Recommended FY 2022-2024 Operating Budget and CIP

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 22-24 Biennial Budget, approximately 76% 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. Property Tax Property tax revenue for FY 22-23 and FY 23-24 is $17.4 million and $18.0 million, respectively. While the pandemic is still having some negative impacts to the City’s major revenue categories, so far property tax seems to have escaped the financial hit from the pandemic albeit demonstrating a slower growth rate. On July 1, 2021, the County of Santa Clara Assessor’s Office released the assessment roll close for FY 21-22. The assessment roll for the County grew 4.6% for FY 21-22 versus 6.87% for the prior year. This “slower” growth still exceeds expectations mainly due to strong residential growth as well as limited impact to the commercial properties from the pandemic. The City of Morgan Hill’s assessment roll for FY 21 -22 grew 5.75% versus 6.12% for the prior year. Though showing lower growth than the prior year, the City’s growth is the 2nd highest in the County, behind only Mountain View of 8.06% which is mainly due to the construction of Google’s new campus in Bayview, and it is also much better than budget predictions of no growth for the year. The City’s total net assessed value for FY 21 -22 is about $11.5 billion, increased by about $625 million from the prior year total net assessed value of about $10.9 billion. The chart below compares the City’s total net assessed value of residential and non -residential properties to the County-wide for FY 20-21. The percentage of the net assessed value of non residential properties in Morgan Hill has been consistently below the County of Santa Clara average. General Fund Revenue

BUDGET MESSAGE 17