Gilroy City Council
May 12, 2025

May 12, 2025 | 6:00 PM Page 1 of 2 City Council
Special Meeting

CITY COUNCIL

SPECIAL MEETING
AGENDA

CITY CHAMBERS, CITY HALL
7351 ROSANNA STREET, GILROY, CA
95020
MONDAY, MAY 12, 2025 | 6:00 PM
MAYOR
Greg Bozzo

COUNCIL MEMBERS
Dion Bracco
Tom Cline
Terence Fugazzi
Zach Hilton
Carol Marques
Kelly Ramirez
CITY COUNCIL PACKET MATERIALS ARE AVAILABLE ONLINE AT www.cityofgilroy.org AGENDA CLOSING TIME IS 5:00 P.M. THE TUESDAY PRIOR TO THE MEETING

COMMENTS BY THE PUBLIC WILL BE TAKEN ON AGENDA ITEMS BEFORE ACTION IS TAKEN BY THE CITY COUNCIL. Public testimony is subject to reasonable regulations, including but not limited to time restrictions for each individual speaker. **Please limit your comments to 3 minutes.** The amount of time allowed per speaker may vary at the Mayor’s discretion depending on the number of speakers and length of the agenda.

Written comments on any agenda item may be emailed to the City Clerk’s Office at [email protected] or mailed to the Gilroy City Clerk’s Office at City Hall, 7351 Rosanna Street, Gilroy, CA 95020. Comments received by the City Clerk’s Office by 1 p.m. on the day of a Council meeting will be distributed to the City Council prior to or at the meeting and available for public inspection with the agenda packet located in the lobby of Administration at City Hall, 7351 Rosanna Street prior to the meeting. Any correspondence received will be incorporated into the meeting record. Items received after the 1 p.m. deadline will be provided to the City Council as soon as practicable. Written comments are also available on the City’s Public Records Portal at bit.ly/3NuS1IN.

In compliance with the Americans with Disabilities Act, the City will make reasonable arrangements to ensure accessibility to this meeting. If you need special assistance to participate in this meeting, please contact the City Clerk’s Office at least 72 hours prior to the meeting at (408) 846-0204 or [email protected] to help ensure that reasonable arrangements can be made.

If you challenge any planning or land use decision made at this meeting in court, you may be limited to raising only those issues you or someone else raised at the public hearing held at this meeting, or in written correspondence delivered to the City Council at, or prior to, the public hearing. Please take notice that the time within which to seek judicial review of any final administrative determination reached at this meeting is governed by Section 1094.6 of the California Code of Civil Procedure.

A Closed Session may be called during this meeting pursuant to Government Code Section 54956.9 (d)(2) if a point has been reached where, in the opinion of the legislative body of the City on the advice of its legal counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the City.

Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are available with the agenda packet on the City website at www.cityofgilroy.org subject to the Staff’s ability to post the documents before the meeting.

May 12, 2025 | 6:00 PM Page 2 of 2 City Council
Special Meeting

KNOW YOUR RIGHTS UNDER THE GILROY OPEN GOVERNMENT ORDINANCE Government's duty is to serve the public, reaching its decisions in full view of the public.

Commissions, task forces, councils and other agencies of the City exist to conduct the people's business. This ordinance assures that deliberations are conducted before the people and that City operations are open to the people's review.

FOR MORE INFORMATION ON YOUR RIGHTS UNDER THE OPEN GOVERNMENT

ORDINANCE, TO RECEIVE A FREE COPY OF THE ORDINANCE OR TO REPORT A

VIOLATION OF THE ORDINANCE, CONTACT THE OPEN GOVERNMENT COMMISSION STAFF AT (408) 846-0204.

If you need assistance with translation and would like to speak during public comment, please contact the City Clerk a minimum of 72 hours prior to the meeting at 408-846-0204 or e-mail the City Clerk’s Office at [email protected].

Si necesita un intérprete durante la junta y gustaría dar un comentario público, comuníquese con el Secretario de la Ciudad un mínimo de 72 horas antes de la junta al 408-846-0204 o envíe un correo electrónico a la Oficina del Secretario de la Ciudad a [email protected].

To access written translation during the meeting, please scan the QR Code or click this link:

Para acceder a la traducción durante la reunión, por favor escanee el código QR o haga clic en el enlace:
bit.ly/3FBiGA0
Choose Language and Click Attend | Seleccione su lenguaje y haga clic en asistir
Use a headset on your phone for audio or read the transcript on your device.

Use sus auriculares para escuchar el audio o leer la transcripción en el dispositivo.

The agenda for this regular meeting is outlined as follows:

1. OPENING

1.1. Call to Order

1.2. Roll Call

2. BUDGET WORKSHOP

2.1. Fiscal Year 2026 and 2027 Recommended Budget Presentation

3. ADJOURNMENT

City of Gilroy
Fiscal Year 2026 and 2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget

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TABLE OF CONTENTS
Preface4
Transmittal Letter5
Elected Officials7
Executive Staff and Budget Development Team8
Budget Award9
Introduction 11
Budget Message 12
History of the City 26
Budget Process and Timeline 39
Basis of Budgeting and Fund Structure 41
Fund Descriptions 43
Definition of Taxes 49
Financial Policies 51
Gilroy Charter Article XI. Fiscal Administration 53
General Fund Reserve Policy 56
Investment Policy 59
Fund Summaries 60
All Funds 61
General Fund 67
Special Revenue Funds 73
Capital Project Funds 81
Debt Service Funds 89
Internal Service Funds 93
Enterprise Funds 99
Agency and Trust Funds 107
Fund Balances 111
Funding Sources 116
General Fund Revenues 117
Special Funds Revenue 121
Capital and Development Impact Funds Revenue 126
Enterprise Funds Revenue 130
Debt Service Funds Revenue 133
Internal Service Funds Revenue 137
Other Special, Trust and Agency Funds Revenue 142
Personnel 144
Personnel Analysis 145
Departments 156
All Departments Summary 157
City Council 159
Administration 161
City Administrator 163
City Attorney 165
City Clerk 166
City of Gilroy | FY26 and FY27 Recommended Budget Page 2

Communications and Engagement 169
Economic Development 172
Emergency Management 174
Recreation 178
Administrative Services 182
Human Resources/Risk Management 184
Facilities 188
Fleet 191
Finance 194
Information Technology 198
Community Development 200
Planning 202
Building 205
Fire Prevention, Hazardous Materials, and Pretreatment 209 Housing and Community Services 213
Fire 220
Police 226
Police Special Revenue Funds 235
Utilities 239
Public Works 246
Administration and Engineering 250
Parks and Landscape Maintenance 253
Street Maintenance, Stormwater, and Forestry 255
Environmental Services 258
Capital Improvement Program 260
Development Impact Fee Funds 261
Transportation Special Revenue Funds 266
Capital Project Special Revenue Funds 271
Non-Departmental 273
Debt 275
Citywide Debt 276
Capital Improvement Program 286
Five-Year Capital Improvement Program 287
Supplemental Information 295
Revenues and Expenditures Line-Item Details 296
Investment Policy 297
Statistical Information 298
Appendix 299
Glossary 300
City of Gilroy | FY26 and FY27 Recommended Budget Page 3

PREFACE
City of Gilroy | FY26 and FY27 Recommended Budget Page 4

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Transmittal Letter
Jimmy Forbis, City Administrator
May 7, 2025
Honorable Mayor, City Council, and the Gilroy Community, The City's Budget Development Team is pleased to present you with the City's Fiscal Year (FY) 2026 and 2027 Recommended Budget. The recommended budget is available on the City's website , and physical copies are available at City Hall.

Included in the budget document are budgets for the City’s various Funds, including the General Fund, Special Revenue Funds, Capital Project and Development Impact Funds, Debt Service Funds, Enterprise Funds (Water and Wastewater), Internal Service Funds, and Agency and Trust Funds.

The budget document is divided into several sections, including:

Introduction – Includes the Budget Message, history of the City, an overview of the budget process to date, a description of the accounting and fund structures, policies, definitions, and budget adoption documents.

Budget Message – the City Administrator’s major highlights of the recommended budget and what the budget will accomplish over the next two years.

Fund Summaries – Includes description of various Fund Types, and outlines their respective Revenues by Source, and Expenditure by Type, with Combined Statements for FY26 and FY27.

Funding Sources – Includes Revenues by Source for all Fund Types, including an analysis of major revenue sources for the next two fiscal years.

Personnel – Includes a discussion on major changes to personnel costs, including pension, workers' compensation, and healthcare. Additionally, it includes a comprehensive list of personnel changes, the recommended Citywide Position Control List, as well as a Position Control List by the Department and Division, which illustrates the changes from Amended FY24 through Recommended FY27.

Departmental Budgets and Narratives – Includes descriptions of the departments and the respective divisions’ accomplishments, work plan items for the next two years, with notable financial and budget implications. The financial and budget implications section will highlight any changes in the respective department or division budgets.

Debt – Includes an overview of the City’s various debts, debt limits, debt calculations, appropriations, and debt service schedules.

Capital Improvement Program (CIP) - Includes an overview of the City's CIP, with summaries of CIP Projects by Program that are recommended for appropriations in FY26 and FY27.

Process:

February 12, 2025 - The City Council conducted the first strategic planning session where the Council reviewed current priorities, goals, and focus areas for the next two years.

March 17, 2025 - The City Council held the second strategic planning session and received an update on the City's fiscal health, with a focus on the General Fund and the City's liabilities.

May 5, 2025 - The City Council conducted the third strategic planning session focusing on Economic Development and Community Development.

May 12, 2025 - The City Council is scheduled to conduct a Budget Workshop to review and discuss the recommended FY26 and FY27 Operating and Capital Budgets.

May 14, 2025 - City staff will host a Community Budget Meeting to review the recommended budget with the community, answer questions, and solicit additional input.

City of Gilroy | FY26 and FY27 Recommended Budget Page 5

May 19, 2025 - The City Council is scheduled to conclude its strategic planning at the last of the series of discussions focused on the Legislative Agenda and further refinements to its goals, priorities and workplans for the next two years.

June 2, 2025 - The City Council is scheduled to conduct a Public Hearing to adopt the FY26 and FY27 Operating and Capital Budget and related documents.

I would like to thank the City Council for their leadership and look forward to adopting the City's budget and embarking upon the work plans for the next two years.

Sincerely,
Jimmy Forbis
City Administrator
City of Gilroy | FY26 and FY27 Recommended Budget Page 6

Elected Officials
Carol Marques
Mayor Pro Tempore
Tom Cline
Council Member
Kelly Ramirez
Council Member
Terence Fugazzi
Council Member
City Council
Greg Bozzo
Mayor
Dion Bracco
Council Member
Zach Hilton
Council Member
City of Gilroy | FY26 and FY27 Recommended Budget Page 7

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Executive Staff and Budget Development Team
Executive Staff
Jimmy Forbis, City Administrator
Andrew Faber, City Attorney
Bryce Atkins, Assistant to the City Administrator
LeeAnn McPhillips, Assistant City Administrator
Harjot Sangha, Finance Director
Pedro Espinoza, Police Chief
Rob Fleeup, Fire Chief
John Doughty, Public Works Director
Sharon Goei, Community Development Director
Heath McMahon, Utilities Director
Budget Development Team
Jimmy Forbis, City Administrator
LeeAnn McPhillips, Assistant City Administrator
Harjot Sangha, Finance Director
Sharon Goei, Community Development Director
Bryce Atkins, Assistant to the City Administrator
Carina Baksa, Finance Manager
Katty Alvarez, Finance Analyst
Luke Powell, Police Captain
City of Gilroy | FY26 and FY27 Recommended Budget Page 8

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Budget Awards
The purpose of the budget awards programs is to encourage and assist governments in preparing welldesigned budget documents that effectively serve as policy documents, financial plans, operations guides, and communication tools. These programs recognize and encourage the creation of high-quality budget documents that adhere to national budgeting guidelines and best practices. The City of Gilroy has received the following awards for the prior budget cycle.

