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8.A. - Page 3 of 72 • Adopting an aggressive pension plan funding strategy that includes making additional annual contributions directly to CalPERS over the next 18 years to accelerate the unfunded liability payoff period, saving the City approximately $38 million in interest • Adopting a strategy of dedicating 80 percent of any fiscal year-end net operating balance towards paying down the City's pension liabilities, with 20 percent of any fiscal year-end operating balance going towards the City Council priorities • Continuing to contain costs through efficiencies, partnerships, shared services, and innovative operational improvements • Analyzing the possibility of new revenue sources • Implementing the budget module of OpenGov, an online platform that provides detailed and transparent budget information • Implementing an online platform for business license and transient occupancy tax compliance tracking, notification, and online payment processing • Engaging the Government Finance Officers Association to perform a best practices review of the City's financial processes and procedures prior to implementation of the City's new financial management system • Streamlining the development of the Capital Improvement Program in an effort to provide a more realistic and financially viable roadmap of the City's capital needs • Paying down pension liabilities by making additional direct payments to the California Public Employees Retirement System (CaIPERS) beyond the annual amount owed, and making additional contributions to the City's Section 115 Pension Trust account to pre -fund the City's pension obligations All of the sections outlined below reflect efforts underway to maintain the fiscal health of the City, while at the same time supporting numerous initiatives to advance the City Council's Strategic Plan. FY 2019-20 MID -YEAR BUDGET UPDATE — GENERAL FUND Revenue Update FY 2019-20 General Fund revenues and transfers in are budgeted at $158.8 million, and are now estimated at $165.3 million, resulting in a positive variance of $6.5 million. This variance is primarily attributed to $2.9 million in higher than expected sales tax revenue, $1.5 million in increased charges for services, $800,000 in increased interest earnings, $800,000 in recreation program revenues, and $400,000 in increased property taxes, including development fees. Sales tax, which represents 21.4 percent of General Fund revenue, is exceeding budget by $2.9 million, or approximately 8.9 percent. This is largely due to higher than expected district sales tax receipts as a result of the half -cent cent sales tax increase passed by the voters in November 2018 (Measure RR). Property taxes, which represent 38.6 percent of General Fund revenue, are expected to increase modestly by $400,000, or 0.6 percent, as compared to the adopted budget. Property tax in -lieu of vehicle license fees is expected to be lower than budget by $1.9 million due to a countywide decrease affecting all cities in San Mateo County, and secured and unsecured property taxes are expected to be slightly Page 3 of 26 IIIIIIIIIIIIIIIIM Now City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 238