Layoffs, Pension Reform Discussed at Corona del Mar Chamber Meeting

Pension reform, layoffs and restructuring were at the top of the agenda Thursday at the Corona del Mar Chamber of Commerce meeting.

Tracy McCraner, Newport Beach's administrative services director, discussed an overview of the fiscal year 2011-12 budget and highlighted examples of how the city plans to cuts costs and increase revenue, which include pension reform, employee restructuring and layoffs. 

Pension Reform

"The city's been very active in looking at pensions," McCraner said. "We lost 25% of our portfolio—$125 million. It will take years and years to make that up."

The portfolio is the city's investment in the Public Employees' Retirement System, which, due to the recession, suffered a significant loss. Although the city has a strict and conservative investment policy, more restrictive than the state's, officials are reexamining their investments in the retirement system.

"I don't think they are doing anything fraudulent or dangerous," McCraner said. "I just think they got caught up in all of this."

Emanuel Patrascu of State Sen. Tom Harman's office took part in the chamber meeting and advised, "We need pension reform. Everyone at the state office ... knows we need pension reform."

According to McCraner, Newport Beach is considering cutting full time-positions and replacing them with part-time positions in an effort to save on pensions. Although adding part-time positions would relieve budget constraints, there would be fewer people paying into the pension system. The city is considering laying off 19 people.

By 2013-14, the city will have paid about $25 million into the Public Employees' Retirement System, a $7.3-million increase from 2009-10. The goal is to reduce employer-paid contributions and payroll.  

Saving the City by Saving Money

In addition to pension reform, the city is looking to make its departments more efficient. "We need to be vigilant," McCraner said. "We are not out of the woods yet.  We are looking to outsource cheaper and better."  

• Newport Beach is looking to save money by outsourcing such jobs as street-sweepers and landscapers.
• The city will have to absorb state cuts by reducing library services by $175,000. 
• The city is considering partnering with the Huntington Beach Police Department for helicopter service. Newport Beach currently pays $1,800 per hour for helicopter use, but Huntington Beach has offered the service for $700 per hour.
• The issue of has yet to be resolved. Replacing full-time lifeguards with part-timers is one option, but lifeguard captains say the full-time guards should be retained because of their high level of experience and training.

Top Revenue

Property tax is still the biggest form of revenue for Newport Beach. Property taxes bring in $72 million—half of the general fund.  "Our accessed property values have always gone up, even in this recession," McCraner said. "The receipts have gone down, but not the accessed value." 

The next-highest revenue source is the sales tax, which generated $22 million in 2010. "The Pelican Hill resort is the top revenue-generating hotel," McCraner said.