City Governement Budget Analysis Newport

City Governement Budget Analysis

Newport Beach Budget Analysis

Newport Beach is a city in Orange County, California, bordered by Huntington Beach at the Santa Ana River on the west side, by Costa Mesa, John Wayne Airport and Irvine on the north side and by Crystal Cove State Park on the east side. The city is 25 feet above sea level, it has a total area of 39.8 mi2 (14.8 mi2 of it is land and 25.1 mi2 of it is water), area that includes Corona del Mar, Balboa Island, Newport Coast, San Joaquin Hills and Balboa Peninsula.

The public budget is influenced by a series of factors, like demographic, economic, social, military, historical or political factors. Demographic factors, like population growth or demographic structure modification regarding age and socio-professional categories, determine the evolution of public expenditures and revenues. Therefore, when analyzing a community's public budget, one must study its demographic structure first.

In Newport Beach's case, the 2000 Census has revealed the following demographic situation:

Newport Beach has a total population of 70,032 people

There is an almost perfect equality between sexes: 49.5% (34,638) of the total population are male, and 50.5% (35,394) are female

The age structure is the following: 4.0% (2,832) are under 5 years; 4.7% (3,269) are 5 to 9 years; 4.6% (3,215) are 10 to 14 years; 3.8% (2,674) are 15 to 19 years; 5.1% (3,587) are 20 to 24 years; 17.0% (11,872) are 25 to 34 years; 16.0% (11,234) are 35 to 44 years; 15.2% (10,646) are 45 to 54 years; 6.7% (4,674) are 55 to 59 years; 5.3% (3,734) are 60 to 64 years; 8.8% (6,128) are 65 to 74 years; 6.7% (4,684) are 75 to 84 years; 2.1% (1,483) are 85 years and over the median age is 41.6 years

The 18 years and over age group represents 84.3% (59,018) and is consisted of 41.4% (28,999) male and 42.9% (30,019) female

The 21 years and over group of age represents 82.1% (57,463)

The 62 years and over group of age represents 20.6% (14,421)

The 65 years and over group of age represents 17.6% (12,295) and is consisted of 7.6% (5,347) male and 9.9% (6,948) female

Newport Beach has a total of 33,071 households, structured as it follows:

Family households (families) represent 51.3% (16,979) and family households with own children under 18 years represent 18.0% (5,955)

Married-couple families represent 42.5% (14,063); married-couple families with children under 18 years represent 13.9% (4,593)

Female householders with no husband present represent 6.1% (2,004); female householders with no husband present and with own children under 18 years represent 2.9% (958)

Non-family households represent 48.7% (16,092); householders living alone represent 35.3% (11,666); householders 65 years and over represent 10.1% (3,351)

Households with individuals under 18 years represent 19.0% (6,271)

Households with individuals 65 years and over represent 25.9% (8,556)

The average household size is 2.09 and the average family size is 2.71.

Regarding housing occupancy, of the total of 37,288 housing units 88.7% are occupied and 11.3% are vacant. 5.3% of the housing units are used only for seasonal, recreational or occasional purposes. Of the total of 33,071 households 55.7% are occupied by their owners and 44.3% are occupied by renters. The average household size of owner-occupied units is 2.3, while the average household size of renter-occupied unit is 1.83.

The social characteristics of Newport Beach's population are the following:

Regarding school enrollment, the total population of 3 years and over enrolled in school reaches 15,130. Of this total, 7.5% attend a nursery school or a preschool, 4.9% attend a kindergarten, 34.5% attend an elementary school, 16.3% attend a high school and 36.8% attend college or graduate school.

The educational attainment for the population of 25 years and over, the situation is the following: of a total of 54,755, 21.4% are graduates or have a professional degree, 37.1% have a bachelor's degree, 7.5% have an associate degree, while the rest have no degree or diploma.

The marital status information among the population of 15 years and over reveals that of the total of 60,516, 30.2% have never been married, 49.6% are married at the present, 1.2% are separated, 6.3% are widowed and 12.7% are divorced.

