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Home My WebLink About01 - FY 2025-26 Proposed BudgetMay 27, 2025 Agenda Item No. 1 FY 2025-26 PROPOSED BUDGET CITY COUNCIL & FINANCE COMMITTEE JOINT MEETING MAY 27, 2025 • Budget Priorities: • Providing high quality municipal services that residents expect • Providing a safe and secure neighborhood • Keeping Newport Beach looking great • Maintaining a prosperous, fiscally sustainable, and economically viable city • Additional Focus • Continued emphasis on elimination of the City's long-term liabilities • Ensuring proper funding of long-term infrastructure maintenance and replacement • Addressing key City Council priorities identified at the February 1, 2025, City Council Planning Session I, CITY OF NEWPORT BEACH Thursday, January 23, Finance Committee Meeting 2025 Saturday, February 1, Special City Council Meeting 2025 Tuesday, March 11, 2025 1 City Council Study Session Thursday, March 13, 2025 1 Finance Committee Meeting Thursday, April 10, 2025 Thursday, May 8, 2025 Tuesday, May 27, 2025 Thursday, May 29, 2025 Tuesday, June 10, 2025 I, i CITY OF NEWPORT BEACH Finance Committee Meeting Finance Committee Meeting Long -Range Financial Forecast (LRFF) uadate City Council Planning Session Early Look at CIP Budget Overview of FY 2025-26 Revenue Projections Proposed FY 2025-26 Expenditure Budget Review Follow-up Discussion of Proposed Budget and Performance Metrics Joint City Council/Finance FY 2025-26 Operating Budget Review Committee Study Session Finance Committee Meeting Finalize Recommendations to City Council City Council Public Hearing I Adoption of FY 2025-26 Budget 3 CITY OF NEWPORT BEACH ANNUAL BUDGET FISCAL YEAR 2025-2026 FY 2025-26 � ALL FUNDS BUDGET OVERVIEW PROPOSED Operating Budget 291,523,400 330,919,923 351,870,115 368,155,904 372,926,118 1.3% Transfers Out 39,075,536 53,035,836 58,859,125 72,312,196 87,856,184 21.5% CIP New Appropriations 35,506,078 71,030,292 29,375,044 54,344,000 66,743,297 22.8% Total Budget 366,105,014 454,986,051 440,104,284 494,812,100 527,525,600 6.6% Note: • Prior year amounts have been restated to align with current accounting for Tideland expenditures. • Amounts for FY 26 are reflective of figures presented in proposed budget book. • Subsequent slide will include detail with proposed budget revisions. CITY OF NEWPORT BEACH EN ERAL FUN D Budget Increase Decrease) Expenditures 1 Pol.ice...O.T..fo.r. d.d.itio.n.al...Enforce.me.nt..at... d.1�1...duri.n.o...PeaK. ea.sa.n................................................................................................................ ..............................................9..1.-.679.... Poll-ce Tory Related Fees for Tow 0 erator Reimbursements ........................................................................................................... p................................................................................................................................................................................................................................................................................ $ 100-000 3 Updated Newppr .Beach Fire Association NNBFA} �r10U................................................................................................................................................; ................................................................... ..................................... -.1.7.$-.1..55...1.... ..f1.p.dated..s.so.ci.ati.on...of.N.eno.rt...Be.ac.h..0.ce.an...Life.ou.a.rdo...fN.BO..}...O.f1QQ.L)..MQU .......................................................... ........................................................................ 591-660 6 Junior Lifeguard Video Production Services ........................................................................................................................................................................................................................................................................................................................ 