emphasis toward social frameworks over investment returns.
Where CalPERS needs to reach a 6.8 percent investment return year-over-year, it lost 7.5 percent to end fiscal year 2022. That net-14.3 percent loss set back cities throughout California, including Newport Beach. That said, our discretionary paydown approach still anticipates fully funding our plan within a decade.
Finally, we remain focused on our core infrastructure projects. We will soon be planning to replace the library and fire station at the end of the Peninsula, designing and constructing an entirely new drainage system on Balboa Island, completing the new Junior Lifeguard Building, and dozens more projects that keep our streets maintained and water clean.
My sincere appreciation goes to my fellow Council Members for entrusting me with the Finance Committee Chair position, our citizen members of the Finance Committee, and our residents.
We serve you; you don’t serve us. And we never forget it.
Hon. Will O’Neill served as Newport Beach’s Mayor in 2020, currently serves as Mayor Pro Tem, and is entering his fifth year as Chair of the Newport Beach Finance Committee.
