gmhTODAY 25 gmhTODAY April May 2019 - Page 40

City Beat By Maureen Tobin, Communications & Engagement Manager City of Morgan Hill Budget Basics: General Fund Revenue Sources R evenue for the City of Morgan Hill is generated from taxes, building permit fees, business licenses, recreation memberships, water and sewer user fees and more. The revenue, or income, is deposited into different funds, like bank accounts. Unlike personal bank accounts where funds can easily be transferred from one account to another, the City must comply with strict laws that require that certain money be maintained in separate funds and spent for specifi c purposes. For example, the City cannot increase water rates to pay for police services. Revenue that is not reserved for a specifi c purpose, like taxes, is directed into the City’s General Fund, which pays for the general operations of the City such as: police and fi re services, parks and street maintenance, economic development, recreation and community services. Most of the general fund money comes from the following primary sources: property tax, sales tax and hotel taxes (TOT). Current services is made up of recreation fees for service and other service fees. Since many of these revenue sources are sensitive to economic conditions, the City of Morgan Hill is exploring additional funding sources for the future. Sales Tax Sales tax is a consumption tax imposed on the sale of certain goods. The sales and use tax rate for Santa Clara County is 9%, of which Morgan Hill’s share is 1%. Revenues from sales tax are expected to reach $9.9 million in the current fi scal year, or 25% of the total General Fund projected revenue. It is the second largest revenue source for the City’s general fund. Transient Occupancy Tax (Hotel Tax) Transient Occupancy Tax (TOT) is a tax imposed on persons staying 30 days or less in hotels or other lodging facilities in the City. TOT revenue for FY 2018-19 and FY 2019-20 is estimated at $2.8 million and $3.1 million, respectively. Measure H was passed by Morgan Hill voters in November of 2018 and increases the TOT in Morgan Hill by 1% (from 10% to11%) effective March 2019. It is anticipated that this new TOT rate will bring in an additional $280,000 – $300,000 in general fund revenue annually. For more information about all the City of Morgan Hill’s revenue sources and entire city budget, please visit Property Tax Property tax is a tax on real property and tangible personal property based on the assessed property value. The State Constitution limits the real property tax rate to 1% of the property’s assessed value plus voter-approved debt rates, parcel taxes, Mello-Roos taxes, and assessments. The largest portion of property taxes supports local schools. Morgan Hill’s share of the 1% is equivalent to 10 cents for every $1.00 collected from property taxes. For the current fi scal year, FY 2018-19, property tax is projected at $11.8 million or 29% of the total General Fund revenues. Property tax is the largest revenue source of the General Fund. 40 GILROY • MORGAN HILL • SAN MARTIN april/may 2019