City of Redwood City Budget Process

Ways you can provide input

The City’s annual budget adoption is one of the most important efforts completed by the City Council. The City’s budget reflects City policy and invests in City services to support community priorities. The City Council adopted a Strategic Plan in 2015 and updated it in 2016 to include housing as an additional strategic initiative.

Go here to learn about activities currently underway to address City Council priorities. Some of these activities are funded in the General Fund, while others are funded in the Capital Improvement Program (CIP). Many of these activities are either ongoing or will extend to FY 2017–18 or beyond.

The City Council has previously endorsed three principles for developing the annual operating budget:

1. Rely on ongoing revenue to fund ongoing expenses

2. Use one-time revenues for one-time expenses and to pay down long term liabilities

3. Ensure adequate reserves

This blog post provides highlights of the proposed FY 2017–2018 Capital budget, an outline of what programs and projects the City’s Operating and Capital budgets invest in and ways the community can participate in the budget process.

BUDGET 101

The City’s budget funds services and programs to support the City’s strategic initiatives, maintain adequate reserves and address long term liabilities.

The budget is also informed by community feedback received from the Redwood City Conversations process. This process, outlined here, generated feedback from nearly 300 residents and business owners who recently took part in one of eight Redwood City Conversations events. Priorities identified include continuing affordable housing programs, expanding transportation and traffic improvement programs, improving parking, focusing on pedestrian and bike safety programs, maintaining a small-town feel and expanding City parks and public spaces.

City Operating Budget Revenues

In February, City staff provided an update on the City’s budget. General Fund Fiscal Year revenues are budgeted at $113.2 million, but as of the mid-year budget update revenues were estimated at $119.5 million, which results in a positive variance of $6.3 million. Much of this variance is related to increased property tax receipts and to excess Educational Revenue Augmentation Fund (ERAF) payments. The City’s FY 2016–2017 adopted budget funded 565.93 full time equivalent (FTE) employees.

Property tax, which represents over 40% of General Fund revenue, is exceeding the revenue projected in the adopted budget by $4.1 million or almost 9%. This is largely due to continued investment in the Downtown area leading to increases in assessed valuation for commercial property, and strong demand compared to limited supply for residential property. The City also received $2.4 million more in excess ERAF payments from San Mateo County than budgeted. ERAF payments are residual proceeds from a complicated property tax and school funding formula administered at the County level as required by legislation enacted in the early 1990’s.

Property tax grown in the Downtown, a former Redevelopment Agency area, particularly stands out and is expected to generate at least $650,000 more than expected at budget adoption. On the other hand, sales tax receipts are lower than budgeted. This appears to be due to the loss of a few large sales tax generators, and a downward trend in automobile sales. Additionally, the growth in online retail sales has cut into sales tax revenues, and a greater proportion of economic activity is dedicated to purchasing services, which are not taxed, rather than goods, which are. When adjusting for inflation, sales generated per capita is lower than it was in 2006. Revenue from Transient Occupancy Tax (TOT), also known as hotel taxes, is trailing last year’s revenue by 4.7% but the revenue from the new hotel at One Marina is anticipated to cover any shortfall.

City Capital Improvement Program Revenues

The City also manages a Capital Improvement Program. Revenues for capital projects come from a variety of sources including funding from the utility users tax, the transportation fund, transportation grant funds, traffic mitigation fees, parks impact fees and in-lieu fees, and water and sewer funds. Last year’s Capital Improvement Program budget was $32.3 million and funded 67 Citywide projects including furthering the Veterans Memorial Senior Center-YMCA project, funding the Middlefield Road Utility Underground project, addressing roadway pavement management projects, rehabilitating the Red Morton Picnic/Play Area, funding the Kennedy Safe Routes to School project, moving forward the next phase of the 101/84 Highway Interchange project and launching the Citywide Transportation plan study. To review last year’s CIP, go here.

CAPITAL IMPROVEMENT PROGRAM STUDY SESSION

The City of Redwood City kicked off budget discussions on May 8, holding a study session about the City’s Capital Improvement Program (CIP). This year, City staff is proposing a five-year CIP budget to address infrastructure and other capital needs. The proposed five-year CIP has a heavy focus on transportation, parks and storm water projects. In order to balance anticipated needs and anticipated revenues over the long-term, in Fiscal Year 2017–2018 the City Council is expected to adopt a policy to establish priorities for capital projects, and to consider opportunities for increased funding. To watch the City Council meeting video discussing the Capital Improvement Program, go here.

PROPOSED CAPITAL IMPROVEMENT PROGRAM 2017–2018

A total of 57 Capital projects are proposed for FY 2017–18 with an estimated cost of $37.8 million. The figure below provides a breakdown of the projects by functional area. It is important to note that only the proposed FY 2017–18 CIP budget is aligned with the anticipated revenue and staffing, and will be requested for budget approval.

The existing CIP (funded in FY 2016–17 and previous years) has 209 active projects with a total project balance of $91.8 million. A detailed list of the projects and their status (as of March 31, 2017) is provided in the May 8 Staff Report Attachment 3.

FIVE-YEAR CAPITAL IMPROVEMENT PROGRAM

The proposed five-year CIP includes 130 potential projects with an estimated cost of $527.9 million. The proposed CIP is summarized in the table below.

Funding for capital projects are from many sources, with the Utility Users Tax (UUT) being a general revenue source that can be utilized for all capital improvement projects. Dedicated revenue sources include park impact fees, water and sewer enterprise funds and Measure A and Gas Tax revenues. Over the next five years, these sources are expected to contribute approximately $143 million in revenues.

The table below shows the fund balances from the available revenue sources and the anticipated revenue for FY 2017–18.

With the exception of UUT revenues, most other funding sources are restricted to certain purposes and, in some cases, must be spent within a prescribed period.

A summary of proposed Five-Year CIP project list can be found here. Detailed proposed Five-Year CIP projects can be found here.

WAYS YOU CAN PROVIDE INPUT

The City Council will host a study session to review the City’s proposed FY 2017–2018 operating budget and FY 2017–2018 and Capital Improvement Program on June 12. The FY 2017–2018 public hearing and budget adoption is scheduled on June 26.

There are a number of ways to participate in the budget process:

1. Email the City Council at council@redwoodcity.org

2. Watch the City Council meetings online or on cable, go here for agendas and online reports

3. Attend the City Council meeting on June 12 or 26 by visiting the City of Redwood City, City Hall Council Chambers. For location information go here

4. Subscribe to receive agenda information via email here or check the tentative City Council agenda for details here

5. Sign up for the City of Redwood City’s digital newsletter here

For more details on ways to Join the Conversation and share your thoughts, go here.

MORE BUDGET INFORMATION

FY 2016–2017 Approved Budget

Staff report on the Mid-Year FY 2016–2017 Budget Update

Mid-Year Budget Council presentation

FY 2017–2018 Capital Improvement Program and Five-Year Capital Improvement Program staff report

Last year’s budget blog series