Regarding disability status of the civilian non-institutionalized population, 6.2% of the population of 5 to 20 years have a disability, 10.4% of the population of 21 to 64 years have a disability and 26.4% of the population of 65 years and over have a disability.

The 2000 Census also revealed that 45.1% of Newport Beach's population haven't changed their residence since 1995, while 52.6% now live in a different house than in 1995.

Regarding the economic characteristics of Newport Beach's population, the 2000 Census reveals that only 65.8% of the total population of 16 years and over are in labor force, 63.8% are employed and 2.0% are not employed.

Newport Beach's inhabitants seem to prefer occupations in the field of management, as 57.6% of them work in this field. The second favorite occupation is in the field of sales and office occupations, in which 29.1% are employed. Newport Beach's inhabitants do not seem to like very much activities like farming, fishing and forestry occupations, as only 0.1% of them are employed in these fields. Most of them, about 90% are employed in the private sector or are self-employed workers, while the rest work for the government.

In 1999, only 4.1% of the households earned less then $10,000, while 17.6% of them earned $200,000 or more. The median household income was $83,455. However, not all of Newport Beach's inhabitants benefit from such a good situation, as 356 families confront themselves with poverty.

For heating their houses, most of the Newport Beach's inhabitants, 75.7% of them, use the utility gas, 22.8% use electricity and the rest use other sources like bottled, tank or LP gas, fuel oil, kerosene, coal or coke, wood and solar energy, while 0.4% do not use any fuel at all.

Regarding the mortgage status, 74.5% of the housing units have a mortgage, while 25.5% of them are not mortgaged.

The selected monthly owner costs as a percentage of household income in 1999 was for most of the owners, 28.3%, of 35% or more, while only 1.2% were not computed.

The median gross rent for renter-occupied units was $1,257. Other information regarding incomes: the mean earning is $122,372, the mean social security income is $13,493, the mean supplemental security income is $7,424, the mean public assistance income is $5,294 and the mean retirement income is $34,445.

The information presented above regarding the demographics in Newport Beach leads to several conclusions: the birth rate is slightly increasing, and although the United States are facing a demographic ageing situation, Newport Beach does not seem to be hit by this process, having a median age of 41.6 years and a lower percent of aged people than most of other areas.

Only about half of Newport Beach's inhabitants own their houses, most of them have a mortgage to deal with, while the other half is represented by renters, who probably live in Newport Beach for a season, during summer.

More than 20% of the population is enrolled in school, more than half of which are students.

Newport Beach has a very low divorce rate, of only 12.7%.

More than half of Newport Beach's population is employed and work mostly in management, professional or related occupations, in the private sector.

The main revenue sources are: property, sales, and transient occupancy taxes. Also, the General Fund is supported by: licenses, fees and permits, intergovernmental revenues, charges for services, fines, forfeitures and penalties, revenue from the use of money and property, contributions and other miscellaneous revenue. The most important revenue source for Newport Beach is represented by property taxes, followed by sales tax and then by transient occupancy tax. These three most important revenue sources are responsible for providing almost 73% of total General Fund revenues.

Besides the General Fund, other revenues come from several other funds, especially capital improvements. The City's Special Revenue Funds is consisted of revenues coming from special sources and it is used for financing expenditures for specific purposes, like the City's Gas Tax Fund, funded by the State Gasoline Tax and is only used for street repair, construction and maintenance. Also, the City's Internal Service Funds is used for vehicle maintenance and replacement, and also for compensated absences, general liability, workers' compensation or other insurance payments, and are funded by charging the operating departments a rate computed for these activities.

In addition to this, the Budget also includes Enterprise Funds, like the City's Water Fund and Wastewater Fund, financed by the customers through user charges.

The revenue situation for the past five fiscal years and the proposed revenue level for the 2006-2007 fiscal year is the following:

The Total General Fund's evolution is the following: for 2001-2002: $96,685,834; for 2002-2003: $103,783,317; for 2003-2004: $110,984,837; for 2004-2005: $123,295,015; for 2005-2006: $130,154,632; for 2006-2007 the proposed revenue is $136,449,519, with a 4.84% increase. For the past five fiscal years the Total General Fund has significantly increased each year.

