OVERVIEW OF PROPOSED
FY2026-27 BUDGET
May 26, 2026
Joint City Council/Finance Committee Study Session
• Budget Priorities:
• Provide high -quality municipal services that residents expect • Maintain safe and secure neighborhoods
• Preserve Newport Beach's appearance and quality of life • Ensure a fiscally sustainable and economically viable city • Additional Focus:
• Continue reducing long-term liabilities
• Ensure adequate funding for infrastructure maintenance and replacement
• Address City Council priorities identified at the January 31, 2026, Planning Session
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MeetingDate Type
Meeting Purpose
Thursday, January 15, 2026 Finance Committee Meeting
Long -Range Financial Forecast (LRFF) update
Saturday, January 31, 2026 Special City Council Meeting City Council Planning Session
Early Look at CIP Budget
Tuesday, March 10, 2026 City Council Study Session
Thursday, April 16, 2026
Finance Committee Meeting
Overview of Proposed Fiscal Year 2026-27
Revenues and Expenditures
Thursday, May 14, 2026
Finance Committee Meeting
Follow-up Discussion of Proposed Budget &
Committee Recommendation to Council
Tuesday, May 26, 2026
Joint City Council/Finance
Committee Study Session
FY 2026-27 Operating Budget Review
Final Committee Recommendation to the
Thursday, May 28, 2026
Finance Committee Meeting
Council on the Proposed Budget, if Substantive
Changes Occur Following the Joint Meeting
Tuesday, June 9, 2026
City Council Public Hearing Adoption of FY 2026-27 Budget Q�EWP0
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ALL FUNDS
BUDGET
OVERVIEW
Operating Expenditures:
Salaries & Benefits $227,526,744
Maintenance & Operations 164,426,516
Debt Service 10,504,260
Transfers 73,067,012
Total Operating Budget $475,524,532
Capital Improvements 47,840,000
TOTAL $523,364,532
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General Fund $348,389,578
Tidelands Fund $27,211,964
Water Fund $43,576,142
Wastewater Fund $6,058,612
Other Funds $50,288,236
TOTAL $475, 524, 532
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GENERAL FUND
BUDGET OVERVIEW
GENERAL FUND REVENUE SOURCES
Transfers
6%
Charges for
Services
10%
Property Taxes
49%
Transient
Occupancy Tax
10% /
Sales Tax
14%
2025-26 Adopted $ 333.7 million
2026-27 Proposed $ 350.9 million
• Projected revenues for FY 2026-27 are
$17.2 million (5.2%) higher than the FY
2025-26 adopted budget.
• Primary drivers of revenue growth
include:
• Property Tax + $10.7 million (6.7%)
• Sales Tax + $2.4 million (5.2%)
• Service Fee and Charges + $1.1
million (4.3%)
$333.6M
N $350.00
0 $300.00
$250.00
$200.00
$150.00
$100.00
$50.00
$
$333.7M 350.9M
FY 2024-25 FY 2025-26
Actuals Adopted
Budget
Property Tax ■ Sales Tax ■ TOT
FY 2026-27
Proposed
Budget
Transfers ■ Others
9 • Represents approximately 50% of General Fund Revenues • The City receives 17% of the 1 % property tax (share varies by city)
• Newport Beach has the third highest share in Orange
County, behind Santa Ana and Laguna Beach
• Assessed value is a key driver of revenue
• A strong tax share and high assessed values support fiscal stability
• The City has the second-largest assessed valuation in Orange County (behind Irvine, ahead of Anaheim)
• Projected assessed valuation is $87.8 billion in FY 2026-27 (4% increase)
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City of Newport Beach
■County of Orange
■ Schools
■Special Districts
IN
• Property tax revenue has grown steadily over the past decade and is projected to increase further in FY 2026-27, driven by Proposition 13 inflationary adjustments, property turnover, and new development.