The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award and a Certificate of Recognition for Budget Preparation to the City of Gilroy, California for its biennial budget for the fiscal year beginning July 1, 2023. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as a financial plan, as an operations guide, and as a communication device. This award is valid for a period of twoyears only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award.

The City also received the California Society of Municipal Finance Officers Meritorious Award for the Operating Budget for Fiscal Years 2023-24 and 2024-25.

City of Gilroy | FY26 and FY27 Recommended Budget Page 9

City of Gilroy | FY26 and FY27 Recommended Budget Page 10

INTRODUCTION
City of Gilroy | FY26 and FY27 Recommended Budget Page 11

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City Administrator's Budget Message
Jimmy Forbis, City Administrator
May 7, 2025,
Honorable Mayor and City Council,
The Fiscal Year 2026 (FY26) and 2027 (FY27) budget is presented to the Council and is the result of several months of preparation by the Council and City Staff. This budget cycle has been conducted under a general sense of financial stability and full operational recovery from the COVID-19 pandemic. Strategic investments in personnel and infrastructure have improved the lives of our residents, businesses, and employees; however, these investments must continue if we expect to meet the service level demand our residents expect from us. Our City continues to grow, as does the City of Gilroy organization; however, the City’s financial resources determine the service level Gilroy can afford, and opportunities to maintain and increase service rely on our ability to identify local sources of revenue.

Prudent financial policies and the Council's priority to plan for future economic challenges have prepared the organization for changes in our economy and increased unfunded liabilities while still investing in the community. The City’s General Fund and Economic Uncertainty reserves have often allowed the City to have a “soft landing” in response to financial crises. Without this plan, the City would be unable to weather economic storms, leaving our residents and businesses with reduced service levels.

The budget is the Council's most important policy document, as it is the City’s expenditure and service delivery plan for the next two years. Via this recommended budget, the City will also affirm and ultimately adopt the City’s goals, priorities, and organizational workplans based on the discussions and presentations made to the Council at the strategic planning sessions, which will conclude on May 19, 2025, with the adoption scheduled for June 2, 2025. This budget message will be updated before the Adopted Budget agenda item on June 2, 2025. The budget serves as the financial and operational plan, but just as importantly, a communication tool for our community.

The City continues to invest in infrastructure, technology, and most importantly, our workforce by implementing tools and programs that allow the organization to be more efficient and transitioning our customers to more online services, saving both the City’s and customers’ time and resources. As we have now exited the Covid-dominated world, the FY26 and FY27 City Administrator’s Recommended Budget includes several themes:

Our City Continues to Grow
Maintaining Infrastructure Investment
Economic Development
Fire Service Evaluation
Customer Service Enhancements
Unfunded Pension Liability Cost
Gilroy (and the region in general) continues to grow in population. In the 2020 Census, Gilroy’s population was 59,520 and is projected to grow to approximately 65,000 by 2030. Several significant developments proposed in and around Gilroy will increase our population, and new residents will create additional service demands – demands that have and will continue to be a challenge for municipalities to fund and provide.

The City’s revenues are growing, but not at a rate that keeps up with costs, and the city will be forced to continue to find ways to serve the public. Ultimately, our employees provide most services, and cost increases (medical, retirement, salaries) are sometimes financially difficult to absorb. The City continues to City of Gilroy | FY26 and FY27 Recommended Budget Page 12

look for grants and allocate our resources where there is an opportunity to use non-general funds. Any service level increase will require the addition of staff – staff that we can only add strategically and incrementally. This budget proposes an expansion of only eight personnel, primarily in our utilities’ operations (Enterprise Fund).

Fiscal Year 2026 and 2027 Recommended Budget (All Funds) The total recommended budget, for all funds, for FY26 and FY27 is $207.2 million and $206.6 million, respectively, with funding sources of $178.6 million in FY26 and $178.8 million in FY27. The budget includes utilization of fund balance of $28.6 million in FY26, and $27.8 million in FY27, primarily in the Capital Project Funds and the Enterprise Funds (Water and Wastewater) for the Capital Improvement Program (CIP).

The recommended budget for the General Fund for FY26 and FY27 is $75.6 million and $78.3 million, respectively, with funding sources of $74.3 million in FY26 and $77.1 million in FY27. The General Fund budget includes the utilization of a net fund balance of $1.3 million in FY26 and $1.2 million in FY27 for one-time strategic investments in City parks, facilities, fleet, and public safety equipment. It should be noted that the budget is structurally balanced and utilizes fund balances (excess reserves) for the one-time investments in infrastructure. The City maintains expenditures aligning with our revenues and the required 30% minimum reserves for the General Fund.

Much is often said concerning economic downturns and recessions. However, the local economy is not in a recession; key indicators show an economic downturn: a volatile stock market, global trade tensions, and declining consumer confidence. As a business operation, the City continues to be challenged to keep up with cost increases and current revenue levels. The City has been getting creative and utilizing the federal/state/county resources by applying for over $100 million in grants in the last few years.

Generating revenue is not as easy as raising taxes. In 2024, the City proposed a 1/4-cent sales tax for public safety. The measure performed well but did not achieve the required 2/3 of voters' support.

Not only are the City’s costs growing, but Gilroy's geography continues to grow in the western (residential) and east of US Highway 101 (commercial) areas, which increases the coverage area of our services. The City is adjusting in some ways by constructing its fourth fire station in the Santa Teresa area. However, several proposed projects in and around Gilroy will further stretch the geographical service area.

FY26 and FY27 Highlights
City of Gilroy | FY26 and FY27 Recommended Budget Page 13

The staff’s focus in developing this biennial budget was to create a budget that uses accumulated fund balances and relies on Excess ERAF (described in more detail later in the message) to allow the City to add staff and services in FY26 and FY27.

Four City funds have significant accumulated fund balances: the General Fund, the Wastewater Fund, the Water Fund, and the Recreation Fund. Although the accumulation of funds reflects positively on the City’s financial statements, excessive fund balance can be considered “idle funds” that should be used for programs and investments in the community.

The recommended budget has recommendations for the use of these funds. For the General Fund and Recreation Fund, they typically use the excess fund balance (reserves – there is no adopted reserve policy for the Recreation Fund, as it is an extension of the General Fund. The recommended budget continues to include significant investments in the Water and Wastewater infrastructure and staffing, the City’s pavement maintenance program, new and rehabilitated Recreation Facilities, and a commitment to plan for the future by finalizing the City’s Civic Center Master plan and the update of Economic Development Master/Strategic Plans.

The City Council (through the Strategic Planning process) has made it clear that it believes Economic Development is a worthy investment of the City’s resources and that investment will produce additional revenues in the form of sales and property taxes. Therefore, the FY26 Recommended Budget includes the creation of the Economic Development Department and the addition of an Economic Development Director who will be tasked with various development initiatives, but primarily to recruit and retain businesses that will bring revenues and employment to Gilroy.

Investment in Infrastructure
The Citywide CIP is discussed in the Five-Year Capital Improvement Update section of the Budget Message, and a few key infrastructure investments are highlighted below.

Streets – previously, the Council directed staff to identify funds to increase investment in the City’s most valuable capital asset – streets. This budget addresses the need to continue to fund the five-year Street Improvement Plan by allocating $4.5 million in FY26 and FY27, above the target annual investment of approximately $3.9 million established by prior Councils. In previous years, the City has allocated excess General Fund balance. However, unspent gas tax funds and transportation-related funding allocations available via regional agencies allow the City to take a two-year reprieve from using the General Fund balance.

Water/Wastewater – the South County Regional Wastewater Authority (SCRWA), which the City operates in partnership with the City of Morgan Hill, is nearing the completion of an $86 million plant expansion project.

Of the $86 million, Gilroy is responsible for approximately $50 million, which was primarily funded through wastewater bond issuance. The plant expansion project will be completed this summer, with the plant being commissioned by 2026. The Water and Wastewater Funds have significant fund balances that can support increased activities from these utilities. The City’s CIP includes significant investments in the City’s water and wastewater systems – investments that the City can afford but will have to continue to implement workforce additions to manage the infrastructure upgrades and increase in residents/customers. The water/wastewater funds have adequate resources to do so.

Fire Station– In FY25, the City allocated $3 million for the Chestnut and Las Animas fire station for fundamental modernization, including improving basic living and medical amenities, which will be completed in FY26. The City is now poised to construct the fourth fire station on the corner of Miller Avenue and West Luchessa Avenue. This project is expected to begin construction by the end of the calendar year 2025. However, the recommended FY26 and FY27 budgets do not propose a staffing plan allowing the station to operate. The budget includes the addition of one fire division chief, funded by the fire station construction fund. The City’s work plan will consist of a long-term analysis of the staffing of not only the City of Gilroy | FY26 and FY27 Recommended Budget Page 14

fourth fire station but also what options the City has for its fire/medical service. The recent Local Agency Formation Commission (LAFCO) recommended that the cities in South Santa Clara evaluate regional/collaborative fire service models.

Long-Term Master Planning and Implementation
Civic Center Master Plan – the City is currently developing the master plan and once completed, will identify the future vision of the city-owned property between West 6 , Church St, West 7 , and Dowdy St. The master plan will include a community center, senior center and new City Hall; however, the master plan does not identify a funding plan, and thus the Council will be deliberating and identifying funding for implementation.

Recreation Needs Assessment - In 2020, the City completed the Recreation Facility and Program Needs Assessment, which identified the need to develop additional facilities to grow recreation programs. The Gilroy Parks and Recreation Commission recently submitted recommendations for constructing Pickleball Courts. The budget includes funding from the Recreation Fund balance for design and construction (approximately $800,000).

Parks Improvement—Historically, the City has allocated funds to improve its park system. In FY25, these funds were used for restroom replacements and other minor improvements. Similarly, $0.5 million was included in FY26 and FY27 from the General Fund balance for the same purpose.

Staffing Summary
The chart below presents a full-time staffing summary across all departments. Given the Great Recession and the Covid Recession, staffing is proposed to return to FY 2007 levels, though some growth is tied to the newly established Utilities Department. Deliberate progress is being made to increase staffing to meet community needs and growth. Many staffing enhancements have been made in public safety. In FY26 and FY27, it is proposed to add eight additional staff members – one in Police, one in Fire, two in Utilities, one in Finance, two in Recreation, and one in Administration (Economic Development).