6 E ansiol7 o..the Police Mounted Program...................................................................................................................................................................................... .............................................. .0.:000.... 7 Fire Dep.artm.e.nt..On-Call Health Bcreen Bervices ........................................................................................................................................................................................................................................................................................................................................................ $ 91-000 Total Expenditure BudgetChanges $ Revenue Measure M Funding for Newport Dunes Infiltration Basin & Big Canyon Restoration Project $ ....................................................................................................................................................................................................................................................................................................................... Total Revenue Budget Changes Total Other Fund Changes: I, CITY OF NEWPORT BEACH 3.09 T-902 8.373.0 .6 ................................ 8.373.046 S 8.373.046 Operating Budget Transfers Out 291,523,400 330,919,923 39,075,536 53,035,836 351,870,115 368,155,904 376,024,020 58,859,125 72,312,196 87,856,184 2.1 % 21.5% CIP New Appropriations 35,506,078 71,030,292 29,375,044 54,344,000 66,743,297 22.8% Total Budget 366,105,014 454,986,051 440,104,284 494,812,100 530,623,501 7.2% • 2.1 % growth in operating budget, primarily related to: • Routine personnel costs such as cost -of -living adjustments and merit increases • Proposed Program Enhancement Requests / Contract CPI updates • 21.5% growth in transfers out, primarily due to increases in transfers to FFP Fund, Water Capital Fund, and Tidelands. • 22.8% growth in CIP projects for street improvements, park projects, tidelands projects, etc. Note: • Prior year amounts have been restated to align with current accounting for Tideland expenditures. • Amounts for FY 26 on this slide are reflective of figures presented in budget book with inclusion of proposed budget revisions. CITY OF ' Additional proposed budget revisions may be included as negotiations with various bargaining units continue. NEWPORT BEACH 7 General Fund 246,163,632 276,111,174 293,917,485 311,258,638 321,498,570 3.3% Tidelands Fund 20,727,144 20,978,717 23,312,029 24,579,410 25,790,120 4.9% Water Enterprise Fund 27,933,241 32,069,765 33,623,346 38,528,044 48,213,050 25.1 % Wastewater Enterprise Fund 3,956,840 4,884,651 5,097,917 5,321,136 5,868,049 10.3% Other Funds 49,408,985 49,911,452 54,778,463 60,780,872 62,510,416 2.8% 348,189,842 383,955,759 410,7299240 440,468,100 463,880,204 5.3% Note: Amounts Include Operating Expenditures, Transfers and Proposed Budget Revisions • General Fund growth of 3.3% outlined in detail on subsequent slides • Water Fund increases largely due to transfer to capital fund for CIP CITY OF NEWPORT BEACH FY 2025-26 GENERAL FUND BUDGET OVERVIEW $350.00 c o $300.00 $250.00 $200.00 $150.00 $100.00 $50.00 FY 2023-24 FY 2024-25 Actuals Projected ■ Property Tax ■ Sales Tax ■ TOT I, CITY OF NEWPORT BEACH FY 2025-26 Proposed Budget Transfers ■ Others 2024-25 Projected $ 323.4 million 2025-26 Proposed $ 332.5 million • Projected revenues for FY 2025-26 are $9 million (2.8%) higher than amounts currently projected for FY 2024-25 • Primary drivers of revenue growth due to: • Property Tax + $7.4 million (4.8%) • Sales Tax + $2.1 million (4.6%) • Transient Occupancy Tax + $1.3 million (4.1 %) 10 • 72% of General Fund Revenues are Property Tax Revenue derived from three sources of revenue: w $155 _.� - • Property tax revenue represents � $128 $115 $138 $146 $153 $160 4 8 % Of General Fund revenues $95 $123 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 and is projected to increase 4.8% Actual Actual Actual Actual Projected Projected in FY2025-26. Sales Tax Revenue $50 • Sales tax revenue represents 46 14.2% of General Fund revenues ° $38 $47 $43 $45 $47 and is projected to increase 4.6% 2 $34 $39 in FY2025-26. 