The Property Taxes revenues' evolution is: for 2001-2002: $33,583,659; for 2002-2003: $39,474,865; for 2003-2004: $43,631,829; for 2004-2005: $56,254,917; for 2005-2006: $61,055,240; the proposed revenue for 2006-2007 is $67,102,454, with a 9.9% increase.

The Licenses and Permits revenues' evolution is: for 2001-2002: $1,956,365; for 2002-2003: $2,305,118; for 2003-2004: $3,483,020; for 2004-2005: $3,061,667; for 2005-2006: $3,027,345; the proposed revenue for 2006-2007 is $2,819,900 with a 6.85% decrease.

The Intergovernmental revenues' evolution is: for 2001-2002: $7,253,139; for 2002-2003: $6,035,742; for 2003-2004: $6,014,233; for 2004-2005: $4,266,673; for 2005-2006: $3,965,291; the proposed revenue level for 2006-2007 is 2,488,100 with a 37.25% decrease.

The Charges for current services revues' evolution is: for 2001-2002: $10,318,366; for 2002-2003: $11,099,872; for 2003-2004: $11,899,279; for 2004-2005: $13,063,134; for 2005-2006: $12,601,949; the proposed revenue level for 2006-2007 is $13,211,561 with a 4.84% increase.

The Fines, Forfeitures and Penalties revenues' evolution is: for 2001-2002: $3,252,387; for 2002-2003: $3,380,531; for 2003-2004: $3,551,515; for 2004-2005: $3,422,735; for 2005-2006: $3,397,000; the proposed revenue level for 2006-2007 is 3,567,500 with a 5.02% increase.

The Taxes other than property revenues' evolution is: for 2001-2002: $31,876,781; for 2002-2003: $32,985,528; for 2003-2004: $35,790,936; for 2004-2005: $34,993,699; for 2005-2006: $37,168,230; the proposed revenue level for 2006-2007 is $38,660,853 with a 4.02% increase.

The Use of Money and Property revenues' evolution is: for 2001-2002: $7,232,430; for 2002-2003: $7,328,014; for 2003-2004: $6,397,127; for 2004-2005: $7,093,909; for 2005-2006: $7,779,954; the proposed revenue level for 2006-2007 is $8,181,010 with a 5.15% increase.

And finally, other revenues' evolution is: for 2001-2002: $1,212,707; for 2002-2003: $1,173,647; for 2003-2004: $216,898; for 2004-2005: $1,138,281; for 2005-2006: $1,159,523; for 2006-2007 the proposed revenue level is $418,142 with a 63.94% decrease.

In conclusion, the data presented above shows the constant growth of the Total General Fund for the past five fiscal years. The only revenues sources that show important decreases are Licenses and Permits, Intergovernmental and Other revenue categories. The highest level of growth is represented by the 9.9% increase of the Property Taxes revenues.

The evolution of the most important funds, other than the General Fund, is presented bellow:

The Total Asset Forfeiture Fund's evolution: for 2001-2002: $74,401; for 2002-2003: $61,351; for 2003-2004: $61,290; for 2004-2005: $237,221; for 2005-2006: $70,000; the proposed revenue level for 2006-2007 is $45,000 with a 35.71% decrease.

The Total State Gas Tax Fund's evolution: for 2001-2002: $1,482,214; for 2002-2003: $1,499,250; for 2003-2004: $1,505,531; for 2004-2005: $1,565,938; for 2005-2006: $1,948,823; the proposed revenue level for 2006-2007 is $1,947,500 with a 0.07% decrease.

The Total Circulation and Trans Fund's evolution: for 2001-2002: $366,697; for 2002-2003: $1,104,538; for 2003-2004: $708,631; for 2004-2005: $499,397; for 2005-2006: $511,717; the proposed revenue level for 2006-2007 is $448,000 with a 12.45% decrease.

