AgdaPkt 2018-07-23 Joint SA PFA - Laserfiche WebLink

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The City has been a leader in the State by proactively addressing required pension cost increases. City employees now contribute up to 18% of their salary to help cover their pension. This is among the highest employee contribution rates in the Bay Area region and the State. Redwood City has a three-tier pension system where newer hires receive more modest benefits. Redwood City also has created a local pension trust to help fund future pension liabilities. After managing City costs and increasing fees related to development, in summer 2017, the Council directed staff to work with the City Council Finance and Audit Subcommittee to examine potential revenue measures. In addition to considering a sales tax, the Committee considered several other approaches to increasing revenues, including: • Increase the Business License Tax: The City currently has a business license tax that varies by the number of employees. The City receives $2.5 million annually from the business license tax. In order to generate $8.0 million in new revenue, the City would need to nearly quadruple the business license tax rate. • Increase the Property Tax throuah a Parcel Tax: This is an annual tax on each real property parcel in the City. In order to generate $8 million annually, each real property parcel in Redwood City would need to be taxed approximately $380 annually. • Increase the Real Propertv Transfer Tax: A real property transfer tax is a tax on the sale price or transfer of real property. The City currently receives $0.55 for every $1,000 of property value. If the City were to increase the real property transfer tax to $2.20 for every $1,000, it is estimated to generate an additional $2.3 million annually. • Increase the Transient Occupancv Tax (TOT): This is a hotel room tax for out of town visitors. The City currently taxes nightly hotel stays at 12%. If the City were to increase the hotel tax by 2%, to 14%, it is estimated to generate an additional $1.0 million in new revenue annually. • Increase the Utilitv Users Tax (UUT): The UUT is a tax on gas/electricity and telecommunication utility usage. Because the City dedicates all revenues from the UUT towards capital projects (infrastructure improvements and affordable housing), increasing the UUT would increase funding for capital projects, but would not provide funding for operating services such as public safety, libraries and recreation.