NEWPORT BEACH – The city’s financial outlook for the foreseeable future looks well even as it grapples with its costly pension debt, city staff told the City Council and Finance Committee during a joint presentation of a proposed $282 million budget on Tuesday.

Based on budget performances of past years and barring a downturn in the economy or a substantial increase in pension payments, the city’s financials should remain stable for the next 20 years, said City Manager Dave Kiff.

“I call this a ‘We’re in good shape, but… budget,’” Kiff said, adding the city needs to watch sales and transient taxes closely and “pension expenses are not impossible to sustain, but challenging.”

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 pension debt was $2 million a decade ago and is expected to reach $353 million by next year.

“We believe this is the best way to handle the debt, is to pay it down… as quickly as you can,” Mayor Kevin Muldoon said. “If we do this in a disciplined manner we’ll protect our city from escalating debt for many more years.”

Deputy Finance Director Steve Montano said the accelerated payments would eventually help the city pay off the unfunded liability faster, eventually bringing down to zero.

The city will pay around $40 million to the California Public Employees Retirement System for 2017-18 and city employees will contribute around $10.5 million.

Only a handful of cities are paying more into their unfunded pensions than is required, Kiff said.

“We have the luxury of being a financially prosperous city,” he said. “What cities like us are doing this? The answer is not many, but many should.”