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

SB 1, also known as the Road Repair and Accountability Act of 2017, which the California Legislature and Governor Brown approved in 2017 increased several taxes and fees to raise over $5 billion annually over ten years in new transportation revenues and prioritizes funding towards maintenance, rehabilitation and safety improvements on state highways, local streets and roads, and bridges to improve the state’s trade corridors, transit, and active transportation facilities. The City of Morgan Hill is estimated to receive $12 million over the ten-year period. This revenue, which is a significant source of funding for the City’s planned street improvement projects, has been incorporated into the City’s FY 2020-26 CIP. VTA Measure B, which the County of Santa Clara residents overwhelming approved in November 2016, increased the countywide sales tax by ½ cent to fund transportation priorities in the County. The projects range from local streets and roads repair, bicycle/pedestrian improvements, building Caltrain grade separations to funding Phase II of the Bay Area Rapid Transit (BART) extension. Measure B is anticipated to generate $6.3 billion in 2017 dollars over the next 30 years, of which approximately $1.2 billion is allocated for local streets and roads. The City of Morgan Hill is expected to receive $800,000 annually from the Measure B for the City’s street improvement projects. In addition, the City’s planned Hale Avenue extension is to be majority funded by VTA Measure B funds. The annual street improvement allocation and one-time funding for the Hale Avenue extension have been incorporated into the City’s FY 20-26 CIP. Funding Gap for Infrastructure and Services and Unfunded Needs While expenditures are being held relatively flat, it is imperative that the Council and the community understand that the City, without an additional revenue source or reducing other services, is not in the financial position to fully address its aging public infrastructure (streets, facilities, parks) and the unfunded needs in public safety. This needs to be addressed in an ongoing manner that significantly reduces the deferred maintenance backlog or decreases the level of annual decline. For Fire Services, as identified in the Standards of Coverage (SOC) Study, funding is needed to address the increased call volume and staff resources for the third fire station. For Police Services, funding is needed in crime prevention and responding to the public safety needs of our growing community.

22 RECOMMENDED BUDGET MESSAGE