Mid-year budget report goes before council
Blog note: this article references a grand jury report.
Paying $3 million to reduce pension liability is among spending recommendations that follow higher than expected revenue for Redwood City, which has an unfunded pension liability of $264.5 million.
“Our commitment is that when we have a surplus,” said Vice Mayor Shelly Masur, “a portion of that will go toward paying down our pension liabilities.”
Masur said a range of issues contribute to the liability — including actions by state government.
“During the recession, the state pulled back on its contributions so the costs were shifted to local governments,” she said.
The recommendation to spend $3 million toward pension liability is part of a mid-year budget report that goes before Redwood City Council members Monday.
Jennifer Yamaguma, city spokeswoman, said the council will consider $9.4 million in spending recommendations.
If approved, staff will propose an increase in appropriations as part of the fiscal year-end budget amendment in June, Yamaguma said.
Accelerating payments toward pension liabilities allows the city to realize interest savings — much like making additional payments on a home mortgage, a city report notes.
Other recommendations on city spending include $1.5 million to support residents’ transition from homelessness or vehicle dwelling into permanent housing and spending $1 million toward climate adaptation initiatives.
The mid-year budget report for Redwood City said revenue budgeted at $158 million are now estimated at $165 million. The increase includes $2.9 million in higher than expected sales tax revenue.
A city staff report noted Redwood City is not unique in facing pension challenges and reforms provide long-term relief but are not enough to fully fund promised benefits.
“The city began reforming pension benefits in 2011, and statewide pension reform occurred in 2013,” the report said.
About 20% of the city’s General Fund goes toward paying for pension benefits — an amount that will grow to 24% over the next five years as city pension contributions ramp up to pay for benefits of retired and current employees, according to the city.
Redwood City said it is undertaking most of the actions outlined in a 2018 county civil grand jury report “Soaring City Pension Costs – Time for Hard Choices.”
The Redwood City Council meets 7 p.m. Monday, Feb. 24, in the chambers at City Hall, 1017 Middlefield Road.
February 22, 2020
San Mateo Daily Journal
By Ryan McCarthy
No comments:
Post a Comment