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6.1.D. - Page 44 <br />Management's Discussion and Analysis <br />For the fiscal year ended June 30, 2016 <br />ECONOMIC OUTLOOK AND NEXT FISCAL YEAR'S BUDGET <br />Redwood City, like many cities, relies heavily upon property taxes and sales taxes to finance general <br />governmental activities with these two revenues accounting for approximately 40.4% and 19.2% of <br />general fund revenues respectively in FY 2015-16. In FY 2015-16 the City experienced significant gains in <br />these revenues with property taxes increasing 7.8% and sales taxes increasing 5.1%. We see the increases <br />in each of these revenues, both of which are sensitive to consumer confidence, reflecting the strength of <br />the local job market. Given the continued increase in the number of local residents employed and the <br />low unemployment rate, we are hopeful that these revenues will continue to grow. <br />The adopted FY 2016-17 general fund budget projects a surplus of $168 thousand. For the foreseeable <br />future, contributions to retirement system are estimated to increase each fiscal year, due to changes in <br />the actuarial assumptions and methodologies used by the California Public Employees Retirement System. <br />City staff is monitoring these factors very closely and is keeping the City Council apprised of significant <br />developments. While property taxes and sales taxes have shown strong increases in recent fiscal years, <br />it is unlikely these increases will continue. All of these factors will be taken into consideration when <br />developing the FY 2017-18 budget. <br />CONTACTING THE CITY'S FINANCIAL MANAGEMENT <br />This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers, investors, and <br />creditors with a general overview of the City's finances. Questions about this report should be directed <br />to the Finance Division, at 1017 Middlefield Road, Redwood City, CA 94063. <br />17 <br />