The Redwood City Council discussed balancing saving money for a rainy day and spending it toward community needs at its meeting June 9, as the city anticipates longer-term structural deficits over the next decade despite a stable upcoming fiscal year.
In a study session for the city’s Fiscal Year 2025-26 recommended budget, the City Council emphasized the need to dedicate money toward improving the city’s roads and other capital improvement projects, while maintaining a secure level of reserves in the bank.
Against the backdrop of a fluctuating economy and uncertain federal and state funds, the council discussed its budgeting responsibilities at length.
“If we knew it was going to be bad, it would be called uncertain,” Vice Mayor Kaia Eakin said. “There’s a cost of keeping too much money in the bank. This is the people’s money.”
Although many agreed, Councilmember Jeff Gee defended the need for abundant reserves as a safe bet.
“Having reserves, having contingencies, having an economic stability fund, is an appropriate measure given the uncertainty, and the work that isn't finished yet that we know is going to cost more than what was budgeted,” Gee said.
Ultimately, the City Council directed staff to dedicate $2 million in “economic stability reserve”— down from the proposed $4.8 million by staff — on top of its 15% reserve. The decrease was promoted by councilmembers who would rather see the money spent on street maintenance and pavement improvements throughout the city.
For Fiscal Year 2025-26, the city is budgeting for $403 million in revenue and $397 million in expenditures, including 634 full-time staff positions, said Finance Director Beth Goldberg. Of the 201 million general fund budget, 30% will be dedicated toward police, 27% toward fire, and 14% to parks, recreation and community services.
The city’s five-year capital improvement plan is a particular “pressure point” in the city’s budgeting, Goldberg said. There is an estimated $243 million shortfall in revenue compared to all projects identified in the five-year plan.
For the five-year capital improvement plan, 43% of the planned funding will be dedicated toward transportation projects which includes street and bike safety improvements.
City Manager Melissa Stevenson Diaz emphasized the public’s consistently stated desire for the city to improve its streets. The city’s “pavement condition index” which gauges the quality of roads, has declined from a rating of 75 to 68. A rating under 70 suggests significant improvements needed that will be more expensive.
Councilmember Diane Howard noted that the increased budget for more full-time staff is just as important as dedicated funds toward specific improvements.
“We can't even do the roads if we don’t have enough people,” Councilmember Diane Howard said. “We have to get on track and have enough people to support the number of people who live in Redwood City.”
Although the city has ended recent fiscal years in a “positive operating position” and moving funds around will address the slight operating deficit for the upcoming fiscal year, longer term projects see a more significant annual deficit within the decade, Goldberg said.
“A lot can change, but it is something we should be cognizant of and plan for as those years approach,” Goldberg said.
The public hearing for the budget and adoption will be June 23.
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