City’s strong financial practices avoid layoffs and abrupt service disruptions; mid-year budget recommendations support vulnerable residents and proactively address long-term needs
On Monday, February 22, 2021, the Redwood City City Council will receive the Fiscal Year 2019-20 Year-End Budget update and Fiscal Year 2020-21 Mid-Year Budget update, as well as proposed framework for the development of the FY 2021-22 budget. While projected to experience a 9.7 percent drop in revenue this year, the City is striving to meet unprecedented community needs while dramatically shifting City operations.
In October 2020, the City Council adopted a Revised Fiscal Year 2019-20 Budget, which included a Ten-Year General Fund Forecast and projected an operating balance of approximately $11 million, after $7.1 million in anticipated limited term funding of City Council priorities. Actual year-end calculations have been completed, resulting in a year-end operating balance of $12.1 million as of June 30, 2020, or $1.1 million more than anticipated. While this is welcome news, staff anticipates it will take four years for the City’s economic base to recover to pre-COVID levels. During this same time period, the City must address escalating contributions for long-term liabilities.
“The City Council’s conservative financial practices allow the City to support the community during this unprecedented economic downturn and make progress on long-term goals,” said City Manager Melissa Stevenson Diaz. “Additionally, voter support for Measure RR in 2018 has provided essential ongoing revenue to sustain community services.”
Operating balances are one-time funds, and the City has used one-time funds to pay down liabilities and support City Council priorities through one-time expenditures. In keeping with this strategy, the City Manager is recommending that the $12.1 million Fiscal Year 2019-20 Operating Balance be used for pandemic response and recovery, reimagining City programs and services, and long-term community needs. In addition to Citywide pandemic costs, this includes a one-time utility bill forgiveness program; additional small business support; enhanced communications; diversity, equity and inclusion initiatives; and increased funding for homelessness services. The recommendation also includes partial funding for planning studies related to improving Redwood Shores levees and the potential creation of a Bayfront Park in the Inner Harbor Area.
“The City has prioritized support for vulnerable residents and our business community during the pandemic,” noted Stevenson Diaz. “We are responding with urgency, creativity and compassion. At the same time, we are proactively addressing long-term needs, including paying off pension liabilities at an accelerated rate to save taxpayers approximately $38 million.”
In addition, staff will seek City Council input on the proposed framework for developing the Fiscal Year 2021-22 Recommended Budget. The framework continues financial best practices and City policies; advances the City’s Strategic Plan and the City Council’s three top priorities of Housing, Transportation, and Children and Youth; and implements the City’s COVID-19 financial and community recovery strategy.
Staff is recommending the following timeline for the development of the Fiscal Year 2021-22 Budget; all dates are public meetings of the full City Council and members of the public may participate:
April 12 – Community Development Block Grant/HOME Grant Study Session
April 12 – Capital Improvement Program Study Session
June 14 – Formal Budget Submittal at City Council Study Session
June 28 – Budget Public Hearing and Adoption