$180
$171
$170 $163
$160 $154 +4.7%
$150
$146 +5.8%
+5.5%
$140 $138 +5.6%
75 $128
$130 +7.7%
$120 +4.3%
$111 ��+6.6%
$110 $105
$100 $97 +5.8%
+7.7%
$90
2016-17 2017-18 2018-19 2019-20 2020-21
Actual Actual Actual Actual Actual
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2021-22 2022-23 2023-24 2024-25 2025-26 2026-27
Actual Actual Actual Actual Projected Projected
11 U) $50
c
0 MO.
$42
$38
$
$34 34
$30
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$39
$36,,.-�+7.5%
$35/+'9.9% -5
+4.0%
$46 $47
+0.8%
-6.
+18.5%
$49 $50
+2.0%
$46 4+6.2%
+5.7%
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 Actual Actual Actual Actual Actual Actual Actual Actual Actual Projected Projected 12 2025-26 Adopted Budget
2026-27 Proposed Budget
$ 321.5 million
$ 348.4 million
• The Proposed Budget for FY 2026-27 includes
• An 8.4% increase over the FY 2025-26 adopted
budget
• $40 million allocated to paying down the City's
unfunded pension liability
• $1.5 million in program enhancements
SEW PO
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$321.5M
U) 350
c
300
250
200
150
100
50 $348.4M
FY 25-26 Adopted FY 26-27
Budget Proposed Budget
Salaries & Benefits ■ Non -Personnel Transfers
13 Routine Compensation Cost Increases (COLAs, etc.) $19,641,858 6.1% Increases in Internal Service Charges
Increases in Operating & Capital Transfers
Increase in Cost for the WISE County Landfill Agreement GF Program Enhancements
Other Cost Increases
1,689,080 0.5%
1,572,212 0.5%
1,552,339 0.5%
1,552,562 0.5%
890,457 0.3%
$26,898, = 8.4%
Note: Percentages reflect each item's increase divided by the total FY 2025-26 adopted General Fund budget ($321.5M), not the percent change within each expenditure category.
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14 i
-2026-27
Ado
City Council
$ 924,218
931,993
903,038
928,943
2.9%
City Clerk
1,191,331
1,310,158
1,212,948
1,261,238
4.0%
City Attorney
2,526,824
2,661,605
2,578,486
3,525,280
36.7%
City Manager
6,760,029
7,392,972
7,341,829
7,697,302
4.8%
Administrative Services*
14,045,449
14,414,565
14,563,749
14,008,827
-3.8%
Police
73,415,698
78,156,707
77,189,382
88,871,563
15.1%
Fire
64,405,996
65,865,961
70,349,121
73,693,415
4.8%
Community Development
14,937,632
17,233,367
17,390,481
18,963,898
9.0%
Library
10,259,001
10,818,892
10,495,210
11,314,378
7.8%
Recreation and Senior Services
15,394,067
16,151,132
15,967,058
17,517,740
9.7%
Public Works*
12,732,652
13,966,846
14,041,566
15,021,625
7.0%
Municipal Operations*
33,861,833
34,714,137
37,203,926
41,901,283
12.6%
Utilities
5,982,258
6,156,003
6,504,144
6,777,768
4.2%
Miscellaneous Non -Operating
2,991,226
2,228,689
2,528,547
2,105,023
-16.7%
SubTotal
$259,428,214
272,003,027
278,269,486
303,588,283
9.1 %
Transfers Out
34,489,271
39,255,611
43,229,083
44,801,295
3.6%
Total
$293,917,485
311,258,638
321,498,569
348,389,578
8.4%
P�RT * Effective December 9, 2025, Finance and Human Resources were consolidated into the Administrative Services
0� Department, and Municipal Operations was separated from Public Works to form a standalone department.
The FY
25-26 and FY 26-27 budgets
reflect these changes,
and prior -year budgets (FY 23-24
and FY 24-25) have been
: z restated for comparability.
