Newport Beach is home to some pretty prosperous people, so it should come as no surprise that the city is also fairly well off. That should be evident as the city goes through the motions of approving a $282 million budget.
“I call this a ‘We’re in good shape, but … budget,’” City Manager Dave Kiff said, as reported by the Register. Nothing is foolproof, though, hence the “but.” So long as tax revenue remains steady and pension payments — which Kiff described as “not impossible to sustain, but challenging” — don’t rise dramatically, however, the city expects to remain financially stable for the next 20 years.
But economic uncertainty and our spendthrift state government are ever present. In light of this, Newport Beach is also being proactive. “In addition to a $300,000 surplus, Newport Beach will pay an extra $9.1 million toward pensions for fiscal year 2017-18, which begins July 1,” the Register noted.
Planning ahead is a trait that so often seems absent in government. It’s easy to hope for the best, while neglecting to prepare for the worst. Newport Beach’s sizeable surplus and overpaying on pensions, a debt which has ballooned dramatically in recent years, is a commitment to sound financial stewardship that is certainly welcome.
Yet, many still seem to think government debt doesn’t matter — until it does. Insolvency in places like Greece, Puerto Rico and, closer to home, the city of San Bernardino, prove that spending and debt have consequences. When they get too high, bankruptcy beckons — whether for a city, a territory or a country.
And, when it comes to pensions, many in government seem to forget just how quickly that debt can accumulate. It should be remembered, as the Register noted, that in Newport Beach, “the pension debt was $2 million a decade ago, and is expected to reach $353 million by next year.”
Newport Beach is hardly unique in this respect. According to the State Controller’s Office, the unfunded…