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

General Fund 6 Year Forecast

50.0%

45.0%

41%

41%

40%

40.0%

37%

37%

35%

35.0%

31%

28%

30.0%

27%

25.0%

20%

19%

20.0%

14%

15.0%

8%

10.0%

5.0%

1%

0.0%

YEP 19-20

REC 20-21

REC 21-22

Forecast

Forecast

Forecast

Forecast

22-23

23-24

24-25

25-26

General Fund 6 Year Forecast at Goal Setting January 2020

General Fund 6 Year Forecast April 2020

General Fund – Summary Overall, absent a quick recovery from the COVID-19 public health crisis economic downturn, the City’s General Fund is expected to remain under pressure and requires corrective action. During the next few months, staff will monitor economic data as it becomes available and make further adjustments to revenue projections. Staff will bring forward amendments to the Recommended Biennial Budget to ensure the City’s fiscal sustainability. The General Fund’s fund balance is forecasted to decrease from $17.9 million at the beginning of FY 2019-20 to $8.8 million by the end of the biennial budget FY 2021-22. The General Fund is expected to transfer to Development Services Fund (Fund 206) a combined $2.9 million through FY 2021-22 as a short-term loan to cover Fund 206’s negative cash, including $425,000 for the current year with the expected repayment in FY 2022-23. Development Services Fund The COVID-19 pandemic is expected to have a material and immediate impact to development services related revenue. The fund was originally budgeted to end the fiscal year with an operating deficit of approximately $0.7 million, however, it is now expected to run out of cash before the

18 RECOMMENDED BUDGET MESSAGE