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i i - - i2026-27
Adopted Adopted Adopted Adopted Proposej
General Fund CIP 5,530,000 6,000,000 6,500,000 6,500,000 6,500,000 Facilities Financing Plan (FFP) - 444,141 1,285,152 6,778,085 6,981,427 Harbor & Beaches Master Plan 4,600,000 4,715,000 5,832,875 5,978,697 6,128,164 Facilities Maintenance Plan
(FMP)
2,500,000 2,500,000
2,500,000
2,500,000
2,500,000
Tidelands Operating Fund
9,987,817 11,152,510
12,256,805
10,611,824
11,835,130
Parks Maintenance Fund
- 1,000,000
2,300,000
2,300,000
2,300,000
Debt Service Fund
8,600,000 8,677,620
8,580,779
8,560,477
8,556,574
Total $31,217,817 $34,489,271 $39,255,611 $43,229,083 $44,801,295 • Maintains the $6 million increase in transfers from the GF to the FFP
0.0%
3.0%
2.5%
3.6%
• Tidelands Operating Fund transfer increases due to maintenance and CIP costs Q�EWP0
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PROGRAM
ENHANCEMENTS &
STAFFING CHANGES
General Fund
Administrative Services
Reclass Senior Accountant to Principal Accountant
22,994
General Fund
Administrative Services
Flex Management Analyst to Senior
8,909
General Fund
Administrative Services
Additional $25,000 for new employee benefits vendor Aaptiv app 25,000
Uninsured Claims
City Attorney's Office
Increase in Outside Counsel: Prosecution
50,000
General Fund
City Attorney's Office
Increase budget for Software License & Renewal
3,500
General Fund
City Attorney's Office
Outside Investigations
80,000
General Fund
City Attorney's Office
Reclass / Reorg Administrative Assistant to Management Analyst 18,383
General Fund
City Clerk's Office
Reduce Assistant City Clerk position
(172,653)
16,143
General Fund
Community Development
Reorg existing Building Inspector, Principal to a Building Inspector, Supervisor General Fund
Fire
Increase budget for Personal Protective Equipment
115,000
General Fund
Fire
Increase budget for Emergency Preparedness
33,000
General Fund
Fire
Increases to Lifeguard Operations Budget
22,000
General Fund
Fire
Increase 1 FTE (Firefighter paramedics) - includes uniform and PPE cost 158,437
General Fund
Fire
5.25% Compensation Adjustment for the Fire Chief
22,758
General Fund
Fire
Reclass Lifeguard Training Captain to Lifeguard Battalion Chief 16,659
Tidelands Fund
Harbor
Budget Increase for Vessel Removal & Destruction
150,000
Tidelands Fund
Harbor
Resources to Operate Balboa Yacht Basin
170,048
P0
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18 -9m, 9W
Tidelands Fund
Harbor
New and Upgraded Water Quality Sensing Buoys
15,552
Tidelands Fund
Harbor
Membership and participation in the Recreational Marina Association 5,500
FTE Increase in association with expansion of Professional Mariners 5,597
Tidelands Fund
Harbor
Program with OCC
Equipment Replacement Fund
Harbor
Additional accrual for vessel replacement
150,000
Increase budget to account for increases from California Air Resources 3,528
Tidelands Fund
Harbor
Board (CARB)
Downloadable materials like e-books, audiobooks, downloadable 50,000
General Fund
Library
magazines and newspapers
General Fund
Library
Building Maintenance
33,500
General Fund
Library
Programming - Pacific Symphony performance
45,000
General Fund
Municipal Operations
Reduce Public Works Deputy Director, MOD Position
(302,167)
General Fund
Municipal Operations
Flex Positions - Maintenance Workers Budget at Maintenance Operator 45,955
Equipment Maintenance Fund
Municipal Operations
Flex Positions - Maintenance Workers Budget at Maintenance Operator 7,877
General Fund
Municipal Operations
Upgrade Maintenance Operator to Crew Chief
12,612
Environmental Liability
Municipal Operations
Additional Maintenance Budget for Water Wheel
100,000
General Fund
Municipal Operations
Parks - Additional Operating Budget
137,500
Equipment Maintenance Fund
Municipal Operations
Equipment Purchases
335,000
General Fund
Municipal Operations
Streets - Additional Striping Budget
50,000
P0
CqG/FORN�P
Fund Na Department1111 Description iill
Equipment Maintenance Fund Municipal Operations Fleet - Additional Operating Budget Investigative funds to support greatly expanded use of technology to create General Fund
Police
leads and solve more crimes.
