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<br />xiv <br />Long-Term Financial Planning <br /> <br />The City Council has a history of taking intentional, proactive, and strategic steps to ensure the City’s long-term <br />fiscal sustainability, including adopting a structurally balanced annual budget, funding long-term needs, and <br />maintaining a 15 percent General Fund reserve level. <br /> <br />The City has earned an Aa1 issuer rating by Moody’s Investor Services. The rating reflects the City’s sizeable tax <br />base, strong wealth indicators, a healthy financial position supported by strong reserve and liquidity levels, and <br />a very modest debt burden. Maintaining a sustainable budget and prudently planning for the City’s current and <br />long-term needs is a top priority for the City Council. The City continues to focus strategically on appropriate <br />funding strategies for annual operations, a robust capital improvement program, and future liabilities. <br /> <br />Each fiscal year, the City prepares a ten-year General Fund forecast to project revenue and expenditure trends. <br />This forecast is an integral part of the annual budget process as the City seeks to establish and implement its <br />priorities in a fiscally sustainable manner. The forecast also assists in providing a long-term road map to guide <br />the financial planning of the City as it addresses rising pension costs and unfunded liabilities. The City reviews <br />major cost drivers to anticipate and control expenses to the maximum extent possible and makes fiscal decisions <br />within the framework of the forecast. The City also monitors its revenue sources to identify and plan for trends. <br />Financial planning also takes the form of continuous review and refinement of fiscal policies and forecasts, and <br />an understanding of the citywide initiatives underway. <br /> <br />During FY 2024-25, the City remained faithful to its established fiscal strategies. Specifically, Redwood City: <br /> <br /> Continued to fund ongoing services with ongoing revenues and limited the allocation of one-time <br />revenues to one-time expenses; <br /> Limited the use of reserve funds in response to emergencies to maintain the 15 percent General Fund <br />reserve level established in City policy; and <br /> Leveraged the ten-year forecast not only for financial planning but also to analyze trends over time and <br />reinforce a longer view in a time of crisis, to support thoughtful problem solving and strategic action. <br /> <br />Revenue Trends <br /> <br />The General Fund is the primary operating fund of the City. Total fund balance increased to $125.6 million in FY <br />2024-25, an increase of $5.5 million from the prior year balance of $120.1 million. General Fund revenues <br />increased by $6.5 million in FY 2024-25 due to increases in most sources, including property tax, sales tax, <br />licenses and permits, and use of money and property. Most of the General Fund fund balance has restricted <br />accounting designations meaning that most of it is not fungible. <br /> <br />Sales Tax <br />Sales tax is an important source of General Fund revenue, as it accounts for 19 percent of total General Fund <br />revenues. Redwood City receives $.16 of each dollar paid in sales tax in Redwood City. Total sales tax revenue in <br />the General Fund decreased by $747 thousand or 1.9 percent in FY 2024-25 relative to FY 2023-24. <br />7.C. - Page 26 of 269 <br />45