City needs to spend more than $15 million for infrastructure in the next five years
Published in the May 27-June 9, 2015 issue of Morgan Hill Life
By Gordon Siebert
Whether it is an appliance, a house, or a vehicle, we all know from experience that it pays to maintain our possessions so they last longer, don’t break down and don’t need to be replaced. The same is true for our roads and streets as well as all other kinds of infrastructure in Morgan Hill.
The Morgan Hill City Council is taking action to avoid situations such as the costly repair work that had to be done on Watsonville Road when its deteriorated condition threatened driver safety. It would be much better to keep all of our roads in good-working condition with fully-funded maintenance across the city.
Much like cities throughout California, Morgan Hill leaders need to make informed decisions on its streets and major roads regularly. To do so, the city conducts an engineering survey called the Pavement Management Report every two years on the condition of our streets. Surveyors evaluate road quality based on observable conditions such as cracks, potholes, patches and loose rock and then calculate a Pavement Condition Index. They score each street, with 100 being “excellent” and scores below 70 being “poor” to “fair.”
Unfortunately, the condition of Morgan Hill’s streets is spiraling downward. They are deteriorating over time. Parts of most major roads (arterials) like Monterey Road or Tennant Avenue score in the 40s and 50s. Parts of the Watsonville Road even scored as low as in the 30s. The current PMR calculates that the city needs to spend more than $15 million in the next five years just to keep roads in their current condition. To improve overall conditions, the report recommends spending nearly $26 million.
In addition, the city commissioned the Safe and Sustainable Streets Study, which included assessment of everything in the road right-of-way, including sidewalks, curbs and gutters, signs, traffic signals, streetlights and trees. That study calculated that the city needs to spend $7.3 million annually to sustainably keep roads and all other city assets in and adjacent to roads in a safe condition. Tasks include fixing raised sidewalks, installing highly reflective street signs and keeping trees trimmed. However, the city only spends $2.7 million each year.
Analyzing needs for parks and municipal buildings’ maintenance that are the general fund’s responsibility, annual needs are $12.7 million versus annual expenditures of $6.9 million.
Morgan Hill runs similar to a business, one with an annual budget of about $126 million. Most of its financial operations are constrained by California state law and accounting regulations to be kept separate, such as the water fund, sewer fund and fees paid for land development. These typically have a separate revenue source, such as fees, and their expenditures are tied to their revenues. The city’s $35 million general fund operates like a household checking account, and pays for many of the services typically thought of as municipal services, such as police, fire, elections, park and road maintenance. In Morgan Hill, the general fund spends 79 percent of its discretionary spending on the two public safety services of police and fire, leaving only the remaining 21 percent for all other functions. After allocating money to other essential functions, including financial administration, city manager and attorney, planning and other services, little remains to pay for maintaining our assets.
Most of the general fund’s unrestricted income is from property taxes, sales taxes, a hotel tax and business licenses. You might think that their property tax all goes to the city. Not so. By state law, many taxing agencies divide the revenue from property tax, with local schools receiving about half the amount (MHUSD 44 percent, Gavilan College 7 percent), and some going to Santa Clara County for criminal justice and social services, and allocations to special districts like the water district, for flood control, and the library, among others. Morgan Hill receives about 10 cents for every dollar paid in property tax.
So with all of this income, is there a problem? The answer is yes, because Morgan Hill is at the bottom in terms of per capita income to pay for general fund services. If you add up the major sources for these services, and including fire district taxes, which in many cities pays for fire departments, plus utility users’ taxes, which many cities have, the per capita figures are that the county-wide average is $800. Gilroy and San Jose collects nearly $600 and the top city, Palo Alto, collects $1,300, about three times more than the $450 that is available to Morgan Hill. In short, while Morgan Hill operates its services efficiently, it lacks sufficient funds to pay for needed asset maintenance.
The good news is that the city’s proposed budget triples funding for street maintenance. City leaders see the problem and want to address it. But the bad news is that the proposed budget hikes are woefully insufficient to get the job done.
If you believe in the importance of protecting our infrastructure for future generations and want to learn more about how city finances work, please attend the various city budget hearings and workshops and give the Morgan Hill City Council your input. There will be a full day of budget hearings from 9 a.m. to 4:30 p.m. May 29, a question and answer period June 3 and council discussion and budget adoption June 17. I believe that if you learn the facts about the city’s budget, you will support some increased funding to conserve our assets and keep Morgan Hill the wonderful place to live that we all call home.
Gordon Siebert is a member of the Morgan Hill City Council. He wrote this for Morgan Hill Life. Feel free to call him at (408) 782-8979 or by email at firstname.lastname@example.org.