The Total Water Enterprise Fund's evolution: for 2001-2002: $17,809; for 2002-2003: $17,326,604; for 2003-2004: $18,321,123; for 2004-2005: $17,878,017; for 2006-2006: $19,172,466; the proposed revenue level for 2006-2007 is $17,929,000 with a 6.49% decrease.

We observe that each of these funds is decreasing.

When linking these revenue levels to demographic characteristics, we observe that the increase by 9.9% of the Property Taxes revenue shows that more people own their houses than they did the previous years.

These revenues are used for the covering the city's expenditures, such as: General Government expenditures (City Council, City Clerk, City Manager, Human Resources, City Attorney, Administrative Services), Public Safety (Police Department, Fire Department), Community Development (City Manager, Planning, Building), Public Works (General Services, Public Works, Utilities), Community Services (City Council - Centennial, Recreation and Sr. Services, Libraries and Arts). These kinds of expenditures are financed from the General Fund. Other expenditures, such as Water (Operations, CIP and Debt Service) and Wastewater (Operations, CIP) are financed through Enterprise Funds. The Internal Service Funds finances expenditures like: Insurance Reserve, Equipment Fund, PD Equipment Replacement, Compensated Absences, Retiree Medical. Other funds finance expenditures like: Police Grants, Tidelands (Harbor Resources, Oil and Gas, Debt Service), Environmental Liability, Newport Annexation and Library.

The evolution of the city's most important expenditures for the past five fiscal years and the projection for fiscal year 2006-2007 is presented below:

The expenditures' evolution for Total General Government is: for 2001-2002: $10,484,529; for 2002-2003: $9,689,276; for 2003-2004: $10,740,106; for 2004-2005: $10,039,069; for 2005-2006: $12,496,775; the proposed expenditures level for 2006-2007 is $13,682,487 with a 7.94% increase.

The City Council's expenditures' evolution is: for 2001-2002: $2,805,143; for 2002-2003: $1,327,729; for 2003-2004: $973,213; for 2004-2005: $710,786; for 2005-2006: $1,498,014; the proposed expenditures level or 2006-2007 is $1,779,011 with a 0.95% increase.

The City Clerk's expenditures' evolution is: for 2001-2002: $263,000; for 2002-2003: $355,940; for 2003-2004: $294,781; for 2004-2005: $375,456; for 2005-2006: $372,688; the proposed expenditures level for 2006-2007 is $493,009 with a 0.24% increase.

The City Manager's expenditures' evolution is: for 2001-2002: $842,723; for 2002-2003: $994,278; for 2003-2004: $1,956,574; for 2004-2005: $1,038,657; for 2005-2006: $1,776,626; the proposed expenditures level for 2006-2007 is $1,176,166 with a 1.13% increase.

The Human Resources' expenditures' evolution is: for 2001-2002: $1,174,414; for 2002-2003: $1,146,646; for 2003-2004: $1,165,004; for 2004-2005: $1,288,208; for 2005-2006: $1,372,136; the proposed expenditures level for 2006-2007 is $1,650,620 with a 0.87% increase.

The City Attorney's expenditures' evolution is: for 2001-2002: $688,672; for 2002-2003: $868,117; for 2003-2004: $1,071,588; for 2004-2005: $970,473; for 2005-2006: $994,041; the proposed expenditures level for 2006-2007 is $1,051,480 with a 0.63% increase.

The Administrative Services' expenditures evolution is: for 2001-2002: $4,710,577; for 2002-2003: $4,996,566; for 2003-2004: $5,278,946; for 2004-2005: $5,655,488; for 2005-2006: $6,483,270; the proposed expenditures level for 2006-2007 is $7,531,501 with a 4.12% increase.

The data presented above shows that each of these categories of expenditures has slightly increased each year. However, the most spectacular increase is in the Administrative Services department, whose expenditures increased by 4.12%. The City Clerk's expenditures are the most constant ones, with only a 0.24% increase. Also, the expenditures have increased at a lower rate than the revenues have, which is a sign of a healthy economy and public management.