AgdaPkt 2020-04-06 Special - Laserfiche WebLink

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S.A. - Page 2 of 21 STRATEGIC PLAN GUIDING PRINCIPLE Healthy Community for All BACKGROUND Actions to reduce the spread of the novel coronavirus (COVID-19) have dramatically shifted City of Redwood City operations and focus in the last six weeks. In addition to measures to address health impacts in the community and protect vulnerable residents, the City has taken numerous steps to address community economic impacts. Given the scale of the pandemic, federal and state support is necessary and has evolved in recent weeks. Additionally, community donations and volunteerism have burgeoned and can help Redwood City address the pandemic. Because most City activity since early March has been dedicated to helping the community prepare for and address COVID-19 related impacts, routine City activities such as annual operating and capital budget development have been delayed. Further, given the profound nature of the pandemic, policy priorities for next fiscal year may shift as the City strives to ensure essential services in an unprecedented crisis and to support community members and staff. While the current Bay Area shelter in place orders are in effect through May 3, 2020, State of California shelter in place orders are in place indefinitely. As a result, economic activity will be disrupted for some time. The pandemic and the disruption in economic activity affects community members, businesses, educational institutions, non-profit organizations, and resources for City operations. While the full extent of impacts on the City's financial outlook will not be known for some time, most economists agree that a recession is imminent. For context, the 2008 recession resulted in varying degrees of reduction in City revenues, and significantly impacted City staffing and service provision for several years. While building permit revenues experienced the highest decrease, 46 percent, property taxes, the City's largest revenue source, decreased by 2 percent. The City's second largest operating revenue source, sales tax, decreased by 17 percent. Other major operating revenues, such as utility users' tax and franchise fees, decreased by 3 percent and 4 percent, respectively. While it is prudent to analyze historical data when developing the current forecast, the upcoming recession will most likely have a different effect on the City's major operating revenues. However, due to the unprecedented times, it is impossible to predict the length and severity of the upcoming recession. City operating and capital revenues are significantly impacted by the health of the local economy, and almost certainly will not reach the projections in the forecast staff presented February 24, 2020. Staff are developing an updated forecast now and anticipate presenting it to the City Council on April 13, 2020. At the same time, maintaining essential community services is vital. Over 70% of the City's operating expenses derive from the City employees who provide those services. To preserve the City's ability to continue to provide services in the face of anticipated revenue declines, staff are taking steps now to reduce expenditures. Because of the significant economic uncertainty and because management staff have focused nearly exclusively on COVID-19 response in recent weeks — a time that normally would have been dedicated to budget development — staff recommend a streamlined approach to developing the FY 2020-21 operating budget. The capital budget has already been substantially developed and is tentatively scheduled for City Council consideration on April 27, 2020. Staff are currently assessing planned capital recommendations in Page 2 of 21 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 5