Agda Pkt 2026.07.27 Joint SA PFA

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City of Redwood City Management’s Discussion and Analysis (Unaudited) (Continued) For the Year Ended June 30, 2025 14 FUND FINANCIAL ANALYSIS The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The general government functions are contained in the general, special revenue, debt service, and capital project funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources by using the modified accrual basis of accounting. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. At June 30, 2025, the City’s governmental funds reported combined fund balances of $256.4 million, an increase of $4.9 million from the prior year’s restated amount of $251.5 million. Governmental fund revenues increased $5.0 million this fiscal year to $238.6 million, an increase of 2.1 percent from last year’s total of $233.6 million. The City’s general fund revenues increased $6.5 million year-over-year. Governmental fund expenditures increased $10.2 million this fiscal year to $232.8 million, an increase of 4.6 percent. Expenditures increased in the general fund by $13.7 million, or 7.9 percent. The general fund is the primary operating fund of the City. At June 30, 2025, unassigned fund balance of the general fund was $34.0 million, an increase of $3.4 million from the prior fiscal year balance of $30.6 million. Total fund balance decreased to $125.6 million, a reduction of $2.3 million from the prior year’s restated balance of $127.9 million. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 18.3 percent of total fund expenditures, while total fund balance represents 67.6 percent of that same amount. The following are the funds that qualified under the reporting criteria for major funds selection: General Fund – General fund revenues increased by $6.5 million this fiscal year primarily due to increases in property taxes and the ‘other revenues’ category. Some of these increases were offset by revenue declines, particularly charges for services. Property taxes increased by $2.4 million, primarily due to incremental increases across several categories, including secured property tax and the rebate of Educational Revenue Augmentation Funds. Sales and other taxes were up slightly, $0.6 million, to fiscal year 2023-24 revenues. Within this category, sales tax decreased $0.7 million as inflationary pressures impacted discretionary spending on taxable goods. Franchise taxes were flat to the prior fiscal year, and transient occupancy taxes increased slightly, $0.4 million, as occupancy rates and room rates stabilized after a period of recovery from pandemic-era lows. Business license taxes increased by nearly $0.2 million to $3.7 million, and the utility users’ tax increased by $0.5 million to a total of $11.8 million. Licenses and permits increased by $0.2 million, stabilizing after a decline of $1.8 million in building permitting revenue from the prior fiscal year. Fines, forfeitures, and penalties were flat to the prior fiscal year, finishing at just under $0.4 million. Investment income, including unrealized gains on investment holdings, was down $0.3 million, reflecting the current interest rate environment and the duration of the City’s investment holdings. 7.C. - Page 46 of 269 65