In addition to the staffing changes described in specific paragraphs above, the other staffing changes being made include:

Shifted Community Coordinator position from Recreation to the Police Department in support of the Youth Task Force Program. (General Fund)
th th
City of Gilroy | FY26 and FY27 Recommended Budget Page 15

Added one Recreation Coordinator, one Recreation Supervisor, and one Management Analyst to the Recreation Division. (Recreation Fund)
Added one Fire Division Chief to the Fire Department. (Construction Funds) Added one Water Operator to the Utilities Department. (Utility Funds) Added one Water Quality Specialist to the Utilities Department. (Utility Funds) Added one Accounting Assistant to the Finance Department for Utility Billing support. (Utility Funds) Added one Economic Development Director to the Administration to establish a new Economic Development Department. (General Fund)
Reclassification of one Operations Services Supervisor in the Water Section of the Utilities Department to Water Systems Superintendent. (Utility Funds)
Reclassification of one Maintenance Worker II in the Water Section of the Utilities Department to Water Operator. (Utility Funds)
Reclassification of an Office Assistant II in the Utilities Department to a Management Assistant. (Utility Funds)
Reclassification of two Firefighters to Fire Captains in the Fire Department in FY26. (General Fund) Reclassification of three Firefighters to Fire Engineers in the Fire Department in FY27. (General Fund) Reclassification of one Management Analyst in the Community Development Department to Senior Management Analyst. (General Fund)
Impact of Rising Workers' Compensation Claims Costs
A cost element of staffing impacting the FY26 and FY27 budgets is the dramatic increase in workers' compensation claims costs. Claims costs include medical costs to treat an injury or illness, permanent disability costs consistent with state-mandated laws, and legal fees related to some claims. The average annual claims costs for FY21 – FY23 were $675,436 per year. Comparing this average cost to the FY24 claims costs ($1,152,085) documents, claim costs increased by over 70% in FY24. Comparing the same average to the projected FY25 claim costs ($1,341,000) documents an increase of over 98%. In addition, during this same period, insurance costs have also increased significantly. Excess insurance premiums have increased by over 55% from FY21 to present ($276,239 in FY21 and $430,400 expected for FY26).

The cause of these increased costs comes from a variety of factors:

Increased costs associated with excess insurance premiums and state-mandated fees Increased volume of claims, and instances of a single employee with multiple claims (claim frequency) Increased medical and permanent disability costs associated with each claim (claim severity) Increase in complex claims requiring specialized legal support These hard costs do not include the lost work time associated with the claims, as that cost is incorporated in budgeted salaries. Sometimes, lost work time increases overtime costs if the position must be backfilled for staffing coverage. This is primarily a challenge in the Fire Department when overtime must be used to meet minimum staffing requirements. Available staffing also drives the ability or inability to staff the fourth fire station (STR).

Lost Productive Work Time:

Category/
Year
FY23 Lost
Work
Hours
FY24 Lost
Work
Hours
FY25 Lost
Work
Hours
(Projected)
Three-Year
Lost Work
Hours Total
Average
Annual
Lost Work
Hours
Annual Lost
Time
Staffing
Equivalent
Line Fire
(based on
56-hour
workweek)
4,819 12,812 9,188 26,819 8,940 3.07
personnel
Sworn
Police
892 1,940 2,544 5,376 1,792 0.86
personnel
All Other 102 130 0 232 77 0.037
personnel
City of Gilroy | FY26 and FY27 Recommended Budget Page 16

Given the above costs, staff will review insurance and claims costs to identify ways to reduce costs and avoid claims. In addition, staff will evaluate ways to reduce lost work time or at least recapture the hours in part through the City’s Return to Work Program (modified/light duty).

Economic Development
Gilroy continues to pursue various economic development-related activities to make Gilroy a “Recreation Destination”. Although still in the development phase, the Council has focused on three primary economic development projects:

1. The 536 acres of City-owned land at Hecker Pass encompasses Gilroy Gardens. The City will restart evaluating the best use of the property, which may include dedicating permanent open space and potential development around the Gilroy Gardens theme park.

2. Gilroy Sports Park—Phase three of the Sports Park Master Plan includes developing the Sharks Ice Center. The design has been completed, and a financing plan will be presented to the Council in early FY26.

3. Downton Gourmet Alley – This project was completed in spring of 2025 and is now being utilized for numerous downtown events.

Other Economic Development Initiatives:

Economic Development Department
Enhancing Gateways to the City
Master/Strategic Plan Updates
Specific Plans including the area off the 101/Monterey Exit Business Attraction/Retention/Roundtables
California Public Employees Retirement System (CalPERS) – Pensions Like most cities in California, the City of Gilroy has experienced significant increases in annual payments to the California Public Employees’ Retirement System (CalPERS). Unfunded Accrued Liability (UAL) is the most rapidly growing component of pension costs, primarily due to plan assumption changes involving mortality rates and less-than-assumed rates of investment return, increasing the annual payments the City makes to fund the current pension obligations. This UAL represents the shortfall/gap between what is needed to pay retiree benefits and the current assets the City has in its accounts with CalPERS.

The City’s current UAL as of June 30, 2023, is $117.4 million, with a funded status of 68%. and does not consider the investment rate of return of 9.3% experienced by CalPERS for FY24, which is slightly higher than CalPERS' target investment rate of return of 6.8%. Considering the FY24 investment return, the City’s UAL is projected to decrease to $111.0 million as of June 30, 2024.

In 2022, the City Council took action to address the City’s pension obligations, including establishing and funding a Section 115 Trust, adopting a pension funding policy, and making annual contributions to the Section 115 Trust (which sets aside current funds for future pension liability payments) according to the adopted policy. As of February 2025, the Pension Section 115 Trust has a balance of $4.5 million, with an annual rate of return of 11%. Given the year-over-year projected increases of the annual UAL payments, continuing to grow the Pension Trust through additional deposits and investment earnings is recommended and will help lessen the impact on the General Fund in future years when UAL payments are highest.

The recommended budget includes funding the required CalPERS contributions at $16.7 million in FY26 and $17.4 million in FY27. The total includes the UAL payments of $10.4 million and $10.9 million in FY26 and FY27, respectively. It is expected that in the next couple of years, beginning in FY29, the City will be able to leverage the Pension Trust (withdraw funds) in a strategic manner, to help pay for a portion of the annual UAL payments and lessen the burden to the City’s General Fund which will preserve City services until the pension cliff is lowered in 2034. Below is an illustrative example of the City’s current UAL payments through City of Gilroy | FY26 and FY27 Recommended Budget Page 17

2043, which assumes 6.8% discount rate for CalPERS, 9.3% FY24 CalPERS investment return, and that CalPERS will meet its target of 6.8% investment returns for FY25 and onwards, as well as the City’s continuing its contributions to the Pension Trust based on Council adopted policy.

Other Post-Employment Benefits (OPEB)
OPEB refers to benefits, other than pensions, that state and local government employees receive as part of their retirement benefits, such as medical, dental, vision, or life insurance. For the City of Gilroy, this primarily includes a retiree healthcare plan administered by the City and provided to eligible retirees through the CalPERS healthcare program. For most retirees under the plan, the City contributes the PEMHCA minimum contribution ($158 per month for 2025) for eligible retirees and surviving spouses. The City also has a Health Reimbursement Agreement for qualifying retirees, contributing up to $200 or $300 per month from retirement to age 65 for retirees who reach certain milestone years of service.

Like pensions, most cities in California offer similar, in some cases enhanced, post-employment benefits to their retirees, which have outstanding actuarially determined liabilities. The City of Gilroy has an outstanding OPEB liability of $15.7 million based on the latest actuarial valuation of the plan as of June 30, 2024, which is a decrease of $2.3 million from the prior actuarial valuation completed as of June 30, 2022. The valuation, like pensions, considers factors such as mortality, the assumed rate of investment return, and other factors such as enrollment, dependent eligibility, and healthcare trend rates. Gilroy, however, has wisely capped the benefit amount in both the dollar amount and length of time, which helps to manage the liability, unlike some other agencies that have offered lifetime benefits of escalating dollar amounts.

Like the Pension Funding Policy, in 2023, the City Council adopted an OPEB Funding Policy, which sets aside up to 25% of the annual budgetary savings in the General Fund to a separate Section 115 Trust for OPEB. As of February 2025, the Trust had a balance of $1.0 million and an annual rate of return of 11%.

Strategic Plan Update – Vision, Goals, Priorities, Workplan The City Council has conducted three strategic planning sessions to discuss fiscal health, Economic Development, Community Development, and Housing to date. On May 19, 2025, the Council will conduct its final strategic planning session and discuss its list of Legislative Agenda items. Legislative Agenda items are policy discussion items and decisions the Council can adopt. As the City’s policy-making body, the Council can focus the City and organization on specific priorities and programs through its legislative authority.

The final Adopted Budget, which will be presented to the Council for consideration on June 2, 2025, will include the Council's vision, goals, priorities, work plan, and legislative agenda.

Health of General Fund – Financial Overview
City of Gilroy | FY26 and FY27 Recommended Budget Page 18

Fund Balance/Reserves
The City maintains a General Fund reserve of 20% of annual expenditure for general operating needs and an additional 10% for economic uncertainties. The Council established these levels during the previous biennial budget process. This budget sustains these levels, based on the revenues and expenditures projected. This was a prudent fiscal decision made by previous Councils and continued through both good and bad economic cycles.

General Fund Revenues
The General Fund’s primary source of revenues is Taxes, representing 76% of total General Fund revenues.

This includes sales tax, property tax, transient occupancy tax, utility user tax, franchise tax, and business license. General Fund revenues are estimated to be $74.3 million in FY26 and $77.1 million in FY27, representing an average growth from FY25 of about 4% year-over-year. The City experienced a robust economic recovery over the last several years due to several economic stimulus packages made available by the federal government. There are signs of the economy “cooling off” as economic growth returns to more normal and sustainable levels. As a result, the City’s tax-based revenues are projected to have slower growth, compared to prior years, especially in the sales tax category, which has declined over the last two years and is expected to remain flat with little to no growth for the next two years.

Sales tax revenue is projected to be $20.4 million in FY26, a decline of 1% from FY25, and projected to increase by a nominal 1% to $20.6 million in FY27. Sales Tax revenue has been the most significant tax revenue source for the General Fund, generally representing about 33% of the total General Fund revenues in recent years, and is, however, expected to be surpassed by Property Tax in FY25. For FY26, sales tax will comprise 27% of the total General Fund revenues. Gilroy's current sales tax rate is 9.125%, and the City receives 1% of the rate as its local share. Sales tax continues to be susceptible to volatility as it is significantly tied to the ability of our residents/customers to purchase non-essential or discretionary items. Sales tax is projected to remain relatively flat, with little to no growth for the next two fiscal years and is expected to return to a normal growth rate after FY27 of about 2% annually. The relatively flat and no increase over the next two years is attributed to a slowdown in consumer spending on taxable goods. High and rising housing, insurance, groceries, healthcare, and energy costs continue to consume personal income, thus shifting the spending towards nontaxable services and away from taxable goods and items, further demonstrating the volatility and eroding nature of the revenue source as it relies directly on consumers’ discretionary spending.

Property tax revenue is projected to be $21.5 million in FY26, an increase of 7% from FY25, and is projected to increase by 5% to $22.9 million in FY27. Property Tax revenue has been the second largest tax revenue source for the General Fund, representing 31% of the total General Fund revenues, and is, however, expected to be the largest tax revenue source beginning in FY25, due to the decline in sales tax. Property tax is a stable revenue source and has historically been easier to predict accurately.

A portion of the annual property tax revenue collected by the County goes to the Educational Revenue Augmentation Fund (ERAF) to support local school districts. When the amount contributed to ERAF exceeds the minimum cost of funding local schools, excess funds are returned to the County, Cities, and Special City of Gilroy | FY26 and FY27 Recommended Budget Page 19

Districts. In the last budget cycle, the City relied on this valuable annual excess ERAF monies for staffing augmentation. This recommended budget and the forecast continue to rely on the excess ERAF monies. In FY26, the City is projected to receive $2.6 million from excess ERAF and is forecasted to grow by 4% to $2.7 million in FY27. This amount is included in the total property tax revenues for the respective fiscal years.

