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185

CITY OF MORGAN HILL

FY 16-17 and 17-18

OPERATING AND CIP BUDGET

CITY OF MORGAN HILL

FY 16-17 and 17-18

OPERATING AND CIP BUDGET

CITY OF MORGAN HILL

FY 16-17 and 17-18

CITY OF MORGAN HILL

FY 16-17 and 17-18

OPERATING AND CIP BUDGET

CITY OF MORGAN HILL

FY 16-17 and 17-18

OPERATING AND CIP BUDGET

CITY OF MORGAN HILL

FY 16-17 and 17-18

OPERATING AND CIP BUDGET

CITY OF MORGAN HILL

Street Maintenance

(continued)

FINANCIAL COMMENTS

Funding for Street Maintenance comes primarily from the City’s share of state gas taxes and transfers from the sewer

and water enterprises reflecting their responsibility for wear and tear on the streets. Since gas taxes are collected

based on gallons, and not on the price of gas the amount of gas tax revenue received by the City has remained more

or less flat, while the cost of street maintenance has increased over time due to inflation.

The latest street condition report completed in March 2016 indicated that the City’s weighted average pavement

condition index (PCI) is 67. Given the City’s current planned expenditures in the Pavement Rehabilitation Program

budget in the CIP, the PCI will fall below 60 in 2021 and deferred maintenance will exceed $41 million. In order to

maintain a PCI of 67, it will be necessary to increase the City’s annual capital expenditures to $3.9 million. While this

level of investment would stabilize the PCI over the next 5 years, it would still result in an increase in deferred

maintenance to $31 million by 2021. Annual expenditures of over $6 million annually would be required to begin to

address the City’s deferred maintenance backlog and would also result in a projected increase in the City’s PCI to 72 by

2021.