Operating and CIP Budget Fiscal Year 2015-16

 CITY OF MORGAN HILL  FY 15-16  OPERATING AND CIP BUDGET  CITY OF MORGAN HILL  FY 15-16  OPERATING AND CIP BUDGET  CITY OF MORGAN HILL  FY 15-16  OPERATING AND CIP BUDGET  CITY OF MORGAN HILL  FY 15-16 OPERATING AND CIP CITY OF MORGAN HILL  FY 15-16  OPERATING AND CIP BUDGET  CITY OF MORGAN HILL  FY 15-16  OPERATING AND CIP BUDGET  CITY OF MORGAN HILL  FY15-16  OPERATING AND CIP BUDGET  CITY The City of Morgan Hill’s General Fund revenue is forecasted to increase from $33.7 million in FY 15 -16 to $37.7 million in FY 19-20. This relatively modest growth of 12 percent over a five year period, allows the City to main- tain its current levels of service with some service level enhancements as described above. With this being said, it is important for the Council and community to understand that 1) the City is not in the financial position to address its aging public infrastructure (streets, facilities, parks) in an ongoing manner that significantly reduces its deferred main- tenance backlog or decreases the level of annual decline, 2) that the City’s Water Utility Enterprise Fund cannot sus- tain itself into the future due to reduced consumption (up to 30 percent compared to 2013) coupled with a rate model which only recovers a fraction of fixed costs, 3) the City’s Wastewater Utility Enterprise Fund’s future is anticipated to fare better than the Water Fund, though it too will require our attention to ensure it remains sustainable into the fu- ture, including meeting its capital commitments, 4) the Community Development Fund continues its strong current day performance, though it will rely on fund balance beginning in FY 16-17 to cover a portion of expenses as housing construction activity returns to normal, and 5) the City’s Housing Funds are financially strong for the short-term (5 years), but annual revenue will decline in the out years at the same time as fund balance is being depleted by projects utilizing one-time revenue infusions. General Fund The General Fund (GF) is the City's most visible fund because it accounts for many of the City's services that most resi- dents relate to including police, fire, recreation, street maintenance, municipal governance, and administrative ser- vices. In FY 15-16, over 77 percent of General Fund revenue will be derived from four sources 1) property tax of $9.0 million, 2) sales tax of $8.7 million, 3) recreation revenue of $6.5 million, and 4) Transient Occupancy Tax (TOT) of $2.0 million. The remainder of revenue is generated by other charges for services, grants, and transfers. For FY 15-16, prop- erty tax is projected to increase by 6 percent compared to Adopted FY14-15 Budget as new housing is built, Prop 8 bounce back occurs (house values return to pre-recession values), and property values increase. Sales tax revenue is estimated to increase by roughly 9 percent largely due to the end of the "triple flip". Subsequent forecast years as- sume an average annual growth of 4 percent. From a property and sales tax perspective, it is important to understand that the City only receives a small portion of the total taxes paid by residents, businesses, and visitors as depicted in the following images.

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