Newport Beach Braces for Economic Cuts

Lower tax revenues, falling home sales and values, and an overall slow economy will slash about $8 million off the Newport Beach city budget this fiscal year, city manager Dave Kiff announced last week.

Much of the cut has been attributed to a drastic drop in tax revenues, as more people lost their jobs, fewer people got hired, and fewer homes got sold compared to recent years. According to Kiff, the city will feel aftereffect of the crisis for some time.

A recent city report showed that Newport Beach sales tax revenues fell by 18% last fiscal year and has so far slumped another 8.4% this year. Hotel occupancy, a significant source of tourism revenue for the city, were also down by 23%.

Prior to the housing market crash, Newport Beach was experiencing steady growth ranging from 6% to 12% per year, according to Kiff. This year, however, reassessments and recovery projects may keep the local economy stagnant.

Leslie Daigle of the Newport Beach Council said that while homeowners will benefit in the form of lower property taxes, it will cut a significant gap in the city’s finances, which may affect the quality of services it offers.

The city is planning an early retirement and reshuffling program for municipal employees, a move expected to save around $3 million a year. The program will cut the workforce from 840 at the start of the year to about 740, according to Kiff.

Kiff also said the city may have to stop or downsize existing programs to cut down on expenses, but declined to specify which ones. He said that while some of the choices will be tough, it will leave Newport Beach a more efficient and competitive city.

 

Earlier in Newport Beach Real Estate News:
Newport Wins Award for Best Beaches
Newport Beach Home On Private Island Hits Market for $28 Million
Old Newport Beach Building To Be Transformed