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8.A. - Page 17 of 42 Revenue Projections Similar to the national outlook, Redwood City is projecting a gradual recovery of revenues comparable to the "Nike swoosh" graph. Projected revenues are not expected to reach pre -pandemic levels until FY 2024- 25, approximately five years after the pandemic began. $190.0 $185.0 $180.0 $175.0 $170.0 $165.0 $160.0 $155.0 $150.0 Projected General Fund Revenue (in millions) $151.2 $183.7 $179.8{ $176.0 $172.2 $167.3 $161.6 $157.6 $187.7 FY FY FY FY FY FY FY FY FY FY FY FY 2018-192019-20 2020-212021-222022-23 2023-242024-25 2025-262026-272027-292029-292029-30 Revenues Actual estimated revenues, including transfers in from other funds, for FY 2020-21 are outpacing the adopted budget revenues by $1.0 million. Revenue projections for FY 2021-22 indicate no growth from FY 2020-21. However, subsequent years are expected to have revenue growth, but at a much slower pace over the ten-year period. The City's primary revenue sources are property tax (40.8 percent of revenue) and sales tax (20.8 percent of revenue). Projections for these and other revenue sources are described below. Sales tax and transient occupancy tax are the sources of local government revenue considered most vulnerable to the economic downturn associated with the COVID-19 pandemic. To a lesser extent, property taxes, development -related revenues and business license taxes could be negatively impacted, depending on the length of the pandemic and the severity of the pandemic on the economy. Taxes Overall, property taxes are expected to decrease by $4.9 million in FY 2020-21 when compared to FY 2019- 20 actual revenues. This is primarily due to the unexpected reduction of $3.5 million in tax increment from the former redevelopment agency, as a result of the City of Chula Vista v. Sandoval case that clarified the calculation of residual tax revenues. Staff has recently engaged a new property tax consultant to keep staff updated on all property tax legislation and changes in property tax laws/regulations. In addition, the property tax consultant will prepare a forecast Page 17 of 28 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 548