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Actual Actual Actual Actual Projected Projected • Transient occupancy tax revenue represents 10.2% of General Fund TOT Revenue, Net of Payments to $ 3NB $34 revenues and is projected to $34 $30 increase 4.1 % in FY2025-26. u) $30 $27 o $26 $20 75; $18 $17 $14 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Actual Actual Actual Actual Projected Projected CITY OF NEWPORT BEACH 2024-25 Adopted Budget $ 311.3 M 2025-26 Proposed Budget $ 321.4 M The Proposed Budget for FY2025-26 reflects: • $10.1 million increase over FY 2024-25 Adopted Budget, or 3.3%. • $40 million allocated to paying down the City's unfunded pension liability I, CITY OF NEWPORT BEACH $350 $300 $250 U) o $200 $150 $100 $50 $0 FY 24-25 FY 24-25 FY 25-26 Adopted Amended Proposed Budget Budget Budget ■ Salaries & Benefits ■ Non -Personnel ■ Transfers 12 � Mor 0 1 Proposed Budget Revisions 3,006,902 Decrease in Internal Service Charges (OPEB) GF Program Enhancements CPI increases to M&O Budgets Other Routine Personnel (COLA, PERS rate changes) Transferred $20k for CASP from GF to Restricted Programs Increase in base Transfers (FFP, HBMP) Decrease in base Transfers (Tidelands & Submerged Lands, Debt Service) Remove One -Time FY25 Enhancements Flock ALPR Onqoinq Cost Decrease (19,500) -91 I, CITY OF NEWPORT BEACH (1,719,401) 1,533,106 2, 588, 682 805,670 (20,000) 5, 638, 755 (1,665,282) 1.0% -0.6% 0.5% 0.8% 0.3% -0.01% 1.8% -0.5% -0.01 % 13 I, CITY OF NEWPORT BEACH Uninsured Claims Fund General Fund General Fund General Fund General Fund General Fund IT Fund IT Fund General Fund General Fund General Fund General Fund General Fund General Fund General Fund City Attorney Community Development Community Development Community Development Community Development Community Development CMO/IT CMO/IT Finance Finance Finance Fire Fire Fire Fire Prosecutorial Services Re -Class FT Mgmt Analyst to Sr Mgmt Analyst Re -Class Senior Planner to Principal Planner Budget Position at Associate Planner Level New Vehicle Full Time Management Analyst Addition of Cybersecurity - IT Engineer Re -Class Sr. IT Analyst to GIS Coordinator Re -Class Mgmt Analyst to Sr Mgmt Analyst Conversion of Buyer to Senior Buyer Additional 0.10 FTE to Part Time Sr Fiscal Clerk Fire Station Maintenance Account Consolidation and Increase Increase EMS Supply/Billing Budgets ISF Equipment Contribution Increases Title Change: Training Battalion Chief to Administrative Services Division Chief 130,000 11,364 10,499 11,614 30,500 140,056 218,628 10,060 11,309 17,437 82,300 50,000 U I Y Vf NEWPORT BEACH General Fund General Fund Tidelands & Submerged Lands Fund Tidelands & Submerged Lands Fund Tidelands & Submerged Lands Fund Tidelands & Submerged Lands Fund General Fund General Fund General Fund General Fund General Fund General Fund General Fund General Fund General Fund Fire Lifeguard Officer PT to FT Conversion 89,949 Fire Senior Fiscal Clerk to Fiscal Specialist (616) Harbor Additional (Used) Patrol Vessel 20,000 Harbor Administrative Assistant to Management Analyst 5,900 Convert Code Enforcement Trainee Positions to CEO I and CEO 24,558 Harbor 11 Positions Harbor Increase Training and Travel Budgets 13,000 Human 75,000 Resources Increase Recruitment and Physical Budgets Human 10,000 Resources Increase Wellness Program and Benefits Budgets Library 0.96 P/T Library Clerk II 64,086 Cultural Arts Division Funding for 3-Year Sculpture Exhibition 79,080 Library Period Police Increased Flock ALPR Data Storage 21,900 Police Tactical Emergency Medical Services (TEMS) Program 5,000 Police Wildlife Care Expenses 27,600 Police LEADS Online Database 15,561 Police Vehicle Washing Expenses 35,262 JF NEWPORT BEACH Asset Forfeiture Police Ongoing CIC Technology Support General Fund Public Works Additional Staffing and Funding to Facilitate Facilities Maintenance 82,948 General Fund Public Works Facilities Maintenance 125,000 Reclass PT Maintenance