Budget and Financials

Budget

The biennial budget process commences with the City Council adopting its priorities, goals, and strategies for the organization and the community at the beginning of the calendar year.

The priority-based budget strategy ensures that the Council’s and community’s priorities are the guiding principles for developing the biennial operating and capital improvement budgets. To achieve this, each operating department proposes enhancements, also known as decision packages, which are categorized as ongoing or one-time investments and evaluated to determine which would best meet the community’s needs within the city’s financial resources. The outcome is a recommended budget that reflects the City Council’s priorities and strives to enhance service levels for the Morgan Hill community.

The budget process is typically completed in May when the City Manager’s Recommended Biennial Budget is presented to the Council and made available to the public. Budget deliberations begin shortly thereafter with a City Council Budget Workshop, Public Hearing, and ultimately adoption of the recommended biennial budget in June. In the fourth quarter of the first year, a mid-cycle budget review takes place and City Council is provided an update on revenue assumptions, fund balances, and possible amendments to the second-year budget.

Biennial Budget Process Diagram

As we begin planning the City’s next two-year budget, we’re inviting you to try a new, interactive tool designed to gather community feedback on General Fund priorities.

We’ve launched Balancing Act, an online budget simulation that presents a menu of possible revenue options and potential service changes, including reductions. It focuses only on the City’s GeBalancing Act Graphic Imageneral Fund and is not a snapshot of the full City budget or all City operations. Instead, it allows you to explore different scenarios, weigh real tradeoffs, and share your input on what matters most as we plan for the future.

Your feedback matters. We encourage you to try the tool and be part of the conversation as budget development moves forward.

Try Balancing Act here: https://morgan-hill.abalancingact.com/cityofmorganhill 

Pruebe Balancing Act aquí: https://morgan-hill.abalancingact.com/city-of-morgan-hill-espanol

Budget Snapshot Graphic Image

View the full Budget Snapshot document in English (PDF).
Vea el documento completo en español (PDF).

City Council Goal Setting Workshop
Friday, February 6, 2026, 9 a.m.
Saturday, February 7, 2026, 9 a.m. both at the Council Chamber

City Council Budget Workshop
Wednesday, May 20, 2026, 6 p.m. at the Council Chamber


Adopted FY 2024-25 through 2029-30 Capital Improvement Program Budget Adopted CIP Cover Page FY24-30

View as a PDF or Flipping Book 

Gann Appropriations Limit (Proposition 4) Fiscal Year 2025-26

The Gann appropriations limitation imposed by Propositions 4 (1979) and later amended by Proposition 111 (1990) creates a restriction on the amount of government revenue which may be appropriated in any fiscal year. Not all revenues are restricted by the Gann Limit, only those that are defined as “proceeds of taxes.” Additional appropriations to the budget funded by non-tax sources, such as charges for services, restricted revenues or grants, are not affected by the Appropriations Limit. Each year the City Council must adopt, by resolution, an appropriations limit. California Revenue and Taxation Code section 2227 requires the Department of Finance to transmit an estimate of the percentage change in population to local governments. Each local jurisdiction must use their population factor for January 1 based on the greater annual population change for the City or the County, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit each fiscal year.

FY 2025-26 Gann Appropriations Limit Resolution and Calculation (PDF).

Financials

Quarterly Financial and Investment Reports

The City’s Finance Division prepares and presents the monthly financial and investment report to the City Council. Under City Council’s direction, the monthly financial and investment reports are agendized under the Consent Agenda, and quarter ending month’s financial and investment reports (March, June, September and December) are presented to City Council as an Other Business item. In addition, staff report any contracts or agreements between $25,000 to $60,000 that were entered into by the City Manager. This information is included within the quarterly reports. 

Annual Comprehensive Financial Reports

The City of Morgan Hill prepares an Annual Comprehensive Financial Report in conformance with Governmental Accounting Standards Board requirements. The report presents audited financial information for the 12 month period ending June 30 by activity (fund) and for the city as a whole. Additional narrative discusses the city’s financial position and provides additional detail for users.

CFD 2014-1 Annual Report

The City of Morgan Hill formed Community Facilities District No. 2014-1, Fisher Creek, to fund all or a portion of the costs of the maintenance and monitoring required by the San Francisco Bay Regional Water Quality Control Board for the realignment of Fisher Creek within or adjacent to the District.

Reference documentation and information is available in the Archive Center.