Recommended FY 2022-2024 Operating Budget and CIP

Assessed Value by Type

18%

27%

82%

73%

Morgan Hill

County-wide

Residential

Non-residential

Source: County of Santa Clara

For FY 22-23, staff anticipates a property tax growth rate of about 7% and returning to a more normal growth rate of about 4% starting in FY 23-24. This normal growth rate includes the limit on the increase of property tax by Proposition 13, which is the lower of 2% or the California Consumer Price Index (CPI), as well as property transfers and new housing units adding to the assessment value. Sales Tax The sales tax revenue for the FY 22-23 budget is expected to remain flat compared to FY 21-22 level as most, if not all, pent-up demand has been resolved, fuel prices stabilize, and continued supply chain and raw material interruptions could disrupt some sales, especially with the auto sector which makes up about 23% of the City’s sales tax revenue. The chart below illustrates the City’s projected sales tax revenue by major industry group for FY 22 -23. Total amount of sales tax revenue, before any tax rebates, in FY 22-23 is projected to be about $12.5 million. Sales tax revenue generated from most industry groups, except Restaurants, State and County Pools, and Autos and Transportation is projected to decrease from the current FY 21-22 amounts.

18 BUDGET MESSAGE