Excess ERAF calculation continues to be challenged through the legal system by the State of California, which could lower the amount of excess ERAF the City receives; however, no resolution has been achieved by the State and the County of Santa Clara, which apportions the amounts to the entities in the County.

Utility Users Tax (UUT) is projected to be $8.2 million in FY26, an increase of 4% from FY25, and projected to increase by 4% to $8.5 million in FY27. UUT represents about 11% of the total General Fund revenues. Taxes are assessed against the value of energy and telecommunications, such as gas, electricity, steam, cable, and phone charges. The current tax rates are 4.5% for telecommunications and 5% for gas and electricity.

Transient Occupancy Tax (TOT) is projected to be $1.9 million in FY26, an increase of 3% from FY25, and is projected to increase by 24% to $2.1 million in FY27. The significant increase in FY27 is due to the assumption of a new hotel coming online. Currently, four new hotels are undergoing reviews at various stages of the development process. Two of the four are further along, with one expecting to obtain building permits and break ground this year. As such, the recommended budget reflects the reasonable assumption of the one hotel coming online by FY27. The City’s TOT revenue comes from a 9% tax on hotel room rentals under 30 days, including RV parks.

Franchise Tax revenue is projected to be $2.6 million in FY26, an increase of 4% from FY25, and is projected to increase by 4% to $2.7 million in FY27. The City receives franchise tax revenue from three franchises: gas and electricity, cable TV, and garbage/refuse.

Businesses pay Business License (BL) fees for using City services and the costs associated with business regulations. The BL revenues are projected to be $0.8 million in FY26 and FY27.

Development Revenues – the City receives revenues from development through user fees, including planning, permitting, and building inspections. The development services revenues for Public Works and Community Development are outlined below. In FY26 and FY27, the development-related revenues are projected to be $5.7 million and $6.0 million, respectively. Development-related activity and related revenues are expected to increase over the next year, especially in the industrial and commercial sectors. The City last updated its city-wide user fee schedule in 2022, which included a mechanism to adjust it annually based on a consumer price index (CPI) to keep pace with the costs of providing services and help the City maintain its cost recovery goal. Per Council direction, and the Gilroy City Code, a comprehensive user fee study is to be conducted every five years to ensure fees reflect the actual cost of providing the service and holistically look at updating existing or adding new fees. The recommended budget includes a work plan item for the comprehensive user fee study over the next two fiscal years.

General Fund Expenditures
The General Fund budgeted expenditures are $75.6 million and $78.3 million in FY26 and FY27, respectively.

The primary expenditure category for the General Fund is personnel, which is budgeted at $54.2 million and $56.6 million for FY26 and FY27, respectively. It represents 72% of the total General Fund budget. In 2022, the City Council successfully negotiated and approved multi-year labor contracts for all bargaining units, all up City of Gilroy | FY26 and FY27 Recommended Budget Page 20

for renewal within the following year. The City is currently undergoing a collective bargaining process with two units, which have their memorandum of understanding (MOU) expiring on June 30, 2025. A significant component of benefits is pensions and the annual UAL payment. The City’s UAL payment for FY26 is $10.4 million, an increase of 14% or $1.3 million over FY25, and projected to increase by 5% to $10.9 million in FY27.

The General Fund’s share of the annual UAL payment is approximately 86%, or $8.9 million for FY26, and $9.3 million in FY27. The recommended general fund budget primarily maintains current levels of core services with some modest enhancements to serve the growing community, including public safety staffing in anticipation of the new fire station, and the addition of an Economic Development Director, as previously discussed. In addition, the General Fund expenditure includes one-time strategic uses of the fund balance of $1.5 million in FY26 and $1.2 million in FY27 for investments in City parks, facilities, fleet, and public safety equipment.

Financial Forecast and Chart
The City accumulated healthy fund balances over the recent years due to stronger-than-expected economic recovery, and the federal funds received through the American Rescue Plan Act were made strategic onetime investments utilizing the accumulated fund balances. Council and staff have worked diligently to ensure that the City’s long-term fiscal health remains in focus. It is essential that we, as a City, continue to look at the long-term impacts of short-term decisions. Below is the updated financial forecast chart, identifying unassigned fund balance changes based on the recommended budget and projections going forward, based on historical trends. The chart below illustrates the ending fund balance and the required total reserves for the respective fiscal years.

City of Gilroy | FY26 and FY27 Recommended Budget Page 21

The above chart demonstrates that the General Fund maintains the required 30% of General Fund expenditure in our Economic Uncertainty and General Fund reserve and remains structurally balanced throughout the forecast. It should be noted that although the budget is structurally balanced, there is little margin for error, and should any of the City’s revenue estimates fall short, the City will have a negative operating margin that must be addressed through either revenue enhancements or service reductions.

The chart illustrates the one-time uses of the general fund balance approved in the current FY24 and FY25 budget cycle, and in FY26 and FY27, for $1.5 million and $1.2 million, respectively. The General Fund forecast reflects several noteworthy revenue and expenditure assumptions to balance the Fund structurally. Future uses of fund balance can be considered during the biennial budget timeline or future budget developments.

Excess ERAF – The recommended budget and the forecast rely on the City receiving the annual Excess ERAF allocation, which currently amounts to approximately $2.5 million annually. The potential reduction due to the ongoing challenge to the ERAF calculation is about 18% for FY26, or about $0.5 million. Given that no resolution has been achieved on this matter, the forecast assumes the City will receive 100% of the estimated amount provided by the County. It relies on this vital source of revenue.

Any negative changes to annual excess ERAF would likely require operational adjustments.

Sales Tax—The forecast assumes, based on the latest quarterly sales tax report and forecast, that revenue will remain relatively flat for the next two years before returning to a more normal growth rate of about 2% in FY28 onwards.

TOT – As previously discussed, the City currently has four new hotels undergoing reviews at various stages of the development process. Two of the four are further along in the process, with one expecting to obtain building permits and break ground this year. The recommended budget and forecast assume one of the hotels coming online in FY27 and the second hotel coming online in FY28; thus, an estimated amount of TOT revenue for each has been assumed based on an average daily rate of room rent and occupancy, yielding approximately $0.7 million annually, once both are online.

CalPERS Pension – Based on the City’s current projection of UAL payments, the payments are projected to increase from $9.1 million in FY25 to $12.7 million in FY31, with a significant annual increase projected in FY29 of about $1.0 million. The forecast assumes that withdrawing funds from the Section 115 Trust for pensions will offset the City’s pension costs from FY29 onwards, and aid in structurally balancing the Fund.

Salary savings – The City delivers services with approximately 300 full-time equivalent staff across all departments. As is typically the case with any business or large organization that relies on personnel to provide services, it inevitably experiences vacancies due to turnover, retirements, and other factors. As previously mentioned, the General Fund’s most considerable cost is related to personnel, which accounts for about 72% of the General Fund budget. As such, the City’s budget typically assumes a salary savings rate related to vacancies, and based on historical trends, an annual 8% salary savings rate is assumed for the General Fund.

City of Gilroy | FY26 and FY27 Recommended Budget Page 22

Non-General Funds
The City’s primary non-General Funds operations include Wastewater and Water utilities. Funded by the Wastewater Fund (700) and Water Fund (705), the utilities operate as a business-like enterprise that primarily generates operational revenues from water and wastewater rates assessed to utility customers. Both funds have accumulated fund balances over the years and will be utilized to augment operations and deliver the utilities capital improvement program as outlined in the approved FY24–FY28 CIP Plan.

In 2023, the City conducted a comprehensive water and wastewater rate study to ensure that the City can pay for the cost increases from Valley Water and continue to invest in its vital water and wastewater utility infrastructure. The City Council adopted the study's recommendations and established water and wastewater rates for a five-year period commencing on January 1, 2024, adjusted annually, through January 1, 2028.

Wastewater
The City’s current wastewater revenues are estimated to be $19.5 million for FY26 and $21 million for FY27, primarily consisting of charges for wastewater services. The wastewater utility has a total expenditures budget of $20.7 million and $25.6 million in FY26 and FY27, respectively. The expenditure budget is primarily related to the City’s own wastewater operations, associated CIP, and the SCRWA treatment plant operations. The wastewater utility issued revenue bonds in June 2021 to finance the City’s share of the $86 million expansion of the South County Regional Wastewater Authority (SCRWA) plant. This major project commenced in 2021 and is expected to be completed in FY26. As such, the commissioning of the expanded plant will also occur in FY26, and as a result, the City’s cost for the SCRWA plant operations is expected to increase by 24%, from $6.3 million projected in FY25 to $7.8 million in FY26 and $8.4 million in FY27. Included in the recommended wastewater budget are the staff augmentations previously discussed concerning the continued organization of the Utilities Department.

Water
The City’s current water revenues are estimated to be $17.9 million in FY26 and $18.5 million in FY27, primarily consisting of charges for water services. The water utility has a total expenditure budget of $25.4 million and $24.2 million in FY26 and FY27, respectively. The expenditure budget is primarily related to the City’s own water operations, associated CIP, and water extraction charges paid to Valley Water. The City’s operational costs continue to increase due to increases in water extraction charges from Valley Water which are projected to increase by 15%, from $4.8 million projected in FY25 to $5.5 million in FY26, and $5.9 million in FY27. Also included in the recommended water budget are the staff augmentations previously discussed concerning the continued organization of the Utilities Department.

Five-Year Capital Improvement Plan (CIP) Update
In 2023, the City Council approved the current five-year, FY24 through FY28, Capital Improvement Plan. The CIP is intended to be a biennial process conducted during the off-year of the biennial Operating Budget process. As such, the next comprehensive CIP plan update will be undertaken in January 2026 (FY26).

Although not directly related to the City’s operating budget, resources are allocated through the operating budget process and are reflected in the CIP for the FY26 and FY27 Recommended Budget. Recommended CIP is budgeted at $59.2 million in FY26, and $54.3 million in FY27, for a total of $113.5 million over the two years for all five programs – to include Streets, Parks and Trails, Utilities, Public Facilities, and Engineering.

The recommended two-year CIP is further discussed in the Capital Improvement Program section of the budget document, and the recommended projects by the program and funding sources are outlined. A few key projects are highlighted below:

Streets
Annual Citywide Pavement Rehabilitation – The recommended budget includes funding for this project at $4.5 million each fiscal year, primarily funded from Gas Taxes and other transportationCity of Gilroy | FY26 and FY27 Recommended Budget Page 23

related allocations received from regional agencies. This investment exceeds the target of $3.9 million established by prior City Councils.

Sidewalk Replacement Program – The recommended budget includes funding for this project at $0.5 million each fiscal year, funded by the Sidewalk Replacement Reserve Fund, which receives an annual investment of $250,000 from the General Fund.

Traffic Signal Installations – The recommended budget includes funding traffic signal installations at five intersections across the City for a total investment of $4.8 million over the two years and is primarily funded by the Traffic Impact Fund. The specific intersections are further outlined in the Program details.

Gateway Senior Apartments Pedestrian Crossing Safety Improvement – The recommended budget includes $0.7 million for this project and is grant-funded.

Parks and Trails
Lions Creek Trail Kern to Tapestry – The recommended budget includes a $1.6 million investment for the project in FY26 and is primarily grant funded with a City match contribution required of approximately $100,000 from the Gas Tax Fund.

San Ysidro Park Healthy Living Enhancements - The recommended budget includes a $2.9 million investment for the project in FY26 and is grant-funded.

Citywide Park Improvements – The recommended budget includes funding for this new project at $0.5 million each fiscal year, from the General Fund.

