Layoffs, Reductions in Police and Lifeguard Services May Be in Store for Newport Beach

As Newport Beach officials begin the arduous task of finalizing a city budget for fiscal 2011-12, projected numbers foretell a bottom line that cannot be reached without layoffs and spending cuts in many city departments, including proposed reductions in police, fire and lifeguard services.

Among the public safety cuts being considered are the elimination of DARE, a police program aimed at educating youths on the dangers of drug abuse; the discontinuance of the police practice of taking reports on non-injury traffic accidents; and a reduction in the number of full-time city lifeguards.

In the first study session of the financial planning season, City Manager Dave Kiff told the City Council last week that he expects revenue to increase during 2011-12, but also projects city costs to rise by about $8 million.  Preliminary budget figures project general fund revenues at about $149 million for the fiscal year, but anticipate expenditures for the same period to be just sightly less, $148.4 million.

“It’s important, as we approach this, to say we have an expenditure problem and not so much a revenue problem,” Kiff said. “You’ve heard folks at different levels of government say that, and I’m convinced that’s the case here, too.”

Although hammering out a budget is much like trying to hit a moving target, in which officials are forced to rely on ever-changing projections of income and costs, the early indications suggest that layoffs and other cuts in spending, including a 5 percent budget reduction in police and fire department costs, may be unavoidable.

Of course, much could change before the City Council is presented with a final budget for approval at its June 15 meeting.

City staff projects that revenues from sales, property and transient occupancy taxes will increase. (Scroll to the bottom of the story to see a chart of the projected revenue changes over the last few years.)

But because of upcoming maintenance goals, rising pension costs and a weak economy, city officials worked under the assumption of an $8-million increase in costs that may, or may not, be offset by an increase in revenues.

This could lead to a projected 1.05 percent net increase over last year's actual budget, according to Kiff. 

Other projected expenditure increases include the absorption of about $175,000 in cuts from the state for city libraries, as well as $1 million for maintenance of the city’s information systems and another $1 million to maintain the city’s streets, alleys and parks.

Expenses for salaries and benefits account for almost 70 percent of the general fund budget, according to Kiff.

“We also have ... some unemployment costs coming up, because you’ll see there are layoffs proposed in this budget," Kiff said.

Some of the proposed layoffs could take place in administrative services, the city manager’s office and, possibly, public works.

“We’re not in this alone,” Kiff said. “Everybody’s looking at the same numbers that we are basically.”

As for public safety, both the city police and fire department chiefs proposed cutting about 5 percent from their budgets—about $2 million for police services and about $1.5 million for fire safety and lifeguard services.

At the May 10 study session, Chief of Police Jay R. Johnson said the changes in his department could be accomplished without layoffs.

“Now I doubt that there are many police chiefs who say they can cut $2 million from their budget while at the same time improving on public safety,” Johnson said at the study session.  “But that’s exactly what I’m going to say to you today."

Johnson's proposal includes implementation of a new officer scheduling system, discontinuance of the DARE program and the practice of taking accident reports for non-injury traffic accidents, and the transfer of more officers to patrol positions.

Newport Beach Fire Department Chief Mike Morgan proposed a number of changes as well, including staffing reductions during less busy times of the year and reducing the number of full-time lifeguards from 13 to eight.  Currently there are 16 positions lifeguard positions budgeted, but some are vacant.

City staff is still reevaluating the figures and working with employee unions to come up with new numbers.

The next budget study session is scheduled May 24 at 4 p.m. in the Council Chambers, 3300 Newport Beach Blvd.

The final study session will be at 4 p.m. on June 15, before the City Council meeting at which it is expected the final budget will be adopted by the council.

To see a copy of the initial presentation on the budget proposals, click here.

Chart of main sources of city income

Revenue (in millions)           FY 08  FY 09   FY 10  FY 11  FY 12

Property Tax:                         $67.4   $70.1   $72.0   $71.6   $72.2

Sales Tax:                               $30.5   $25.9   $22.4   $24.8  $25.5

Transient Occupancy Tax:   $12.8   $11.2    $11.4    $12.1   $12.8

Total:                                       $110.7 $107.2 $105.8 $108.5 $110.5

Source: City of Newport Beach