Aides to PT Maintenance Workers to Support 33,446 General Fund Public Works Enhanced Summer Maintenance General Fund Public Works Reclass FT Senior Civil Engineer to FT Management Analyst (46,199) General Fund Public Works Municipal Operations Divisions Classification Study Report 28,639 Reclass Equipment Operator II to Public Works Crew Chief and Enable 3,948 General Fund Public Works Independently Functional Concrete and Repair Crews General Fund Public Works Flex Position Budget Update -Analyst Series 6,993 General Fund Public Works Increase Parks Hazard and Mitigation Account 250,000 General Fund Public Works Increase Professional Services Budget for Contractor Inspector Needs 150,000 Equipment Additional Equipment Operations Budget for Automobile Parts, Materials 75,000 Fund Public Works and Supplies, and Outside Maintenance Labor 4d, CITY OF NEWPORT BEACH Reclass Park Patrol Officers to Code Enforcement 6,717 General Fund Recreation and Senior Services Officers and Recreation Supervisor General Fund Recreation and Senior Services Lecture Hall staffing and maintenance 47,789 General Fund Recreation and Senior Services OASIS Garden Club Supplies (1,300) General Fund Recreation and Senior Services OASIS Fitness Center Revenue/Expenditure Increase General Fund Recreation and Senior Services North Star Beach Summer Restrooms 18,000 Wastewater Fund Utilities Sewer Video Inspection Services - Contract/SSMP 166,375 Reclass (3) Equip Operator II & (1) Maint Wrk to Sr. Util 29,163 General Fund Utiltiites Specialist and Util Specialist Water Fund Utilities Convert Dept. Assistant to Management Analyst 49,362 General Fund Total Grand Total I, CITY OF NEWPORT BEACH 18 General Fund Corn munityDevelopment Re`cIass ManagementAnalysttoSeniorManagementAnalyst - - Community Development Re -class Senior Planner to Principal Planner - - CommunityDevelopment Re-cIass AssistantPlannertoAssoc iate Planner - - Community Development Increase ManagementAnalyst 1.00 - Finance Re-cIassManagementAnalysttoSeniorManagementAnalyst - - Finance Convert Buyer to Sen i or Buyer - - Finance Addition of 0.10 FTEto PartTimeSr Fiscal Clerk - 0.10 Fire Tra i n i ng Batta I i on Ch ief to Ad m i n istrative Servi ces Divisi an Ch ief - - Fire PartTime Lifeguard Officerto Full Time 3.00 (2.251 Fire Senior Fiscal Clerk to Fiscal Specialist - - Library Increase PartTime Library Clerk - 0.96 Library Transfer Facilities M a i nten a n ce Tec In n icia n to Public Works (1.00) - Public Works Addiiton of Public. Works Crew Chief 1.00 - Public Works Facilities Maintenance Worker to Facilities Maintenance Technician - - Public Works Increase Full Time Facilities MaintenanceTechnician (from Li brary) 1.00 - Public Works Increase Full Time Facilities MaintenanceTechnician (from RSS) 1.00 - Public Works Increase PartTime Facilities Maintenance Technician (from RSS) - 0_45 Public Works Increase PartTime Facilities Maintenance W orker II - 0.30 Public Works Part Time Maintenance Aide to Maintenance Worker - - Public Works Water quality Coordinator to Management Analyst (Sustainability Coordinator) - - Public Works Full Time Equipment Operator I to Maintenance Operator - - Public Works Full Time Equipment Operator II to Senior Maintenance Operator (9) - - Public Works Full Time Maintenance Worker I to Maintenance Worker (7) - - Public Works Full Time Maintenance Worker I to Can crete Finisher - - Public Works Full Time Maintenance Worker II to Full Time Maintenance Operator (6) - - Public Works Full Time Senior Maintenance Operator to Public Works Crean Chief - - Public Works Full Time Assistant Management Analystto Full Time ManagementAnalyst - - I, CITY OF NEWPORT BEACH 19 General Find(cant-) Rec reatlon and Senior Services Pa rt Time Pa rk Patro l Off Ice r to {ode Enfo rcerne rt Offlcer l - (Q40) Rec reatlonaA5eNor 5ervices FulITImeParkPat rolOfficer toCode Enforcernentoffk:erI - - RecneatlonandSenlonSenvlces F ul l Tl me lead Pa rk Pat ro 19ffcer t0 Rec rea tic, n 5 upervlsor - - Rec reatlonand5eNor 5ervkes In[ rease Pa rt Tlrne Se No r Recreat to n Leader - CL50 Rec reatlonaA5eNor 5ervices IncreasePartTlrnepsslstantRec reatlanCoo rdlnator - Q75 Rec reatlonaA5eNor 5ervIces Decrease FuIITImeFacllltlesMaIntenanceTech nkWn[TransfertoPwf (L.CC) - Rec reatlonandSeNor 5ervlces Decrease Pa rt Tlrne Facl lit les Ma lnte na nce Wo rker l I[Tra nsfer to Fwj - (C—) Litllltles FulITImeEqulprnent43peratorIIto5enlarUt]Ittles5pe[Wllst[3f - - LItllltles FulITImeMalntenanceWorker ItoUtllltles5pecialist - - TotalGeneralFund 5.00 0IL" WgtEr LitIlltles Part Time DepartrnentAsslstanttoFulITlnteManagementAna fyst L.