Utilities
McCarthy Site Well – The recommended budget includes a $3.9 million investment for the project over the two fiscal years to construct a new water well, funded by the Water Impact Fund.

Joint Morgan Hill – Gilroy Trunk Line Repair - The recommended budget includes a $3.4 million investment for the project over the two fiscal years for the repair of the joint wastewater trunk line, funded by the Wastewater Operations Fund, with a reimbursement from Morgan Hill for its allocable share of the project. Water and Wastewater Master Plan Projects - The recommended budget includes a $7.1 million investment over the two fiscal years for several improvements identified in the 2023 Sewer and Water Master Plans, funded by the Water and Sewer Operations and Impact Funds.

Public Facilities
Santa Teresa Fire Station – The recommended budget includes $13.0 million for the design and construction of the City’s new fire station over the two fiscal years, funded by the Capital Projects Fund, with contributions received from the developer for this project.

Chestnut and Las Animas Fire Station Renovations - The recommended budget includes a $2.5 million investment to make certain improvements and complete the seismic assessments needed for the Chestnut and Las Animas Fire Stations, funded by the Equipment Outlay Fund.

Gilroy Library Improvements - The recommended budget includes a $5.0 million investment for the construction of improvements at the Gilroy Library, identified by the County library staff and funded by the remaining unspent Bond Proceeds from the facility's original construction.

Engineering
Gilroy Ice Center - The recommended budget includes $36.0 million for the design and construction of the Ice Center facility, funded primarily by Bond Proceeds, and the City’s various Impact Funds. The facility's operator will provide funding for the annual repayment of the bonds.

Corporation Yard EV and EV Charging – The recommended budget includes $0.3 million for installing charging facilities at the Corporation Yard and is grant-funded.

Summary
Gilroy has adequate reserves and is operationally balanced. Due to prior Council action that implemented best-practice financial policies and a conservative approach to spending, Gilroy is primed to address the economy's ups and downs. In numerous instances, the City’s reserve level has served as a financial insurance policy enabling the City to weather economic storms.

City of Gilroy | FY26 and FY27 Recommended Budget Page 24

Our City has been relatively stable over the last few years, both financially and operationally. Relative to other Cities, we have a low employee vacancy rate and can recruit and retain our workforce. We can also address the needs of our streets and utilities while keeping an eye on the future and planning for the next generation of Gilroy residents.

This budget proposes continuing our investment in infrastructure while planning for the future.

The City Council continues to support the organization while also being the “eyes and ears” of the community. The Mayor and Council deeply care about their City. Thank you for your leadership and support.

Nothing would get done in this City without you!
The budget process is a six-month marathon that challenges our departments and staff to do the very best for our community—we owe that to our Council, residents, and businesses. This award-winning document reflects the months and years of dedication from many of our staff members who work behind the scenes and are rarely acknowledged for their contributions to the final product.

I want to thank the Budget Development Team: Harjot Sangha (Finance Director), Carina Baksa (Finance Manager), Cindy Murphy (Finance Extra Help), LeeAnn McPhillips (Assistant City Administrator), Bryce Atkins (Assistant to the City Administrator), Sharon Goei (Community Development Director), and Luke Powell (Police Captain). This group never forgot about the Gilroy taxpayers—the real heroes in any budget process! Sincerely,
Jimmy Forbis
City Administrator
City of Gilroy | FY26 and FY27 Recommended Budget Page 25

About Gilroy
City of Gilroy | FY26 and FY27 Recommended Budget Page 26

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Regional Setting
Gilroy is situated in south Santa Clara County at the southern tip of the San Francisco Bay Area, which is a dynamic urban area of 7,000 square miles, nine counties, 101 cities, and a population of more than nine million people. The City is part of the enterprising and technologically advanced San Jose/Silicon Valley sub-region and is within an hour’s drive of the scenic beauty of both the San Francisco and Monterey Bay Areas. Gilroy lies at the crossing of US Highway 101 and State Highway 152, giving it direct access to the San Francisco Bay Area, San Benito, Monterey, and Santa Cruz counties, and the Central Valley.

City of Gilroy | FY26 and FY27 Recommended Budget Page 27

Environmental Setting
The Gilroy section of the Santa Clara Valley is a broad, gently sloping, fertile plain enclosed on the northeast by the Diablo Mountains of the Contra Costa range and on the west by the Santa Cruz Mountains. At the southern end, the Santa Clara Valley merges into the Pajaro Valley. The City of Gilroy is situated in the eastern foothills of the Santa Cruz Range and bordered by the Llagas and Uvas creeks that flow southward into the Pajaro River.

Despite its growth, Gilroy continues to harbor a rural and historic character, especially in the older neighborhoods where buildings dating back to the mid-1800s can be found. There is a sense of abundant open space, due mainly to the wide, tree-lined streets in the older neighborhoods; the large areas of undeveloped land surrounding the newer sections of town; and the City’s pristine mountainous backdrop.

Gilroy’s climate is a pleasant balance between
extremes. The cooling breezes from the Pacific Ocean
keep the average temperature at a comfortable 62
degrees. While summer temperatures have been
known to cross 100 degrees, the average July high
temperature is about 90 degrees.

Winter temperatures drop to an average of about 50
degrees and the first freeze generally arrives in
November. The average date of the last freeze is
around March 1. The climate is perfect for agriculture:
the average agricultural growing season in the valley
ranges from 300 to 350 days per year.

City of Gilroy | FY26 and FY27 Recommended Budget Page 28

Early History: A Town Built on Diversity
The earliest recorded inhabitants of the Gilroy area were the Ohlone Indians, who occupied the area between 1000 and 3000 years ago and lived as hunters and gatherers until the arrival of the Spanish in the 1700s. Two Spanish land grants, the Las Animas and the San Ysidro, and many Mexican grants divided the area into large ranchos that raised cattle for hide and tallow.

Gilroy’s namesake, John Cameron Gilroy, arrived from Scotland in 1814 and made his way to Rancho San Ysidro.

The first American settlers arrived in 1843 in the first California-bound wagon train. Following the gold rush years, pioneers flooded the fertile Gilroy area with farms of every size and description. Settlers joined the Spanish and Mexican pioneers in stock raising and grain farming, and the area, growing from the small settlement of San Ysidro into the village of Pleasant Valley, became known as the Hay and Grain Capital of California.

The town of Gilroy got its start in 1850 as a stage stop along the San Jose to Monterey Road. By the time it was incorporated by the State as a charter city in 1870, it was the third-largest community in Santa Clara County, with a brewery, a flouring mill, and a distillery. The railroad arrived in Gilroy in 1869 and made the community the hub of south Santa Clara Valley. The Bank of Gilroy opened in 1871 and played an integral part in the town's growth. This local bank later became known as the Bank of Italy and eventually as Bank of America.

City of Gilroy | FY26 and FY27 Recommended Budget Page 29

Rich Agricultural Legacy
In its first hundred years, Gilroy’s economy was
dominated by agriculture and agricultural
processing, with its primary crops changing over the
years in response to changing markets as well as the
introduction of new crops and new growing
techniques by waves of new immigrants. Orchard
crops flourished well into the 1950s, when Gilroy was
known as the Prune Capital of California. Garlic
production for the commercial market only started
after the arrival of Japanese farmers in 1918. By 1940, the largest grower of garlic in the US was Kiyoshi
Hirasaki of Gilroy.

Agricultural industries, including canneries as well as dehydrators, dryers and packers, breeding, and the
seed industry, have long been the backbone of
Gilroy’s industry, and continue to play an important
role, with Olam Spices and Vegetables (formerly
Gilroy Foods) and Christopher Ranch remaining the
City’s two largest private employers.

For 40 years, beginning in 1979, the Gilroy Garlic
Festival celebrated Gilroy’s role as the Garlic Capital of the World.

City of Gilroy | FY26 and FY27 Recommended Budget Page 30

Post-War Development and the Silicon Valley Boom
Gilroy’s city limits remained unchanged for the first 80 years of the City’s history, defined by a 1.5-mile rectangle of land known as the “old quad” and its grid system of streets laid out in 1867 by a local physician, Dr. David Huber.

California grew rapidly in the post-war years, and Silicon Valley and other employment centers began to flourish in north Santa Clara County in the late 1950s. With the completion of the US Highway 101 by-pass in the early 1970s, the City of Gilroy became more accessible and its growth rates rose sharply. While agricultural sector growth began to slow down, manufacturing, retail, and service sectors began to grow at a faster rate.

Gilroy now encompasses 16 square miles.

Today, Gilroy’s growth is closely linked with economic activity in the Bay Area as a whole, and with Silicon Valley in particular. The sustained economic growth of the 1990s, which was led by information-related technology companies in north Santa Clara County, has fueled Gilroy’s continued growth, both in population and in jobs. While agriculture remains an important part of the local economy, a large and growing proportion of City residents commute north to jobs, and an increasingly diverse local economic base is developing.

The nationwide economic downturn and recession which began in 2008 had a significant impact on Gilroy, especially considering the large retail sales base which contributes substantially to the City of Gilroy’s general fund. Proactive and aggressive management and targeted expenditure reductions have maintained services to the community and weathered this storm, positioning Gilroy well for the economic recovery in process.

Subsequently, the next decade, from 2009 to 2020, the City, experienced one of the longest economic expansions. The real estate values quickly recovered, and economy continued to thrive, benefiting from the Silicon Valley ecosystem.

In March 2020, Gilroy, like the rest of the world, experienced a significant change in its local economy due to the outbreak of COVID-19 pandemic. Local businesses, including City facilities, were forced to close doors due to the “Shelter in Place” orders instituted by the State and County. As a result, revenues were significantly reduced, and the City experienced an immediate recession. The federal government swiftly responded with economic stimulus aid to businesses and individuals, quickly averting the pandemic-induced recession. The shelter-inplace orders were rescinded by the middle of 2021 and the Federal Department of Health and Human Services formally declared the end of the COVID-19 public health emergency on May 11, 2023 which allowed economic activity and discretionary travel to resume. As a result, the City's sales tax base saw a robust recovery from the pent-up demand during 2022. The economy since "cooled-off" and the sales tax revenue declined for the next two years.

Current economic conditions reflect concerns over inflation and high interest rates, leading to more cautious spending on discretionary items which affect Sales Tax Revenue. Property values continue to be stable, thereby offsetting fluctuations in sales tax revenue. In 2025, the Property Tax revenue is expected to outpace the Sales Tax revenue likely after a very long time for Gilroy.

City of Gilroy | FY26 and FY27 Recommended Budget Page 31

Economic Setting
Gilroy’s economy has been dominated by agriculture and its related industries (food processing, etc.) since the 1800s. However, the growing influence of Silicon Valley and regional population growth have resulted in significant changes in the local economy during the past twenty years. Today, Gilroy’s economy is diversified into non-agricultural commercial and industrial activities such as light manufacturing, wholesale operations, automobile sales, and large retail centers.

Development and Construction Activity
The economic boom in Silicon Valley, which began in
the early 1990s, had a profound impact on the local
economy, resulting in significant increases in home
prices and land values as well as significant decreases in local unemployment. The pandemic fueled a crisis
in the housing market, sending demand and prices
for homes soaring high, in an already supply-tight
market. Gilroy benefited economically from this trend
as many Silicon Valley workers had an opportunity to
continue to work from home and saw more value in
buying homes in smaller cities.

