After elected officials authorized the city manager to dip into
reserves four out of the last five budget cycles, Ed Tewes said
he’s now ready to deliver a proposed budget that includes a surplus
of $550,000 for fiscal year 2007-08.
Morgan Hill – After elected officials authorized the city manager to dip into reserves four out of the last five budget cycles, Ed Tewes said he’s now ready to deliver a proposed budget that includes a surplus of $550,000 for fiscal year 2007-08.
But as a result, Tewes said the city would be left with a “lean” government with little room to grow or even keep up with ordinary tasks such as repairing traffic signals and cleaning road gutters.
On May 16, Tewes will present his $24 million budget, two days before the Morgan Hill City Council holds its annual budget workshop. The council aims to adopt a final budget by the start of the fiscal year July 1.
This year, Tewes hopes to preserve the city’s 180 jobs. He’s confident he can meet the goal – based on financial projections in January – but he also warns the result will be a city operating at maximum efficiency with little fat left to trim.
Meanwhile, costs of providing services are rising. The city’s contract with the Santa Clara County Fire Department, for instance, will jump $300,000 from $4.6 million to $4.9 million in the upcoming budget.
Revenues are rising, too, but only enough to keep things stable. Most of the money in the general fund, which covers salaries, services, supplies, capital expenses and other operational costs, comes from a tax base that’s projected to grow.
Local property taxes – which account for about $5.5 million in general-fund dollars this year – will jump $1.1 million next year to about $6.6 million.
Sales taxes, Morgan Hill’s largest general-fund revenue source this year at roughly $6.2 million, also is expected to grow when Target and other stores open on Cochrane Road.
The picture Tewes paints brings to mind the heated debate that erupted Wednesday night between Morgan Hill Mayor Steve Tate and City Councilwoman Marby Lee on whether to float a tax to hire more police officers. The city is growing and sales and property taxes alone – the city’s two major revenue streams – won’t grow quickly enough to expand city services.
A solution could be a voter-approved utility-users tax, which seven of Santa Clara County’s 15 cities and towns, including Gilroy, rely on as funding sources. Whether that’s politically feasible in Morgan Hill remains to be seen.
New data from the state confirms Morgan Hill is the fastest growing city in Santa Clara County with 38,4128 residents in January – a 3.1-percent increase over last year’s population of 37,256.
According to the city, Morgan Hill ranked 12th among cities in the county last year in terms of per-capita revenues from property taxes, sales taxes, transit occupancy taxes, business licensing and utility taxes.