-X (1.07f Total Water Fund L.00 11.00) InforrrationTechnology InformatlanTechnology 5enlorITAna fysttoGl5Coardlnator - Informatlan Technology FulITlnle IT Engineer-Cybersecurity L.-X Total IT Fund L.00 - Tidelands Harbar CornrertAdminstratAreAsslstanttoManagernentAna fgst - - Harbar PartTimeCodE- EnforcernentTralneetoCodeEnforcenlentOfficerI - - Harbor Part Time Ccds E nfo rcernent Tra lnee to {ode Enfo rcerne nt Officer II Harbor Reuss Fla rbar5ervlces Workerto Fla rbar5afetyofflcer - - Harbor Reuss Fla rbar5ervlces Worker, Lea dto Harbor5afetyOfficer, Lead - - TotalTldelands Fund I, CITY OF NEWPORT BEACH 20 1000 :11 700 NO 500 m 925 877 886 888 895 902 916 867 855 867 M 0 q9j 927 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 I, CITY OF NEWPORT BEACH 21 I, CITY OF NEWPORT BEACH 22 Beginning Unrestricted Fund Balance 15,752,275 P - Operating Revenues & Transfers In Operating Expenditures & Transfers Out Repayment of Advances Prior Year Resources Carried Forward Non -Operating Transfers Out Preliminary Ending Unrestricted Fund Balance I, CITY OF NEWPORT BEACH 323,420,032 332,457,397 332,457,397 - (315,826,017) (318,400,668) (321,498,570) (3,097,902) 1,250,000 1,250,000 1,250,000 - 6,786,845 - - - (13,924,578) - - - 17,458,557 15,306,729 12,208,827 (3,097,902) 23 I, CITY OF NEWPORT BEACH 24 • In November 2024, CaIPERS announced a 9.3% investment gain for Fiscal Year 2023-24. • The Actuarial Valuation at June 30, 2024, will not be available until August 2025. However, the CaIPERS Pension Outlook tool has been utilized to estimate the City Is projected funded status as of June 30, 2024, which reflects the impact associated with the 9.3% investment gain. June 30, 2020 1 June 30, 2021 June 30, 2022 June 30, 2023 June 30, 2024 Unfunded Liability $ 333,046,257 $ 223,438,444 $347,832,174 $341,009,386 $295,190,000 Funded Percentage 69.2 % 79.3 % 70.9% 72.5% 76.9% �i Investment Return 4.7 % 21.3 % -7.5% 6.1 % 9.3% I, CITY OF NEWPORT BEACH 100% 95% r^ 90% 85% 80% 75% 70% 65% 60% 55% 50% ,,68.7% �0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 oFunded Status CaIPERS Investment Returns Discount Rate (Expected Return) I, i CITY OF NEWPORT BEACH 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% TURNOVER OF EMPLOYEES INTO TIERS 2 AND 3 5%/0h"14016 %■23 6% ` 7 /o q 35% 35% 41% o° 7% lq-- 47 /0 51 % 55 7% 7% - 7% 7 -70%-64 7% EM ` , 7% 7% 06% i2% ° 46 /0142%1-,zoo), • The Finance Committee and City Council revisit the UAL paydown strategy as part of each year's budget process • In the FY 2024-25 Adopted Budget staff recommended a $40 million per ear, payment from the baseline budget plus an additional �5 million added as a supplemental appropriation at the time of budget adoption. • For FY 2025-26, staff recommends a $40 payment from the baseline budget plus ar added as a supplemental appropriation at • Results in anticipated paydown in FY 2032-33 6.8% on investments over the next 10 years. I, CITY OF NEWPORT BEACH million per additional year-end. year 5 million assuming CalPERS earns 28 • Proposed General Fund budget for FY 2025-26 is balanced • Updated and comprehensive savings plans for long-term capital needs • Maintained pension UAL payment of $40 million, recommending funding additional $5 million with year-end surplus, resulting in paydown of the liability in 2033 • Structural General Fund budget surplusof $12.3 million is projected for FY 2025-26 recommended to be maintained until negotiations with bargaining groups are complete. I, CITY OF NEWPORT BEACH 29 QUESTIONS?