The City of Morgan Hill this week released its recommended two-year budget for the fiscal years starting this fall, and officials are urging members of the public to attend a series of upcoming meetings to learn more about the spending plan and offer suggestions.
The city’s budget for 2024-26 includes total expenditures of about $205.9 million in 2024-25, and $254.4 million in 2025-26, according to City Manager Christina Turner’s budget message. Each fiscal year starts on July 1, and the city council must approve a final draft of the two-year budget by June 30.
The budget also includes general fund expenditures of about $62 million for 2024-25, and about $63.2 million for 2025-26. The general fund is considered the city’s “discretionary fund,” which is financed by local and state taxes and pays for basic public services such as public safety, parks and street maintenance.
The budget also recommends adding nine new full-time city staff positions, including two police officers and employees for Morgan Hill’s third fire station that will be completed at the end of this year on Butterfield Boulevard.
Additional positions recommended in the two-year general fund budget are a maintenance worker, part-time deputy city attorney and part-time administrative analyst, says the budget document.
Turner’s budget message notes that the recommended budget is partially bolstered by current economic growth trends, but will also be challenged in future years by increasing costs to deliver services and pay employees.
“The recommended FY 24-25 and FY 25-26 budget reflects an assumption of continuing economic growth trajectory and increased costs in providing the services, with the enhancements that prioritize what our community demands,” reads Turner’s budget message. “However…there remains uncertainties in our economic outlook that could derail our assumptions. Staff will cautiously approach spending and continue to be vigilant and monitor the progress as well as keep the Council abreast of any changes to the City’s financial condition and outlook to ensure the City’s fiscal sustainability.”
In the long term, in order to maintain new expenses proposed in the current recommended budget, the city will likely have to draw down some of its reserve fund unless new revenue sources can be obtained. Projections in the budget document show that the reserve fund will drop below the council’s preferred 25% level in about three years, and down to 15% by 2029-30.
“(The) projected higher cost to provide city services due to high inflation as well as staffing the third fire station and additional staffing for police are consuming a large portion of general fund reserves,” says Turner’s budget message.
The message adds, “What this tells us is the city needs to either increase its revenue from its existing revenue base or through a tax measure to maintain the level of service, or reduce the level of service.”
Another growing expense taking a toll on the city’s long-term budget is electricity, which is projected to increase by $1.5 million, or 52%, at city facilities for the 2024-25 budget. Turner said that would otherwise be enough money to hire three more full-time police officers.
City staff have scheduled a series of meetings and events for the public to offer their input on the budget, from May 11 to June 19. The council is scheduled to adopt a final draft of the budget at the June 19 meeting, following a public hearing.
Mayor Mark Turner said community engagement is a key part of the process in which elected local officials consider and approve how to use local residents’ tax dollars.
“Community engagement in city budgeting is crucial for several reasons including transparency, accountability, representation, education and better decision-making,” Turner said. “Community engagement is essential to us—it’s one of our city council’s top priorities. Involving the community in the budget process increases their interest in budget outcomes. It’s not just about money; it’s about showing our residents how their tax dollars are spent.”
Capital projects
The recommended budget also includes a five-year Capital Improvement Program. Projects listed in this plan total $272.1 million—a figure that reflects rising costs in the construction industry. The budget message notes that the CIP total relies on only $1 million from the general fund—specifically, for pavement rehabilitation.
“High inflation is reflected in this CIP with the cost of certain planned capital projects rising drastically from previous projections,” says Christina Turner’s budget message.
Future projects listed in the CIP include a new sewer trunk line from Highland Avenue to Renz Lane in Gilroy (about $58.7 million); recreation facility expansion and renovation ($4.9 million); sewer system repair and replacements ($5 million); and new groundwater wells ($11.2 million).
Budget conversation
The City of Morgan Hill has scheduled a number of public hearings and outreach events for members of the public to ask questions and make suggestions about the recommended 2024-26 budget.
– 9am-1pm May 11: Open Streets & Budget Outreach in downtown Morgan Hill
– 6pm May 15: Presentation to the city council and public, at Morgan Hill Council Chamber, 17555 Peak Ave.
– 5pm May 22: City council budget workshop, Morgan Hill Council Chamber, 17555 Peak Ave.
– June 19: Public hearing and budget adoption, Morgan Hill Council Chamber, 17555 Peak Ave.
