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In a recent meeting, Redwood City council members discussed the city’s upcoming fiscal challenges and planned budget, ensuring it fits their primary goals despite tough economic times.
With council member Alicia Aguirre absent, the council voted to pass a series of resolutions to improve the city’s financial situation and plans for the future.
Council member Diane Howard first raised concerns about Redwood City’s financial challenges, specifically addressing the pension liability issue of over $300 million.
“Here we are planning for deficits in the next five to 10 years, and I give us a lot of credit for doing it because it certainly isn’t an easy conversation to have,” Howard said.
“We are struggling to make it all work. We’re trying to make sure we stay sustainable and provide the services people want. And it’s becoming increasingly more challenging, but I just feel strongly that together, we’re going to be able to accomplish it,” she added.
Addressing the pension liabilities and extra payments to the California Public Employees’ Retirement System (CalPERS), which comprises 65% of the city’s general fund, City Manager Melissa Stevenson Diaz said the city should reconsider not “making extra payments to CalPERs,” especially considering the economic impacts of the pandemic and an unexpected $82 million loss to the general fund. The city, she said, was in a much different place, financially speaking, before the pandemic.
Diaz also presented a framework for developing the Fiscal Year 2023-24 budget, focusing on community priorities, financial best practices, and strategic investments.
She proposed using the current year’s operating balance to cover next year’s projected deficit, with the remainder allocated towards city liabilities and one-time expenditures based on council priorities.
According to the city’s budget, the city brings in a total of $342 million in revenue against $335 million in expenditures, including roughly 590 full-time staff positions. A significant portion, $171 million, is allocated to the general fund, which is primarily financed by tax dollars. Notably, salaries, wages, and benefits constitute roughly 69% of the general fund expenditure budget, up from 66% percent in FY 2022-23, with police and fire department salaries and benefits making up $78.3 million, or 65% percent of these costs.
Redwood City anticipates a 3% decrease in general fund revenue for FY 2023-24, mainly due to lower sales tax revenues and an additional 1% drop in FY 2024-25 from declining property tax revenues.
In the same meeting, Diaz also gave an overview of the city’s strategic goals, particularly highlighting the SMARTIE goals — Specific, Measurable, Achievable, Relevant, Time-bound, Inclusive, and Equitable.
“Nearly 75% of all the goals citywide are either completed now or on track for completion, with about a quarter of them behind schedule or will be postponed,” she said.
The SMARTIE goals for 2023, focusing on Housing, Children & Youth, and Transportation, showed completion rates of 34%, 33%, and 25%, respectively, reflecting a strategic alignment with the city’s priorities amid fiscal constraints.
“A significant correction was necessary in our general fund due to a duplicated entry of revenues from the American Rescue Plan Act (ARPA) grants,” explaining the steps taken to ensure budget accuracy.
The council also set a timeline for future budget discussions, with critical dates leading up to the formal budget submission and adoption planned for June 2024.
The next city council meeting is a special council meeting scheduled for March 7. The regularly scheduled meeting is on March 11.
