Commentary
One of the fun components of reviewing annual comprehensive financial reports, which is a very time-consuming “hobby,” is when you see a trend that needs to be complimented.
The ranking of Orange County’s 34 cities for the year ending June 30, 2023, was just released. When reviewing the rankings for the past seven years, there is a city that really stands out and sets itself apart as a fiscal success story.
What do we find that is noticeable and worth talking about? The city of Newport Beach and its ascension in the rankings, compared to other cities in the county.
The cities were ranked by their unrestricted net position (found in their annual comprehensive financial reports) divided by the population, providing a useful tool for demonstrating a city’s fiscal health. The negative balance sheets are shown below in parentheses, while the positive one is not.
Seeing the city improve from 32nd place to 17th place since 2017 prompted me to contact some of Newport Beach’s current and former city councilmembers for the city’s “secret sauce.”
Assemblywoman Diane Dixon (R-Newport Beach), a former mayor, provided some history, going back to Councilmembers Keith Curry and Mike Henn. She credits them with bringing fiscal discipline and structure by implementing a simple strategy of creating a “30-Year Facilities Financial Plan.” It identified every building owned by the city and provided a maintenance, repair, and replacement plan with a goal of having no surprises. This seems like good common sense, but is so rare with local governments.
The city also established a finance committee, comprised of three city councilmembers. When Scott Peotter was on the council, four financially focused public members were added, increasing it to seven members. The meetings are open and transparent. One goal was to achieve a reserve of 25 percent of the general fund. Another goal was to pay down the defined benefit pension plan unfunded liability to zero by the years 2029-2030.
Taking a very conservative approach, the annual budgets included all of the necessary staff positions, even though some might have been vacant at the time. When the city had a budget surplus, half would be allocated to retiring pension and other debt, and the other half would go to public works on a one-time only basis.
Should a necessary building project be identified, like a fire station or library, it would be fully planned, with a multi-year timeline and budget, from concept to completion. When a new city manager is selected, having a strong background in the finance area is a requirement. And rightsizing city staff was a critical priority, reducing the number of employees on June 30, 2009, from 832, down to 736 five years later.
This emphasis continues to this day. When I contacted the current mayor, Will O’Neill, he forwarded to me the PowerPoint pdf for the 2024-2025 annual budget. It opened with the following stated principles:
Budget Priorities:
- Providing high quality municipal services that residents expect
- Maintaining the safety and security of our neighborhoods
- Keeping Newport Beach looking great
- Maintaining a prosperous, fiscally sustainable, and economically viable city
- Continued emphasis on elimination of the City’s long-term liabilities
- Ensuring proper funding for long-term capital needs
- Addressing key City Council priorities identified at the February 3, 2024, City Council Planning Session
![(Courtesy of Newport Beach)](/_next/image?url=https%3A%2F%2Fimg.theepochtimes.com%2Fassets%2Fuploads%2F2024%2F07%2F18%2Fid5689519-Newport-Beach.png&w=3840&q=75)
(Courtesy of Newport Beach)
On the morning the ranking for Orange County’s 34 cities was published in The Epoch Times, I presented the good news at the Newport Beach Chamber of Commerce’s “Wake Up! Newport” breakfast. It was fun to congratulate former city councilman and Chamber President Steve Rosansky. Former Councilman Keith Curry was in the audience. It was a treat to congratulate him on the groundwork he provided for the city’s success. He and I then met to discuss the financial plan, and Mr. Curry provided me with a copy of Resolution 2015-7. It provides a wonderful 16-point blueprint for other cities to consider implementing.
One of the sixteen elements that Mr. Curry was very proud of was an emphasis “that costs related to pension and other benefits are appropriately allocated between employer and employees.” A shared participation in defined benefit pension plan costs is a critical fiscal maneuver that should be emulated by other governmental agencies within the state. I pursued this same principle while serving on the Board of Supervisors of Orange County, and its standing from 46th place in 2010, to 24th place in 2021, provides positive evidence that it should be considered by other municipalities.
The city of Newport Beach provides a proven roadmap on how to address a city’s finances. It is a tribute to successor city councils that they continued the fiscal priorities in subsequent years. The determination of each new city council every two years has borne fruit and, as they say, the proof is in the pudding. Congratulations, Newport Beach.