City of Morgan Hill Adopted Budget FY 2016-17 and FY 2017-18

This report recommends the City to increase its average annual budget to $5.4 million to increase its PCI from 67 to 70 by FY2021 and maintain the Deferred Maintenance at $25 million level for the next five fiscal year period.

In the last report in 2014, the PMS budget analysis recommended $4.0 million per year of budget to raise PCI from 70 to 72.

2. Purpose The purpose of this report is to assist the City in utilizing the budget options analyzed in the PMS. This report assesses the adequacy of the current budget and identifies a recommended budget scenario that meets the M&R needs recommended by the PMS and that will improve the City’s M&R strategies over the next five fiscal years, and compares this cost to the City’s current budget. The following criteria were used in identifying a recommended scenario: • PCI value : Maintain network PCI at the current value or higher • Cost-effectiveness : Allocate more funds to arterial/collector roads than residential roads with appropriate PM ratio • Affordability : Provide a realistic expenditure plan that can stabilize Deferred Maintenance or minimize increase.

3. Definitions and Assumptions

Deferred Maintenance:

Dollar amount of maintenance and rehabilitation work that should have been treated, but funding was not allocated.

Inflation Rate: Interest Rate: PCI Treated:

3% 3%

Future PCI value with budget allocation. It shows PCI trends with limited or unlimited budget. Future PCI value without budget. It shows PCI trends “what if there is no fund for certain period of time”.

PCI Untreated:

City of Morgan Hill 2 Budget Options Report March 2016