City of Gilroy | FY26 and FY27 Recommended Budget Page 32

Housing developments in the southwest quad, northwest quad and north-central Gilroy brought new households to the City and residents that usually commute to work in the north county area. Construction activity was also high in the southeast industrial area. Development and construction activity that declined dramatically beginning in 2008 has since demonstrated growth that is anticipated to continue over the next few years. This growth is focused within an Urban Growth Boundary approved by voters in 2016.

One of the most active residential development areas in Gilroy is Glen Loma Ranch. This 392-acre masterplanned area is located between Santa Teresa Boulevard and the Uvas Creek corridor and when completed, will include approximately 1,467 residential units, 145 acres of parks and open space, and a trail system linking the various neighborhoods. As of March 2025, over 1,080 housing units have been issued or completed building permits in Glen Loma. The City Council approved the final neighborhoods in this specific plan area in March 2025.

Currently, Gilroy has a wide variety of housing projects planned for development, including a 94-unit affordable apartment project located on Monterey Road south of 10th Street; a 54-lot single-family project on Miller Avenue at Santa Teresa Boulevard; and a 45-unit townhouse project on Royal Way.

City of Gilroy | FY26 and FY27 Recommended Budget Page 33

Retail, Manufacturing and Wholesaling
The Gilroy Outlets, Auto Mall area and retail developments east of Highway 101 have put the City on the map as a regional retail destination and helped strengthen the City’s tax revenues. These developments are clustered near the City’s highway interchanges, primarily on the east side of the city. Manufacturing and wholesale/distribution operations choose to locate in Gilroy to take advantage of its proximity to Silicon Valley and easy access to Highway 152, leading to Interstate 5 and the Central Valley. These operations are located in the Forest Street industrial park, the southeast industrial area, and in some sites formerly occupied by foodprocessing facilities. Two new industrial buildings were added to the market, increasing the supply of industrial availability by 383,000 square feet. There are several more industrial buildings, plus data centers and storage facilities, anticipated over the next several years.

City of Gilroy | FY26 and FY27 Recommended Budget Page 34

Construction activity has also been high in the commercial sector in southeast Gilroy, near Hwy 152 east of 101.

Various industrial and warehouse developments anticipate adding jobs to Gilroy. A new commercial center at 10th Street and Chestnut is under construction and will include a five-story 112-room hotel, a coffee shop, a restaurant, a carwash, a convenience store, a gas station and long-awaited roadway improvements and repairs.

In addition, three other hotel projects are proposed for development in the vicinity of State Route 152 and State Route 101.

Aside from new construction and development, numerous commercial tenant improvements took place among retail stores, restaurants, and offices throughout Gilroy and the downtown area, with more anticipated in the coming years. These commercial developments and tenant improvements provide millions of square feet of retail and professional services space to the City.

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Downtown Revitalization and High Speed Rail
Downtown revitalization efforts have helped attract some new businesses to the area and retained existing businesses, creating a core area of specialty shops, restaurants, brewpubs, service-oriented businesses and a bowling alley. Restored historic buildings also add to the downtown’s character, including the Old City Hall and Train Depot.

The City guided several downtown property owners who retrofitted their buildings for compliance with seismic safety requirements bringing additional space available for commercial and residential use. Several property owners also utilized City incentive programs to restore or upgrade façades and other structural improvements resulting in several new businesses opening Downtown in the past few years, with more businesses planned.

A new 140-space parking lot with a pedestrian pathway to Monterey Street, and several electric vehicle charging stations was built at the corner of Eigleberry and 7th Street to accommodate an increased number of visitors/shoppers to the downtown area. Improvements in Gourmet Alley have been completed. Activation and business development in the entire downtown area will continue to be a priority of upcoming downtown revitalization efforts.

Continuing the Downtown development, In 2019, the California High Speed Rail Authority (CHSRA) Board of Directors identified the downtown area as the preferred location for a high-speed rail station. The plan is for the Gilroy station to be the high-speed rail system’s hub for Southern Santa Clara County and include connections to coastal communities on the Monterey Peninsula.

The High-Speed Rail Project is sponsored by the State of California and is administered by the CHSRA and the Federal Railroad Administration. The City partnered with the CHSRA and Valley Transportation Authority (VTA) to conduct robust community outreach to prepare a Station Area Visioning Study, to be followed by the development of a Station Area Plan. City leaders continue to collaborate with the CHSRA and VTA on planning efforts to ensure that the public is kept apprised on the many significant impacts that the train system will have on the City and the lives of its residents as it is constructed.

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Boards and Commissions
The City of Gilroy is able to provide the level of service and urban planning which the citizens of Gilroy deserve and expect in large part due to the efforts of civic-minded individuals who volunteer many hours to study a myriad of issues, then provide guidance to staff and the City Council. This citizen involvement is highly welcomed and very much appreciated. In 2022, Boards and Commissions were studied and streamlined for efficiency. Some Boards and Commissions serving the same purpose were combined. Listed below are the current Boards and Commissions serving the city in an advisory capacity and a brief description of their mission.

Arts and Culture Commission
Responsible for advising the Recreation
Department and the City Council on all matters
pertaining to cultural and artistic activities and
cooperating with other governmental agencies
and civic groups to encourage, promote and
stimulate the growth of broad-based arts in the
community.

Building Board of Appeals
The Board meets as necessary on matters
pertaining to building and construction and
hears all building appeals from customers
concerning the interpretation of code-required
compliance.

Library Commission
Serves as an advisory and liaison body to the
Gilroy City Council, the City staff and Community
Librarian on matters concerning the Gilroy
Library.

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Open Government Commission
Serves to advise the City Council and provide
information to City Departments on ways in
which to implement and enforce chapter 17A of
the Gilroy City Code “Gilroy Open Government
Ordinance”.

Parks and Recreation Commission
Responsible for advising the Recreation Staff,
Planning Commission, and City Council on
matters pertaining to public parks, urban
forestry and recreation.

Personnel Commission
Advises and reviews job descriptions and
classification recommendations for City
positions. Further, this Commission serves as a
neutral body to hear appeals of disciplinary
matters regarding full-time City employees and
reviews the Human Resources Rules and
Regulations, in accordance with the City Charter.

Physically Challenged Board of Appeals
Conducts hearings regarding action taken by the Building Division in providing public accommodations for the physically challenged.

Planning Commission
Acts as an advisory body to City Council on matters pertaining to land use. Reviews all planning applications for various types of land use entitlements including subdivisions, planned unit developments, zone changes, conditional use permits and variances from the City’s development standards.

Youth Commission
Serve as a youth advisory group to the City Council, making recommendations on issues affecting local youth. The Commission has extensive involvement with the planning, organization, and implementation of programs and events in the community such as Intergenerational events like Breakfast with Santa and Tech Days at the Senior Center.

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Budget Process and Timeline
Budget Process
The City’s fiscal year is July 1 through June 30.

This year’s budget process began in December 2024 when an overview of the biennial budget development process, the budget development manual, and related training were provided to departments. The FY26 and FY27 Biennial Budget Development process officially commenced in February 2025.

The City Administrator facilitated a Council Strategic Planning Workshop on February 12 . Council met again on March 17 and received an update on the City's fiscal health. A second Council Strategic Planning session was held on May 5 focusing on Economic and Community Development. Council will conclude their Strategic Planning sessions on May 19th, discussing Priorities and Goals, the Legislative Agenda, and the recommended departmental work plans to serve as a focus for the next two fiscal years.

In consideration of the financial forecast, which is updated at intervals throughout the fiscal year, the City Administrator gives directions to staff to prepare a base budget for the funds and divisions within their departments. This base budget updates the costs of maintaining service and staffing levels into the new biennial budget. The base budget also includes updated estimates of revenues and other financing sources.

Staff recommend a base budget to continue to provide the same level of service to a growing population. Costs for existing personnel, supplies, and services increase over time, especially under current market conditions that have caused incremental increases in both labor agreements and prices of goods and services. Staff requests for increases above the base budget levels were considered separately as "Decision Packages". These included position add-backs and one-time strategic investments. Any approved requests are incorporated into the Recommended Budget presented to the Council.

The City’s biennial budget process includes the Capital Improvement Plan and the Operating Budget, which are typically developed and submitted for Council approval in alternating years. Recommended Budgets are prepared and transmitted to the Mayor and City Council and posted publicly prior to the budget presentation.

The Mayor and Council review the proposed Operating and Capital Budgets in public meetings. The budget is formally adopted by the vote of the City Council on or before June 30th of each year. Any changes to the recommended budget, as considered and approved by the City Council during budget hearings, are included in the Adopted Budget document.

Subsequent budget amendments throughout the fiscal year are submitted to Council for approval by resolution. The City Council approves appropriations at the fund level. As such, individual line items may see more or less expenditure than appropriated, but each fund may not spend more than was appropriated in aggregate for the entire fund. Transfers either between funds or where state or federal regulations require council approval and transfers from unappropriated reserves or fund balances may only be made with the approval of the City Council.
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City of Gilroy | FY26 and FY27 Recommended Budget Page 39

Month Activity
December
Biennial Budget Development process overview and related training is provided to Departments.

January
Existing personnel allocations and budgets are reviewed and developed (no enhancements).

Staff solicits advisory bodies’ input into the budget process.

February
Council Strategic Planning Workshop is conducted
Kick-off meeting held to provide current fiscal update, guidance on biennial recommended budget development, and communicate key deliverables dates.

Departments spend February into early March developing their base budgets, and formulating appropriation requests for additional service needs or enhancements.

March
Finance coordinates, conducts initial review of departmental submissions and prepares for departmental budget neetings with the citywide budget development team, consisting of staff from administration, Finance, and other certain department members.

Late March and April, each department presents their budget information to the City Administrator to discuss their base budgets, and the additional needs identified as Decision Packages.

April
Initial and follow-up meetings are held between the citywide and departmental budget teams.

Determination is made on what additional requests are to be recommended to the City Council.

May
City Administrator's recommended budget for the next two year is released to the City Council and the community.

Budget workshop and community meeting is present the recommended budget and solicit input.

Follow-up information and changes as directed by Council are undertaken.

June Biennial Operating and Capital Improvement budgets are adopted.

July The first fiscal year of the biennial budget commences.

August
Finance publishes the final version of the adopted budget book to distribute, publish on the City’s website, and submit for Budget Award programs.

Budget Calendar
City of Gilroy | FY26 and FY27 Recommended Budget Page 40

Basis of Budgeting and Fund Structure
Basis of Budgeting
The City of Gilroy uses a modified accrual basis of accounting in preparing the budget for governmental funds.

This is consistent with the basis of accounting used for the Annual Comprehensive Financial Report (ACFR).

Under the modified accrual basis, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days of the fiscal year-end. Licenses, property taxes, and taxpayer-assessed tax revenues (e.g., franchise taxes, sales taxes, motor vehicle fees, etc.), net of estimated refunds and uncollectible amounts, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Expenditures are recorded when the related fund liability is incurred, except for claims and judgments, compensated absences, which are recognized as expenditures to the extent they have matured, and principal and interest on general long-term debt.

A balanced budget is adopted biennially, where current expenditures are funded from current revenues plus, as appropriate and directed by Council, available fund balance or reserves.

Fund Structure
The City’s accounts are organized and operated on a fund basis. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts recording assets, liabilities, fund balances, revenues, and expenditures. The City has the following fund type categories:

Governmental Fund Types
The governmental funds include the General, Capital Projects, Debt Service, and Special Revenue Funds.

Governmental Funds are reported using the current financial resources' measurement focus and the modified accrual basis of accounting.

