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:
http://gmhtoday.com/stories/city-budget-comparison-gilroy-morgan-hill-2016-17
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
gmhtoday.com
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