FY 2425 2526 Recommended Operating Budget

General Fund

The General Fund (GF) is the City's most visible fund because it accounts for City services that residents relate to including police, fire, recreation services, street maintenance, park maintenance, municipal governance, and administrative services. In the Recommended FY 24-26 Biennial Budget, approximately 74% of General Fund revenue is derived from four main sources: 1) Property Tax; 2) Sales Tax; 3) Recreation Revenue; and 4) Transient Occupancy Tax (TOT). The remaining revenue is generated by other charges for services, grants, and transfers from other funds.

General Fund Revenue

Property Tax

Property tax revenue for FY 24-25 and FY 25-26 is $19.4 million and $20.8 million, respectively. On July 1, 2023, the County of Santa Clara Assessor’s Office released the assessment roll close for FY 23-24. The assessment roll for the County grew 6.65% for FY 23- 24. The City of Morgan Hill’s assessment roll for the same year grew 6.34%. Though showing lower growth than the prior year of 7.60%, the City’s growth is better than the budget of 6.0% The City’s total net assessed value for FY 23- 24 is about $13.1 billion, an increase of about $0.8 billion from the prior year’s total net assessed value of about $12.3 billion. The assessment roll growth of 6.34% for the City equates to approximately $800,000 more in property tax revenue. However, continued higher mortgage rates coupled with a low inventory of available homes for sale will likely result in a fewer number of homes sold than in the past years. This will lead to lower supplemental and transfer property tax revenue. The chart below compares the City’s total net assessed value of residential and non -residential properties to the Countywide for FY 23-24. The percentage of the net assessed value of non residential properties in Morgan Hill has been consistently below the County of Santa Clara average.

Assessed Value by Type

19%

26%

81%

74%

Morgan Hill

Countywide

Residential

Non-residential

Source: County of Santa Clara

16 BUDGET MESSAGE