General Fund
Police
Crossroads e-citation system, interfaces to RMS and hardware Implement auto -tagging for body -worn and in -car video, saving staff time and Police Equipment Fund
Police
improving the speed and accuracy of video searches.
General Fund
Police
Increase funding to cover costs of hiring outside agencies for special events General Fund
Police
Additional funding to support community events and outreach efforts General Fund
Police
Upgrade to the Cellebrite forensic system
General Fund
Police
Uniform expenses
General Fund
Police
POST training funds
General Fund
Police
Patrol Division training funds for defensive tactics instructor proficiency General Fund
Police
Detective Division training funds
General Fund
Police
Add two Police Officers (one for Fashion Island and one for CdM) Police Equipment Fund
Police
4 New Lieutenant Vehicles
General Fund
Police
5.25% Compensation Adjustment for the Chief of Police
Water Fund
Public Works
New Associate Civil Engineer Position
Wastewater Fund
Public Works
New Associate Civil Engineer Position
General Fund Public Works Upgrade Office Assistant to Department Assistant PO�T
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50,000
45,000
83,500
34,000
100,000
25,000
23,500
25,000
30,000
24,000
10,000
439,482
246,662
23,396
197,220
21,913
5,726
20 Nr
General Fund
General Fund
General Fund
Deoartment
Public Works
Public Works
Public Works
General Fund Recreation & Senior Services
General Fund Recreation & Senior Services
General Fund
Recreation & Senior Services
Water Fund
Utilities
Wastewater Fund
Utilities
General Fund
Utilities
Water Fund
Utilities
Wastewater Fund
Utilities
Water Fund
Utilities
Equipment Maintenance Fund
Utilities
Water Fund
Utilities
General Fund Total
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Expenditui
L Descriotio Increase/(Decr
Upgrade Two Associate Civil Engineers to Senior Civil Engineers 39,817 Reclass PT Assoc. Engineers to PT Assoc. Civil Engineers 16,463 Study PW Administrative Manager Position -
Contract Class: Expenditure increase offset by higher revenues ($55,852) (net savings)
Facility Rentals: Expenditure increase more than offset by higher ($1,800) revenues (net savings)
Increase staff count (1 FT / 2.8 FTE) to operate the Animal Shelter 251,800
New 2027 Water Rate Study
150,000
New 2027 Sewer Rate Study
100,000
Training Program - Supplemental Funding for Current Programs 25,000
Training Program - Supplemental Funding for Current Programs 25,000
Training Program - Supplemental Funding for Current Programs 15,000
Large Commercial Meter Replacement Program
60,000
Trailer -Mounted (Towable by Pick-up) Jetter Trailer
91,900
Reclass Utilities Crew Chief to Utilities Inspector
6,855
21 General Fund
Administrative Services Reclassify Senior Accountant to Principal Accountant Administrative Services Flexibly Staff Management Analyst to Senior Management Analyst City Attorney's Office Reclassify Administrative Assistant to Management Analyst City Clerk's Office
Reduce Assistant City Clerk Position
(1.00)
Community DevelopmentConvert Principal Building Inspector to Supervising Building Inspector -
Fire
Add Firefighter Paramedic
1.00 Fire
Reclassify Lifeguard Training Captain to Lifeguard Battalion Chief -
Fire
Transfer Police Emergency Coordinator from the Police Department
1.00 Municipal Operations
Flexibly Staff Maintenance Workers to Maintenance Operators -
Municipal Operations
Convert Maintenance Operator to Crew Chief
Municipal Operations
Reduce Public Works Deputy Director, MOD Position
(1.00)
Police
Add x2 Police Officers
2.00 Police
Transfer
-
Police
Transfer Police Emergency Coordinator to the Fire Department (1.00)
Police
Transfer Park Patrol Officers from Recreation & Senior Services Department
2.00 Police
Transfer Animal Control Officer to Recreation and Senior Services Department (1.00)
Police
Transfer Community Services Officer to Recreation and Senior Services Department (1.00)
