City of Morgan Hill Economic Blueprint.docx

Another way to understand the City’s costs and revenues is to relate them directly to land use. As shown in Figure 4, residential lands generate approximately two-thirds of the City’s General Fund revenues, but an estimated three- quarters of the General Fund goes to providing services to those lands. In contrast, employment lands contribute 28 percent of revenues, but only account for 21 percent of costs.

Revenue sources that are directly tied to land use and economic growth – including sales taxes, property taxes, and transient occupancy (hotel) taxes – account for 64 percent of General Fund revenues.

Figure 4. General Fund Revenues and Expenditures by Land Use, FY 2014-2015

Public Spaces/ Other Uses 8%

Employ ment Lands 21%

Public Spaces/ Other Uses 3%

Revenues

Expenditures

Employ ment Lands 28%

Residential Lands 64%

Residential Lands 76%

Sources: County of Santa Clara Assessor, City of Morgan Hill sales, property, and transient occupancy tax, recreation fees and business license. General Fund costs are generally attributed two-thirds to housing and one third to businesses.

The City Council has established a policy to maintain a minimum General Fund balance of 25% of revenues. As a result of increased investments in transportation improvements, the General Fund balance is at approximately 42% of revenues. However, the five-year forecast predicts a decline in General Fund Balance to 36% in 2017-18 and 29% by 2020-21 because of future investments in the City’s street

infrastructure, increasing staffing levels in high priority areas, and addressing unfunded pension liabilities. Given these increased expenditures, it is more important than ever to develop sound policies to support increased revenues by attracting office, commercial, industrial and R&D investment and growing tourism- related investment and visitor spending.

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