Proprietary Fund Types
The proprietary funds, which include the Enterprise and Internal Service Funds, are used to account for the City's business-type activities. Proprietary funds are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

Enterprise Funds - used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City of Gilroy has two enterprise funds: Sewer Enterprise Fund and Water Enterprise Fund.

Internal Service Funds - used to account for the financing of goods or services provided by one department to other departments of the City on a cost reimbursement basis. The allocation methodologies can vary, but generally aim to ensure a fair distribution of costs based on usage or other relevant factors. The City has seven internal service funds, as described in the fund descriptions on the following pages.

Fiduciary Fund Types
The Fiduciary Funds account for assets held by the City in trust or as an agent for various assessment and community facilities districts. The City maintains two types of fiduciary funds: agency funds and privatepurpose trust funds. Each fund is described later in this section.

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Relationship Matrix
Below is a matrix that illustrates the relationship between the City’s departments and the respective fund types.

Department
Fund Type
General
Fund
Special
Revenue
Capital
Internal
Service
Enterprise
Agency/
Trust
Administration X X X
Administrative
Services
X X X
Community
Development
X X X
Finance X X X X
Fire X X X X
Police X X
Public Works X X X X X
Utilities X X
City of Gilroy | FY26 and FY27 Recommended Budget Page 42

Fund Descriptions
Below, in numerical order, are the various funds that the City of Gilroy and the South County Regional Wastewater Authority (SCRWA) maintain. All of these funds are included or referenced in the City's Annual Comprehensive Financial Report; However, not every fund contains appropriations and therefore may not be included in this budget document. Some of these funds are simply a method for tracking non-budgeted items, such as deposits, maintaining records of specific capital that is not the fund from which any transaction would be made, and some are channels for apportioning or distributing revenue or expenses that are recorded in other funds.

Each fund falls into a general category or type of governmental fund. These types are discussed briefly in a heading before each section. Each fund type is kept together in a numerical group, also identified in each heading.

GENERAL FUNDS
100 ‐ General Fund ‐ This fund is used to account for all resources except for those where a separate fund is necessary for legal or administrative purposes. This fund includes the City's general-purpose services that relate to public safety, public works, community development, finance, and administration. Interest is allocated. 104 ‐ General Fixed Assets ‐ This account group is designated to account for all City assets, excluding assets in Internal Service Funds, Enterprise Funds, and SCRWA Funds. All City assets are recorded at their book values.

No depreciation is provided in accordance with Generally Accepted Accounting Principles (GAAP). The debit side reflects the various categories of assets. The credit side is merely a control total. The City maintains a separate Fixed Assets database to record all details of individual assets held by each department. The accounts in this account group are updated based on the Fixed Assets database. No interest is allocated. 106 ‐ General Long-Term Debt ‐ The purpose of this account group is to maintain a separate record of all longterm debt. The individual funds to which the loans belong will reflect the detailed movement in each loan account. This account group is based on the balances in these individual accounts. No interest is allocated.

SPECIAL REVENUE FUNDS - Special Revenue Funds are to account for revenue sources that are restricted for specific purposes (other than those resources to be expended solely for the construction of major capital facilities).
200 ‐ Sidewalk Repair Reserve ‐ The original seed funds came from the State Franchise Board lawsuit. This money was supplemented by General Fund money. The interest on this fund is used for City sidewalk repair and replacement, including the 80/20 Sidewalk program. Interest is allocated. 202 ‐ Parking Management ‐ Fund is used to account for downtown parking programs. Initial funding for this program will be from the General Fund in the form of a loan against future revenue generated by the downtown parking program. Interest is allocated.
205 ‐ Gas Tax Fund – Combination of previous Gas Tax Funds 2105, 2106, 2107, 2107.5 and 2103. This is fuel tax money from the State and is used to fund Chip Seal, traffic signal and streetlight maintenance and electricity, congestion and pavement management and related capital projects. Interest is allocated. 210 ‐ Road Maintenance and Rehabilitation (SB1) ‐ This is a State fuel tax that is allocated on formulae determined by statewide legislation. The City is allowed to use this funding for local street and road repairs only until the City’s average Pavement Condition Index (PCI) meets or exceeds 80, at which time a city or county may spend its apportionment of SB-1 funds on functions similarly to the other Gas Taxes listed above. Interest is allocated.
212 ‐ Local Streets and Roads (Measure B) ‐ This is a portion of the Santa Clara County-only sales tax measure intended to pay for various transportation improvements in the county including transit, bicycle/pedestrian, highway interchanges and expressways, and grade separations. The Local Streets and Roads portion of the funds is allocated on formulae determined by the revenue measure, and is allocated to the Santa Clara Valley Transportation Authority, which allocates a portion to Gilroy for maintaining the City’s local streets and roads. More stringent requirements regarding the use of these funds are in place if the City’s PCI is below 70. This fund is used for street projects. Interest is allocated.

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215 ‐ Transport/Mobility Grants ‐ This is for various transportation grants. Monies are received on a reimbursable basis. Interest is allocated.
220 ‐ Vehicle Registration Fee ‐ This fund represents registration fees from Santa Clara County which will be used for pavement maintenance, operations, signals, signs, and marking. Interest is allocated. 222 – Neighborhood Safety Unit – This fund is used to account for revenues and expenditures related to gang prevention and intervention activities funded by the South County Youth Task Force and its partners. Interest is allocated.
223 ‐ Office of Traffic Safety (OTS) Police Grant – These Federal funds are used for traffic safety and support police department operations such as DUI and other types of traffic checkpoints and compliance monitoring operations. Monies are received on a reimbursable basis. Interest is allocated. 225 – Police Grants Fund – This is for Miscellaneous Police grants, which currently include the Justice Assistance Grant Program (JAG) and the Officer Wellness and Mental Health Grant Program. The JAG is a federal grant that provides funding for a wide range of police programs, such as crime prevention and education, witness initiatives, mental health programs and drug treatment, among others. The Officer Wellness and Mental Health Grant is a State grant funded through the Board of State and Community Corrections, to provide mental health resources to Officers. Interest is allocated. 226 ‐ Federal Asset Seizure – Monies are received from seizures of drug-related funds/assets in cooperation with Federal law enforcement. These funds must be used for law enforcement. Interest is allocated. 227 ‐ South County Youth Task Force – Funding is provided through the South County Youth Task Force (SCYTF), the cities of Gilroy and Morgan Hill, Gilroy and Morgan Hill Unified School Districts, Santa Clara County Library District, Santa Clara County District Attorney's Office, and Santa Clara County Probation Department.

Funding is to be used on efforts to reduce juvenile delinquent behavior in Santa Clara County through multifaceted, community-oriented, culturally-responsive prevention and intervention practices. Interest is allocated. 228 ‐ Board of State and Community Corrections Title II‐ This is a grant issued by the Board of State and Community Corrections (BSCC) over three years, expiring on December 31, 2025 to fund the South County Restorative Justice Youth Diversion Program (RJYDP). The RJYDP provides an opportunity for Santa Clara County youth who engage in alleged citable or harmful conduct to come together with impacted community members and collectively address the incident as a circle, while supporting and respecting youth as valuable community members with the goal of diverting youth away from the Juvenile Justice System. Interest is allocated.
229 ‐ Special Enforcement Operations ‐ Monies received from seizures of drug-related funds/assets. These funds must be used for law enforcement. Interest is allocated. 230 – BEGIN Loan Fund– The California Department of Housing and Community Assistance funds this home buyer down payment assistance grant program and the money is typically deferred for 30 years. Interest is allocated.
235 – Residential Development Loan Program - This is a loan from the State to the City, who in turn loans the funds to South County Housing for construction costs. Once South County Housing pays back the City the City pays back the State.
240 ‐ Proposition 172 Sales Tax ‐ Funds are received from State sales tax and must be used for public safety activities. Interest is allocated.
245 ‐ Community Development Block Grant ‐ HUD annual grant of federal funds to operate the Community Development Block Grant Program. Interest is allocated, but must be paid back to the Federal Government. 250 ‐ Housing Trust – Local funds are used to address affordable housing and homelessness, for both capital projects and services, provide homebuyer down payment assistance, and administrative oversight. Interest is allocated.
255 ‐ Los Arroyos Fund – Local funds previously managed by South County Housing (SCH) that the City of Gilroy now manages given their dissolution. The City will use funds to support future homebuyers in the Los Arroyos neighborhood as established in a memorandum of understanding between the City of Gilroy and SCH City of Gilroy | FY26 and FY27 Recommended Budget Page 44

first signed in 2001 and amended in 2008. Interest is allocated. 260 ‐ Community Facilities District Fund (Deer Park CFD and Citywide CFD) ‐ These funds come from special landscape assessment districts to maintain improvements of a public nature that provide benefits to property owners. The maintenance costs are assessed to the property owners of the parcels that benefit from such maintenance and improvements. Interest is allocated. 265 ‐ BEGIN Reuse Fund– The California Department of Housing and Community Development requires that all repayments of BEGIN Program loan principal and loan interest be deposited into a separate maintained reuse account. The repayments can be used to fund new loans and home buyer education. This account will be monitored for twenty years by HCD. Interest is allocated. 270 – CALHOME Fund – These funds and the deferred loans that make up their portfolio were previously managed by South County Housing (SCH). Due to the dissolution of SCH, the City now maintains these funds and intends to use them to support future home buyer assistance. Interest is allocated. 272 – CALHOME Reuse Fund - The California Department of Housing and Community Development requires that all repayments of CALHOME Program loan principal and loan interest be deposited into a separately maintained reuse account. The repayments can be used to fund new loans and home buyer education. This account will be monitored for twenty years by HCD. Interest is allocated. 275 – Fire Special Grants – Fund is used to record grants received by the Fire Department for various purposes, such as Emergency Operations Center, Weapons of Mass Destruction response equipment, etc. Grants are not guaranteed or consistent. Monies are received on a reimbursable basis. Interest is allocated. 280 ‐ Golf Course ‐ This fund was established because of an agreement between the City of Gilroy and Gilroy Golf Course/Contractor. The Golf Course/Contractor shall collect and retain the Gross Receipts from the Golf Course, which is defined to mean all revenues of every kind in connection with the Contractor’s operation, use or management of the Gilroy Golf Course property including, but not limited to green fees, passes, etc.

Contractor shall be compensated solely from the Gross Receipts and except as otherwise provided in Article 5, “Compensation,” no monies from any fund of the City shall be used to compensate Contractor. Contractor shall pay to the City each year of the term of the agreement a base rent and additional rent based on the financial performance of the golf course. This fund has negative cash due to operating losses prior to contract. No interest is allocated.
290 ‐ Community Recreation ‐ Revenue is collected through fees charged for participants of the programs and activities of the Recreation Division. General Fund contributions and program revenues offset the expenses incurred in the operation of these programs. No interest is allocated. 293 ‐ Opioid Settlement ‐ State-led participation in the National Opioid Settlement with Teva, Allergan, CVS, Walgreens, and Walmart. Money can be used for opioid abatement. 85% of monies received from the settlement will be distributed to cities and counties.

CAPITAL PROJECTS FUNDS - Capital Projects Funds are to account for resources intended to be used primarily for major capital facilities (other than that for proprietary fund debt). 400 ‐ Capital Projects ‐ Allocates resources intended to be used for major capital projects other than those financed by revenues of proprietary funds, including projects that are partially funded from other sources such as grants or fuel tax. Any unallocated interest is allocated to this fund. Interest is allocated. 405 ‐ Gilroy Community Library ‐ The purpose of this fund is to finance the acquisition, construction, and improvement of facilities to be used as a public library within the City of Gilroy. Funding was provided by the issuance of general obligation bonds. Interest earned on specific LAIF accounts will be recorded directly to the Library fund. No other interest is allocated.
410 ‐ Storm Drain Development ‐ The purpose of the Storm Drain Development Fund is to finance the construction of drainage collection and distribution systems within the City as described in the City of Gilroy Storm Drain Master Plan. Improvements and expansions of the City's storm drain system are needed to accommodate the development of new residential, commercial, and industrial uses within the City of Gilroy.