Public Works
Reclassify Office Assistant to Department Assistant
Public Works
Reclassify x2 Associate Civil Engineers to Senior Civil Engineers Public Works
Reclassify x2 Part -Time Associate Engineers to Part -Time Associate Civil Engineers -
Public Works
Add Associate Civil Engineer"
1.00 Q�EWPp�T
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Recreation & Senior
Add Recreation Coordinator
1.00 -
Services
Recreation & Senior
Add Assistant Recreation Coordinator
-
1.40 Services
Recreation & Senior
Add Senior Recreation Leader
-
1.40 Services
Recreation & Senior
Transfer Park Patrol Officers to Police Department
(2.00)
-
Services
Recreation & Senior
Transfer Animal Control Officer from Police Department
1.00 -
Services
Recreation & Senior
Transfer Community Services Officer to Recreation from Police Department
1.00 -
Services
Total General Fund
3.00 2.80
Tidelands
Harbor
Add Lead Harbor Safety Officer
1.00 -
Harbor
Add Harbor Safety Officer
-
1.50 Harbor
Increase Management Analyst FTE
0.05 Equipment Maintenance Fund
-
Municipal Operations
Flexibly Staff Maintenance Workers to Maintenance Operators -
Water Enterprise Fund
Utilities
Reclassify Utilities Crew Chief to Utilities Inspector
-
Total Other Funds
1.00 1.55
Total Personnel Program
4.00 4.35
Enhancements
" Position is being funded through the Admin Service Charges that are collected in the Water and Wastewater Enterprise Funds.
PO�T
23 CqG/FORN�P
1,000.0
967.1
945.9
924.6
900.0
800.0
700.0
600.0
500.0
886.3 878.1
866.8
847.9 852.6 � 855.4
915.9
921.5 927.5 935.8
886.2 888.1 895.4 901.7
866.8 877.0 — — - - MEN
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 # of FT Positions ■ # of FTE Positions
�EVVPO
T
}
U ?+b ?
e�
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24 of
i WP -
'V jo
Nwrlw
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UNFUNDED PENSION
LIABILITY
100%
95% 92.3%
90% -
85% 85.3
80% —
75%
70%
65%
60% 7.
55%
50%
I 67.4% 0 69.2%67.5% 68.70/0.2%
65.8 /0 66.00 6.9°/
n 62.2 %F- I 16o f3.8 l I _
60.6% I I I
25%
20%
15%
/82.4% 10%
5%
75.9%
0%
-5%
-10%
-15%
-20%
-25%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Funded Status CaIPERS Investment Returns Discount Rate (Expected Return) PO
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• The Finance Committee and City Council revisit the UAL paydown strategy annually as part of the budget process.
• For Fiscal Year 2026-27, staff recommends a $40 million allocation from the baseline budget, plus an additional $5 million supplemental appropriation at fiscal year-end.
• Assuming CalPERS achieves a 6.8% annual investment return, the City's unfunded pension liability is projected to be fully paid off by FY 2032-33. • In March 2026, the City deposited $5 million into a Section 115 Pension Trust to complement the City's pension liability paydown strategy by helping stabilize future pension contribution volatility and diversify pension -related investments.
• No budget allocation is proposed at this time for additional contributions to the Section 115 Pension Trust; however, the City Council may revisit the matter during the next fiscal year in connection with a future update on the trust.
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GENERAL FUND
RESERVES AND
SURPLUS
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
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Ej
$
339,037,638
$
349,647,075
$
(331,180,374)
$
(348,389,578)
$
1,250,000
$
1,250,000
$
3,785,541
$
-
$
(25,714,088)
$
-
$
12,892,805
$
2,507,497
29 • The FY 2026-27 Proposed General Fund budget is balanced • Continued investment in long-term infrastructure and capital needs
• Maintains $40 million annual pension UAL contribution • Structural surplus of approximately $2.5 million projected, subject to Council direction
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Questions and
Council Feedback
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M