gmhTODAY 21 gmhToday Aug Sept 2018 - Page 29

Summary Conclusions with Amounts: what they are called, cities cannot budget for them because they do not have the revenue. It is like saving for college or that new roof you know you'll need one day, diffi cult to do if the income we have is already spent. At some point all cities will have to address the issue of unfunded liabilities. Morgan Hill also has some significant unfunded liabilities. To compare them to Gilroy would be mismatched because of accounting differences but the big picture is similar. Gilroy falls short of budgeting for its necessities to the tune of about $11 million each year. Gilroy’s annual unfunded liability shortfall is $2.9 million for PERS (Public Employee Retirement System), $3.9 million in unfunded street and sidewalk maintenance, $2.2 million in unfunded replacement costs for city fleet, IT, equipment and facilities, and $1.4 million for unfunded staffing of the Glen Loma Fire Station. One of the most common unfunded liabilities shared by many cities is the PERS obligation (employer contribution to the Public Employee Retirement System). Decided and controlled by the State of California PERS Board, cities are responsible to make up for projected investment shortfalls within the PERS defined benefit plan, and to fund those shortfalls within a shorter period of time. These continually rising costs are hurting Gilroy and Morgan Hill alike, and they are the primary reason for the pace at which expenses are taking over revenue. For example, by fiscal year 2026-27, Gilroy estimates its $2.9 million annual PERS shortfall to grow to $7.7 million. At a League of California Cities Advanced Leadership Workshop I attended on June 29th on City Finances, it was estimated that in less than 10 years most cities in California will be signifi- cantly dropping their level of services or filing bankruptcy. Somewhere, somehow, something's got to give. General The City of Gilroy and the City of Morgan Hill have about the same amount of revenue per person. Total Governmental Revenues Gilroy Morgan Hill $69,447,302 $53,488,184 $1,242 per person $1,212 per person The City of Gilroy spends more than the City of Morgan Hill per person Total Governmental Expenses Gilroy Morgan Hill $59,891,344 $44,951,139 $1,071 per person $1,018 per person Revenue The City of Gilroy has more revenue from Sales and Utility Taxes; Morgan Hill has more revenue from “Charges for Services.” Sales Tax Gilroy Morgan Hill $17,768,469 $ 9,734,686 $318 per person $221 per person Utility Tax Gilroy Morgan Hill $ 4,748,381 none $85 per person Charges for Services* All Government Funds Gilroy $18,973,863 Morgan Hill $23,488,554 $339 per person $532 per person *Gilroy’s current (2017-18) recreation budget is $3.4 million, expected recovery is 33% or about $1.1 million. Morgan Hill’s current recreation budget is $8 million, expected recovery is 92% or about $7.3 million. Expenses The City of Gilroy has higher expenses per person for public safety and for debt service Public Safety (general fund) Police, Gilroy Police, Morgan Hill $21,180,570 $14,935,212 $379 per person $338 per person Fire, Gilroy Fire, Morgan Hill $ 9,650,303 $ 5,423,007 $173 per person $123 per person Total, Gilroy Total, Morgan Hill $30,830,873 $20,358,219 $552 per person $461 per person $5,870,060 $ 933,708 $105 per person $ 21 per person Debt service Gilroy Morgan Hill The actual spreadsheet of Marie’s study is available on line at: Marie Blankley is on the Gilroy City Council. She is a lifelong Gilroy resident and a Certified Public Accountant. She is running for election to a full term in November. GILROY • MORGAN HILL • SAN MARTIN AUGUST/SEPTEMBER 2018 29