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

Based on the results of the survey, Godbe Research recommended not moving forward with the special ballot measure. Furthermore, due to the failure of Measure A in March 2020, which would have amended a Planned Development Master Plan for "Madrone Village Shopping Center" located on the northwest corner of Madrone Parkway and Cochrane Road to add hotels as an approved use, staff believes there would not be strong support from the community for any tax measures in November 2020. City staff will continue to engage the City Council and the Community to both educate and strategize the best way (or if/when) to move forward with a sustainable funding source for infrastructure, public safety, and general services. Personnel The City’s full-time and part-time employees are the most important resources for the delivery of its high-quality services. Annual investments in personnel account for approximately $39.1 million or 24 percent of organization-wide expenses in FY 2020-21 and $41.2 million or 29 percent in FY 2021-22. Of this amount, 68 percent is related to salaries and the remaining 32 percent is attributed to benefits (health insurance, retirement, etc.). As a percent of total costs, the City continues to maintain its personnel expenses by continuing to work with other organizations to collaboratively deliver services; most notably, with the YMCA for recreation services, Cal Fire for fire/emergency medical services, HouseKeys for the Below Market Rate Housing program, and the City of Gilroy for wastewater treatment services. The Council’s Long-Term Labor Policy, Principles, and Strategies’ Principle No. 4 – Fiscal Sustainability and Economic Climate states that “all compensation commitments must be made consistent with principles of fiscal sustainability and to ensure the City’s long-term success in achieving its mission.” As part of this principle, “the City will strive to hire contract employees instead of full-time benefitted employees to allow for greater flexibility during periods of peak demand.” The City continues to adhere to this principle throughout the organization and especially in development services. The City has contracted to augment its team in the planning, building, and land development engineering services to ensure we have the necessary resources to satisfy the expectations of the development community. During the last recession, balancing the General Fund was accomplished by strategically reducing expenditures, establishing more efficient operating models, and working closely with employees to contain personnel expenses. The City reduced approximately 34 positions or over 17 percent of its workforce during the recession. In addition, during the current fiscal year, the City eliminated 5.5 FTEs. The City’s current workforce continues to remain at a level of approximately 9 positions, or 4 percent, fewer than the pre-Great Recession level. During this same time, the number of residents has increased by approximately 23 percent from 37,107 in 2008 to 45,752 in 2019.

24 RECOMMENDED BUDGET MESSAGE