City of Redwood City logoOn Monday, February 28, 2022, the Redwood City City Council received a Year-End update for Fiscal Year 2020-21 and a Mid-Year Update for Fiscal Year 2021-22, as well as the proposed framework for the development of next year’s budget. While the economic recovery is rebounding more quickly than originally anticipated in many sectors, the City expects it will take a total of five years to return to pre-pandemic revenue levels to support City operations.
“We need to continue to lean into reimagining service delivery by studying service levels against best practices, leveraging technology, and applying an equity lens to City service delivery,” said City Manager, Melissa Stevenson Diaz. “Many departments are stressed beyond capacity, especially as we continue to grapple with staffing constraints due to the pandemic. Looking ahead, we have to ensure we have the right staff, right services and right resources.”
Through difficult budget reductions throughout the organization, the City ended Fiscal Year 2020-21 with $1.6 million available in operating balance. This year, the City received $9.24 million in pandemic recovery assistance from the federal government, enabling the City to balance the budget without additional drastic cuts. In preparation of the budget for the coming fiscal year, the City is forecasting a deficit of more than $11 million that will need to be offset with another $9.24 million in federal assistance (the last year the City expects to receive federal pandemic assistance), combined with $2.52 million in City reserves to balance the budget. The City will set-aside about $6.5 million in additional City funds for anticipated deficits resulting from the pandemic; however, more than $17 million in deficits over the next four years is currently projected. Key drivers for the projected deficit are shortfalls in sales and hotel taxes and rising costs to fund pension benefits for employees who have already retired and current employees.
Housing and homelessness were top concerns in a recent community survey. The City Council approved adding a position to the Housing Division to support Housing-related initiatives, and will receive additional proposals for increasing capacity related to housing and homelessness with the FY 2022-23 Recommended Budget. The City’s March 14 State of the City Address will focus on the City’s substantial efforts to eliminate homelessness and ensure homes for all.
The City Council approved staff’s recommendation to develop the Fiscal Year 2022-23 Recommended Budget that continues financial best practices; advances the City’s Strategic Plan and the City Council’s three top priorities of Housing, Transportation, and Children and Youth; continues progress with the City’s COVID-19 financial and community recovery strategy; expands the recovery strategy with emphasis on right-sizing; and studies cost recovery and potential new revenue sources.
The City Council also approved the following timeline for the development of the FY 2022-23 Budget; all dates are public meetings of the full City Council and members of the public may participate:
  • March 24, 2022 – Capital Improvement Program Study Session Community Development Block Grant
  • May 9, 2022 – Community Development Block Grant/HOME Grant Study Session
  • June 13, 2022 – Formal Budget Submittal at City Council Study Session
  • June 27, 2022 – Budget Public Hearing and Adoption; Announcement of The People’s Budget Projects
To view the agenda and full staff report with recommendations (Agenda Item 9A), click here.