Newport Beach considers bonds

The Newport Beach City Council on Tuesday night held off on voting on how to pay California the $6 million in property tax revenues it wants to borrow while city officials look into a plan that would allow Newport to sell the state’s debt for proceeds from bonds.

The state budget Gov. Arnold Schwarzenegger signed last month included a plan to borrow $1.9 billion in property tax revenues from local governments.

The state is supposed to pay back the money, plus interest, by 2013.

The League of California Cities and the California State Assn. of Counties wants to create a joint powers authority that would sell bonds to replace money cities and other local governments must pay the state to help balance its budget.

This would allow Newport Beach to get its $6 million back faster than the state’s repayment schedule.

“At this point it looks like this program has potential, but we’ll have to wait to have details of this program worked out,� Newport Beach City Manager Homer Bludau said at Tuesday’s council meeting. “A bird in hand is worth two in the bush.�

City officials agreed Tuesday that the idea was worth looking into, because with California’s ongoing budgetary problems, it is still unclear whether the state government will really be able to pay Newport Beach its $6 million back, plus interest, by 2013.

“It’s very clear the state does not have its financial house in order and it’s not likely to have it in order any time soon,� Councilman Keith Curry said. “It might be something worth looking into.�

City officials said it would take another 30 to 45 days to gather information about the joint powers authority plan and bring it back to the City Council.

“It looks like our state legislature has kicked the can down the road to the tune of at least $6 million,� Councilman Mike Henn said. “If there is a reasonable economic way to get the money now and not depend on the state, it looks like a good thing.�

The City Council could also decide to pay the state the $6 million out of its $11 million in general fund operating reserves.

A reduction of the city’s reserves from $11 million down to $5 million could raise what the city pays to import water from the Metropolitan Water District and reduce the amount of groundwater it could by from the Orange County Water District next year.

There are less likely options the council could consider: The city could slash the money out of its annual budget, or borrow $6 million to cover the loss of property tax revenues.

By The Numbers

$6 million

How much property tax revenues Newport Beach must pay California

$11 million

Newport Beach general fund operating reserves

$125 million

in budget this year for salaries and benefits

$60.8 million

for maintenance and operations

$30.5 million

for capital improvements