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Politics & Government

Council Officially Adopts Balanced Budget

City Manager attributes ability to avoid services cuts to concessions made by labor unions.

The city council last night unanimously approved a balanced budget that was made possible through by the city's labor unions and management.

Going into the upcoming fiscal year, City Manager Bob Bell said the city faced needing to cut nearly $2.6 million from its budget. But thanks to the willingness of labor parties to contribute more money to their benefit funds and accept pension payment reductions, the reductions were avoided.

Bell thanked the city's labor unions, its elected leadership as well as the negotiating teams for coming to an agreement that allowed the city to pass the $78.8 million budget.

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"It wasn't the easiest thing to do, but it was the right thing to do," said Bell of the agreement and the negotiations leading up to it.

He attributed the city's ability to make such an agreement to the "respectful and trusting relationship" between the two parties.

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Bell said that the city's deficit would have grown to nearly $6 million by the 2014-2015 fiscal year, had the agreement not been struck.

Some union workers will still receive scheduled salary increases as part of the agreed upon contracts. But savings are returned to the city through reductions in long-term expenditures such as retirement and benefit payment plans.

Pension and benefit payments to public employees have undergone enormous scrutiny in recent years, and are widely becoming regarded as overwhelming burdens on taxpayer dollars by districts across the nation.

Redwood City's ability to balance its budget without reducing services to residents is a relatively unique achievement, compared to most other cities which rely on cuts to close a gap between revenues and expenditures, said Bell.

But Bell also said the city isn't out of the woods yet, as more creative thinking and problem solving will be necessary to avoid further problems down the road.

He alluded to the possibility of consolidating or sharing the public safety responsibilities, such as a fire department, as means to save money or increase spending efficiency.

Last month, it was announced that the Command Staff the newly formed San Carlos Fire Department, which will begin operations in October.

Bell last night did not specify how the agreement will effect service to residents, but cited the hybrid department as a potential indicator of changes to come.

Decisions regarding the state's budget made by legislators that impact the city's finances may result in more local re-orgnizations as well, said Bell.

He referenced Governor Jerry Brown's approving a state budget last week which alters the allowable use of local Redevelopment Agency funds by cities, and

Bell said it is possible Redwood City may do away with its RDA, but that city staff would return to the discussion with City Council members after a intermission through the summer.

"We cannot afford to rest on our laurels," said Bell.

He said the city's unions and negotiating teams should soon begin work toward hammering out a new labor deal for the next fiscal year, as the agreement approved last night took nearly a year to reach.

Also last night, the council unanimously agreed to move forward with a plan to ask voter approval to increase both the city's .

Should residents ratify the tax hikes in the fall election, Redwood City's current $37 business license tax would increase to $59 over a three year span.

Additionally, fees to business owners for full-time employees would increase over the same span to $38 from the current rate of $24. As well, the fee for part-time workers would increase from $12 to $19 over the same time period.

After the three year lifetime of increases, both taxes would rise annually based on the consumer price index.

And under approval from voters to hike transit occupancy tax, or hotel tax, would increase from 10 to 12 percent.

In all, the taxes are slated to generate $1.5 million annually if approved, according to a city report.

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