Recommended FY 2022-2024 Operating Budget and CIP

policy requirements. F. The City’s independent auditors, in conjunction with their annual audit, will audit the cash and investment balances in conformance with generally accepted accounting principles. 4. OPERATING BUDGET A. The City of Morgan Hill’s Operating Budget will be developed on a biennial basis. Appropriations for each year will be approved by the City Council. B. The City will avoid budgetary and accounting procedures that balance the current budget at the expense of future budgets. C. The City shall define a “balanced budget” as a budget where ongoing funding sources are sufficient to support ongoing funding uses. A budget may temporarily use fund balance to offset a temporary reduction in funding sources, however, fund balance shall not be used to fund ongoing expenses without a sustainable budget adjustment. D. The legal level of control is established as follows: a. The Department Director has the authority to transfer between line items within an activity to facilitate the functions of the activity in accordance with the directions, goals, and policies of the City Council. b. The City Manager is authorized to Fiscal Policies (continued)

City Council. c. The City Council’s approval is r e q u i r e d f o r a d d i t i o n a l appropriations or transfers between funds. New programs and new appropriations not anticipated during the budget process require City Council approval. E. Mid-cycle budget adjustment reports will be presented to Council in May or June of every other fiscal year, if necessary. 5. PRINCIPLES TO GUIDE THE SUSTAINABLE BUDGET STRATEGY The City Council has adopted the following principles to guide the Sustainable Budget Strategy: A. Critical services should be maintained to the greatest extent possible. B. Resources should be allocated to the highest priority services. C. No City services or functions should be exempt from evaluation. D. “Across the Board” approaches shall be avoided because they are not aligned with the Council’s and community’s priorities. E. Reductions in service should position the City to take advantage of economic recovery. F. Budget reductions should be ongoing and not simply “one time only.” G. Council should commit to support employees during the transition, a n d assist those who may be adversely impacted. H. Employees and their recognized bargaining units should be actively involved in

transfer appropriations between activities budgets within a fund to facilitate the functions of those activities in accordance with the directions, goals, and policies of the

GENERAL INFORMATION 45