City of Morgan Hill Fiscal Years 2020- 2022 Recommended Operating and CIP Budgets

The table below summarizes the projected revenue loss by major revenue categories over the three fiscal years from the current year FY 2019-20 to FY 2021-22:

Revenue Type

FY 2019-20

FY 2020-21

FY 2021-22

TOTAL

Property Tax

$0.1M $1.5M $0.9M $0.9M $1.2M $4.6M

$0.1M $1.8M $0.8M $0.6M $1.3M $4.6M

$0.6M $1.5M $0.4M $0.2M $0.3M $3.0M

$0.8M $4.8M $2.1M $1.7M $2.8M

Sales Tax

Recreation Services

Hotel Tax

Fund 206 Revenue

TOTAL

$12.2M

General Fund - Discretionary Expenditures To offset the impact to City’s revenues from the pandemic, the City had to make some budget adjustments. In conjunction with the closure of the recreation centers, the City has furloughed most part-time teammates, reduced contractual services citywide such as janitorial and maintenance services, and implemented a hiring freeze, except for Public Safety. Staff intends to bring to the Council additional proposals and adjustments to the budget to ensure the City’s fiscal sustainability. From a spending perspective, for FY 2020-21 for example, the Council has discretion on how to spend approximately $28.4 million of the $42.4 million in General Fund revenue. This is because over $14.0 million in General Fund revenue is related to a specific service or purpose and can only be used to provide that service (e.g., recreation services). The Biennial Budget recommends that the Council allocate its discretionary funds as depicted in the following chart. As demonstrated, Public Safety continues to be the number one priority as 84 percent will be used for Police and Fire services. The remaining 16 percent of discretionary revenue is appropriated to pay for Economic Development, Finance, Human Resources, City Clerk, Recreation and Community Services, Environmental Services, Streets, Parks, Public Facilities, Downtown Maintenance, City Attorney,

Use of Fund Balance

Long Range Planning

Cable TV

Library Impact

Congestion Management

Code Compliance

Pavement Rehab CIP

Environmental Programs

OPEB

Downtown Maintenance

Park Maintenance

Economic Development

Street Maintenance

Development Services

Administration

Recreation &Community Services

Fire

24%

Police

60%

-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

16 RECOMMENDED BUDGET MESSAGE