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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.
Figure 4. General Fund Revenues and Expenditures by Land Use, FY 2014-2015
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.
Employ
ment
Lands
28%
Residential Lands
64%
Public
Spaces/
Other
Uses
8%
Revenues
Employ
ment
Lands
21%
Residential Lands
76%
Public
Spaces/
Other
Uses
3%
Expenditures
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.