Newport’s net assets grow

Newport Beach’s net assets increased by $45.8 million to $2.3 billion during the past fiscal year, but government expenses were way up, according to a newly released audit of the city’s finances.

Newport Beach government expenses increased by 10% or about $1.4 million during the last fiscal year, primarily because city legal fees from issues related to drug and alcohol rehabilitation homes in the city and from site planning for a new city hall account for much of the increase, according to the audit.

Several legal challenges ensued after the city enacted a ordinance requiring most drug and alcohol homes in the city to obtain permits.

“We’ve had litigation costs, hired outside counsel to develop ordinances that were passed and that’s what that money has gone toward,” Newport Beach City Manager Homer Bludau said. “We spent a lot of money on legal fees, and we will continue to spend a lot of money to go through the permitting process with a lot of group home operators.”

The audit also found that public safety expenses were up $6 million, or 9% from the previous year, mostly due to increases in salaries and benefits.

The audit paints a mostly rosy picture of the city’s finances for the past fiscal year, but city officials continue to look at how the down economy will affect the city this fiscal year.

“All of us are concerned and watching carefully the unfolding economic situation and its impact on the city,” said Councilman Keith Curry, who chairs the city’s finance committee. “So far, we have avoided making any of the cuts that other cities have had to make.”

The city’s net assets can be used as a barometer of sorts to monitor the financial health of the city.

The report attributes a good deal of the growth to the annexation of the West Santa Ana Heights area last year, which accounts for about $31 million in capital contributions.

Newport Beach reported a $7-million increase in general revenues in the last fiscal year, according to the audit. Property taxes account for a large part of the boost in revenue. Property tax collections increased by $4.4. million and the city raked in $67.4 million the last fiscal year in property taxes, according to the audit.

The audit also shows debt decreased by $1.7 million the last fiscal year, from $53.4 million to $51.7 million.

BRIANNA BAILEY may be reached at (714) 966-4625 or at [email protected].