Three-quarters of the city
’s fiscal year have passed but the economic turnaround trumpeted
from Wall Street has not yet arrived in Morgan Hill. The March
financial report, which the City Council will hear Wednesday, is
still a bit dreary.
Three-quarters of the city’s fiscal year have passed but the economic turnaround trumpeted from Wall Street has not yet arrived in Morgan Hill. The March financial report, which the City Council will hear Wednesday, is still a bit dreary.
While income is down 5 percent or more, city spending is also down, so the budget balancing picture is not as bleak as it might be. Property taxes and business licenses are ahead of schedule. Sales taxes, interest, the hotel tax and, especially the car tax (vehicle license fee or VLF) are down.
To paint the picture by numbers, with 75 percent as the baseline, since that much of the year has passed, sales taxes are at 68 percent (9 percent less than last year at $3,324,963), the hotel tax is at 53 percent at $468,456 (slightly less than in 2003 and representing a still-depressed travel market), interest and other revenue came in at 64 percent ($571,891) and only 51 percent of expected VLF money has arrived from Sacramento ($1,040,105). The 51 percent VLF revenue is down 31 percent from last year.
Jack Dilles, the city finance director, explained in his report to be reviewed Wednesday by the council, that the severe drop in VLF is because the promised “backfill” has not been received.
When Gov. Arnold Schwarzenegger reduced the car tax back to “boom time” levels when the state did not need the tax revenue, he promised to find a way to compensate cities for the loss. This has not happened. Municipal governments count on VLF to fill their general funds, from which they pay the critical and increasing costs of police and fire protection and, in Morgan Hill’s case, recreation services and some city staff salaries.
On the brighter side, property related taxes received were at 88 percent of budget – higher then the expected 75 percent ($2,143,514). Community Development (the planning department) revenues were also higher, at 92 percent, largely because the fees were adjusted by council to more closely relate to actual costs incurred. Even with these higher fees, the city still spends more money on checking builders’ plans than it receives from the fee.
“We are still under-recovering our costs,” Dilles said.
Council will hold a public hearing on May 5 to consider increasing the development processing (plan checks, for example) in July.
“This will still not get us to full cost recovery,” he said. “We will ask council to consider one more increase a year from now and that would bring us to full cost recovery (by July 2005).”
Spending from the general fund, the primary account, is at 69 percent, helping to ease the strain caused by lower income. More specifically, spending for fire protection is at the 75 percent mark ($2,808,733) while only 67 percent for the police department ($4,583,218), 60 percent in public works ($494,245), 65 percent in recreation ($1,311,240) and 70 percent for city administration ($2,362,577).
The complete Council agenda is available at the City Clerk’s desk in City Hall and on line. City Council and/or the Redevelopment Agency meets at 7 p.m. most Wednesdays, 17555 Peak Ave. Details: www.morgan-hill.ca.gov or 779-7271. Council meetings are broadcast live on cable access channel 17.
