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6.C. - Page 43 of 196 City of Redwood City Management's Discussion and Analysis For the fiscal year ended June 30, 2020 GOVERNMENTAL ACTIVITIES Governmental activities prior to transfers increased the City's net position by $14.2 million. Including transfers, governmental activities net position increased by $8.8 million. Transfers out of governmental activities and into business -type activities of $5.4 million during FY 2019-20 consisted of the transfer out of the general fund to the Docktown Marina fund of $4.3 million to cover litigation settlement expenses related to ending residential uses at the marina, a transfer out of the general fund to the parking fund in the amount of $900 thousand to support operations, and a transfer out of the general fund to the water fund in the amount of $200 thousand to support operations. Key elements of the increase/decrease in revenues for governmental activities are as follows: General governmental revenues (non -program) increased by $9.6 million, or 7.4 percent, from FY 2018- 19, as most categories of general revenues increased, other than property taxes, franchise taxes, utility users' taxes, transient occupancy taxes, and other revenue, which decreased. Within the broad categories, property taxes decreased $.7 million — due to a decrease in Educational Revenue Augmentation Fund (ERAF) revenue of $4.2 million, offset by increases in secured property taxes; sales taxes increased $7.8 million — due to receiving 12 months of the new half -cent sales tax, versus three months in the prior fiscal year; franchise taxes decreased $200 thousand; property transfer taxes increased $100 thousand, business license taxes increased $500 thousand, utility users' taxes decreased $100 thousand, transient occupancy taxes decreased $2.7 million — due to a large decrease in occupancy rates that began in April 2020, as a result of COVID-19 and the resulting stay-at-home order; investment earnings increased $4.9 million — due to a large accounting entry related to the fair value adjustment of investments as of June 30, 2020; and other revenues remained virtually unchanged. Community development revenues decreased by $2.1 million due to a decrease in building permit fees charged to customers of $1.3 million, and a decrease of $800 thousand in the amount of community development related grants received in FY 2019-20. Public safety revenues decreased by $1.1 million, primarily due to a decrease of $700 thousand in citations — due to a one-time back payment of citation administration fees to the County of San Mateo, and a decrease of $400 thousand in the amount of public safety related grants received in FY 2019-20. Transportation revenues decreased by $9.6 million, primarily due to a decrease of $9.5 million in developer contributions and capital grants. Environmental support and protection revenues decreased by $1.8 million, primarily due to a decrease of $1.8 million in developer contributions. Leisure, cultural and information services revenues decreased by $3.9 million primarily due to a decrease of $2.6 million in capital grants and a decrease of $1.1 million related to charges for services in the Parks, Recreation, and Community Services and Library Departments. Policy development and implementation revenue increased $200 thousand primarily due to an increase in charges to the South Bayside Waste Management Authority for accounting services. Key elements of the increase/decrease in expenses for governmental activities are as follows: Total governmental activities expenses were up $17.5 million, or 10.9 percent. Most functions experienced an increase in expenses, except community development and leisure, cultural and information services. In FY 2019-20, there was a contribution to the Section 115 pension trust investment account of $11.1 million that was recorded in the policy development and implementation expense category. This was an increase of $9.4 million from the FY 2018-19 contribution of $1.7 million to the Section 115 pension trust investment account. In addition, $3.8 million in additional payments were made directly to CalPERS to pay down the City's pension liability, which was also recorded in the policy development and implementation expense category. The increase in the policy development and implementation expense category accounted for 75 percent of the increase in governmental activities expenses in FY 2019-20. 11 130