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6.B. - Page 4 of 10 and cancellation of classes in compliance with the Shelter in Place Order. Staff anticipate revenue will return to near -recent levels in FY 2021-22 and assume a1% increase in FY 2022-23 and beyond. Expenditure Update After accounting for mid -year budget adjustments approved by the City Council, FY 2019-20 General Fund expenditures and transfers out were forecast to be $164.4 in February, but are now estimated to be $159.3 million, a decrease of $5.1 million. Significant expenditure changes are detailed below. • Savings associated with maintaining employee vacancies are estimated to be $3.0 million • Contributions toward City reserves, which are determined by the amount of next fiscal year's projected revenue, are decreased by $765,000 as projected revenue has decreased • Added current city-wide COVID-19 operating costs through March 31, 2020 of $159,000 • Added $693,000 for additional contributions to Emergency Rental Assistance and a Small Business Assistance program • Reduction by $127,000 of transfer out of Utility Users' Tax revenue to align with actuals Based on a positive operating position projected in February, staff recommended and the City Council approved several one-year or two-year expenditures to advance policy priorities, particularly around addressing unfunded liabilities, infrastructure maintenance needs, and to address increased community impacts associated with individuals living in recreational vehicles. The Revised Forecast includes most of these expenditures at the level presented in February, however, in light of the anticipated budget deficit beginning in FY 2020/21, these expenditures may need to be revisited with the Recommended Budget to be considered by the City Council on June 8, 2020. A summary of these policy -related expenditures is below and both Forecasts are provided as Attachments 1 and 2. Special Expenditures to Address Policy Priorities February 24, 2020 Forecast April 9, 2020 Forecast Section 115 Pension Trust Contribution $1.1 million $1.1 million Section 115 Other Post -Employment $0.3 million $0.3 million Benefits (OPEB) Retiree Health Trust Contribution Direct additional payment to CaIPERS $3.0 million $1.5 million Homeless/Healthy Streets/Safe $1.5 million $1.5 million Parking Initiative Americans with Disabilities Act (ADA) $1.5 million $1.5 million Transition Plan Climate Adaptation Initiatives $1.0 million $1.0 million Transfer to Capital Improvement $2.0 million $2.0 million Program Budget for Transportation Projects As was discussed at the April 6, 2020 City Council meeting, to develop the FY 2020/21 Recommended Budget staff will roll over the current base budget and include employee compensation changes which are effective July 1, 2020 under current bargaining agreements. Bringing together the current assumptions on revenues and expenditures, the Revised Forecast results in a deficit operating position beginning in FY 2020/21. As more is known on revenues and expenditures in the coming months, staff will recommend a Mid -year budget update to the FY 2020/21 budget by December 2020. Page 4 of 8 ..A . City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 224