The Storm Drain Development Fee is used to expand system capacity to accommodate new development.

Interest is allocated.

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415 ‐ Utility Undergrounding ‐ Allocates resources to underground existing overhead utilities (electricity, telephone, and cable) along fully constructed streets. The City collects the fee from developers as development occurs along these streets. Interest is allocated.
418 ‐ BANS Refinance Series 2009 ‐ The purpose of this fund was for the 2009 short‐term refinancing of the City’s public facilities debt. The City included its cost for the Christopher High School joint use of public facilities with GUSD in the refinancing. Interest is allocated.
420 ‐ Street Trees Development ‐ The Street Tree Development Fund collects a front footage fee to plant trees in new developments. Interest is allocated.
422 ‐ Stormwater Management ‐ The Stormwater Management Fund was established to set aside funds to implement state-required trash capture device provisions in the Stormwater system. 425 ‐ Traffic Impact ‐ The purpose of the Traffic Impact Fund is to finance the construction of streets, bridges, interchanges, and traffic signals within the City as described in the City of Gilroy's Circulation Element.

Improvements and expansions of the City's traffic circulation system are needed to accommodate the development of new residential, commercial, and industrial uses within the City of Gilroy. The Traffic Impact Fee is used to expand system capacity to accommodate new development. Interest is allocated. 430 ‐ Sewer Development ‐ The purpose of the Sewer Development Fund is to finance the construction of sewer collection and conveyance systems within the City as described in the City of Gilroy’s Sewer Master Plan.

Improvements and expansions of the City's sewer system are needed to accommodate the development of new residential, commercial, and industrial uses within the City of Gilroy. The Sewer Development Fee is used to expand system capacity to accommodate new development. Interest is allocated. 435 ‐ Water Development ‐ The purpose of the Water Development Fund is to finance the construction of water transmission, distribution and storage systems within Pressure Zone 1 of the City water system as described in the City of Gilroy’s Water Master Plan. Improvements and expansions of the City's water system are needed to accommodate the development of new residential, commercial, and industrial uses within the City of Gilroy. The Water Development Fee is used to expand capacity to accommodate new development. Interest is allocated.
440 ‐ Public Facilities Impact– The purpose of this fund is to finance the construction of parks, police, fire, and other City Facilities as described in the City of Gilroy’s Public Facilities Master Plan. These improvements to public facilities are completed in order to accommodate new residential and commercial development.

Interest is allocated.
487 ‐ Downtown Beautification – The purpose of this fund is to finance the design and construction improvements along Gourmet Alley and Railroad Alley. These improvements are funded by a $3.9 million grant from Caltrans' Clean California Local Grant Program. Interest is allocated.

DEBT SERVICE FUNDS - Debt Service Funds are to account for resources accumulated for the payment of debt principal and interest (other than that for proprietary fund debt). 500 ‐ Gilroy Community Library Debt Service ‐ This fund is maintained to pay the indebtedness of the 2009 and 2010 General Obligation Bonds for the new Gilroy Community Library. Interest is allocated. 505 ‐ CA ENERGY COMMISSION LOAN ‐ This fund is maintained to pay the debt service of principal and interest for the loan agreement between the California Energy Commission (CEC) and the City of Gilroy for the City-Wide LED streetlight replacement project. Interest is allocated. 510 ‐ 2022A LEASE REVENUE BONDS ‐ This fund is maintained to pay the debt service of principal and interest for the 2022 A Lease Revenue Bonds. Interest is allocated. 515 ‐ PFFA Refunding Lease 2010 Debt Service ‐ This fund is maintained to pay the debt service of principal and interest for the Public Facilities Financing Authority Refunding Lease 2010 Bonds. Interest is allocated. 520 – Lease Revenue Bond Series 2020A – This fund is maintained to pay the debt service of principal and interest for the Public Facilities Financing Authority Lease Revenue Refunding Bonds, Series 2020A.

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INTERNAL SERVICE FUNDS - Internal Service Funds are a proprietary fund type and are to account for goods or services provided to other departments of the City where the intent of the City is that the costs of these goods or services are to be recovered through interdepartmental charges at the time that the goods are delivered, or the services are rendered to those departments. The allocation methodologies can vary, but generally aim to ensure a fair distribution of costs based on usage or other relevant factors. 600 ‐ Fleet Services ‐ This internal service fund includes all the operations required to maintain the City's vehicles. The costs are recovered through an annual "user fee" which is charged to all departments/funds that have vehicle use. This fund also provides funding for the replacement of all the City's vehicles on an "as-needed" basis. Interest is allocated.
605 ‐ Worker's Compensation ‐ This internal service fund accounts for all expenses relating to worker's compensation (i.e., injury claims, insurance premiums, etc.). The costs are recovered through an annual "user fee" which is charged to all departments/funds that have employees. Interest is allocated. 610 ‐ Liability Insurance ‐ This internal service fund accounts for all expenses relating to the City's general liability insurance. The costs are recovered through an annual "user fee" which is charged to various funds.

Interest is allocated.
615 ‐ Facility Services ‐ This internal service fund accounts for all expenses relating to the operation and maintenance of City facilities. The costs are recovered through an annual "user fee" which is charged to all departments/funds that have facilities. Interest is allocated. 620 ‐ Information Technology ‐ This internal service fund accounts for all expenses relating to computer hardware, software, maintenance, capital purchasing and other service charges. The costs are recovered through an annual "user fee" which is charged to all departments/funds that have computer equipment.

Interest is allocated.
625 ‐ Equipment Outlay ‐ Allocates resources intended for the purchase of specific equipment.

ENTERPRISE FUNDS - Enterprise Funds are a proprietary fund type and are to account for operations where the intent of the City is that the costs of providing goods or services to the public are to be recovered primarily through user charges.
700 ‐ Sewer ‐ This enterprise fund is used to account for the operation of and maintenance of the City’s sewer collection system. Additionally, this fund is used to account for the debt service related to the 2021 Wastewater Revenue Bonds. Interest is allocated.
705 ‐ Water ‐ This enterprise fund is used to account for the operation and maintenance of the City’s water production and distribution system. Interest is allocated.

TRUST/AGENCY FUNDS - Trust/Agency Funds are a fiduciary fund type and are custodial in nature. These funds are (1) to account for assets held by the City on behalf of other organizations, or (2) to account for assets governed by a legal trust document.
800 ‐ Deposit Revolving Fund‐ This fund includes miscellaneous deposits, revolving deposits from developers and refundable deposits received in advance for rental of City facilities. No interest is allocated. 805 ‐ Trust Specific Fund ‐ This fund includes miscellaneous deposits held for the benefit of others. Funds are designated for specific purposes. No interest is allocated. 808 ‐ Senior Advisory Board ‐ Revenues come from fund-raising and donations. The funds are used to buy equipment for the Senior Center. Interest is allocated. 809 ‐ Henry Miller Poor ‐ This fund was established by a donation from Henry Miller. The annual interest earned on the original donation of $15,000 is the amount donated to the poor of Gilroy each Christmas Season.

Interest is allocated.
810 – Highway 152 Agency 2018 Fund - This fund is maintained to collect the special assessments and pay the bonded indebtedness for the refinanced (2006) Highway 152 Series 2018 improvements. Interest is allocated.

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814 ‐ Museum Endowment Trust ‐ This fund was established by the sale of a vase by the Gilroy Museum. The purpose in selling the vase was to create an endowment for the museum. This would generate interest income for the museum. Interest is allocated.

SCRWA - The City also provides accounting for the South County Regional Wastewater Authority (SCRWA), which follows the City's policy and procedures. The budgets for the following SCRWA funds are reviewed and adopted by the SCRWA Board.
820 ‐ SCRWA Construction ‐ This fund accounts for SCRWA assets under construction and resources restricted for the construction of plant, property, and equipment. No interest is allocated from the City; interest is earned from a separate SCRWA LAIF account.
825 ‐ SCRWA Operations ‐ This fund accounts for the completed assets used in the sewer treatment operations, as well as the costs of providing sewer treatment and pre-treatment services for the Cities of Gilroy and Morgan Hill. SCRWA has it's own Authority with a Board comprised of Gilroy and Morgan Hill representatives. The Authority adopts the budget for SCRWA, not the City Council. No interest is allocated from the City; interest is earned from a separate SCRWA LAIF account.

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Definition of Taxes
The following is a brief definition or explanation of the taxes received by the City of Gilroy.

CURRENT TAXES-SECURED: Based upon the Proposition 13 limits, the tax is limited to 1% of the assessed value of the property, plus amounts required for the payment of principal and interest on voter-approved bond indebtedness. The City receives approximately 10% of the Proposition 13 tax.

SUPPLEMENTAL PROPERTY TAX: A locally generated tax authorized by Senate Bill 813. An ad valorem tax is generated when property is sold, which triggers a Supplemental assessment. Supplemental assessments are designed to identify changes in assessed value (either increases or decreases) that occur during the fiscal year, such as changes in ownership and new construction. They are in addition (supplemental) to the traditional annual assessment and property tax bill. A tax bill is issued only on added value and is prorated for the remaining portion of the fiscal year. The County distributes the funds to local agencies based on collections for the particular period.

CURRENT TAXES-UNSECURED: This tax is based upon taxable furnishings and equipment for businesses and industry, as well as personal property such as boats and airplanes.

EXCESS EDUCATIONAL REVENUE AUGMENTATION FUND (ERAF): The California Constitution requires the State to guarantee that schools receive a certain minimum level of funding. In 1992, to reduce the impact of this mandate on the State general fund, the State required each county to establish an ERAF where local property tax dollars are taken from the county, cities, and special districts, deposited in ERAF, and used to bring school districts up to their minimum funding levels. When more local property tax revenue is diverted to ERAF than is needed to meet school districts’ minimum funding needs, that revenue is deemed “excess ERAF” and returned to the county, cities, and special districts whose taxes were diverted to ERAF.

HOMEOWNERS EXEMPTION: The State of California controls this tax. Homeowners may apply for up to a $7,000 reduction from the assessed valuation before calculation of the tax bill. The State reimburses for this reduction.

DOCUMENTARY TRANSFER TAX: The tax ($1.10/$1000 of the sales price) is charged each time the property is sold or transferred to a different owner. Collection occurs during the escrow process and is sent to the County.

The City receives 50% ($.55/$1000) of the transfer tax on the property transferred within city limits.

SALES TAX: The City’s share of the present 9.13% sales and use tax rate is 1%. The State’s Department of Tax and Fee Administration collects this tax and distributes it monthly as an advance with actual accounting quarterly.

In 2004, Proposition 57 provided the state with a mechanism to fund $15 billion in economic recovery bonds without raising taxes. It increased the state’s share of the sales and use tax by 0.25% and reduced the local sales and use tax by 0.25%. The lost revenues to the city will be backfilled by property tax revenues from the ERAF. A portion of annual property tax revenue collected by the County goes to the ERAF to support local school districts. When the amount contributed to ERAF is more than the minimum cost of funding local schools, excess funds are returned to the County, Cities, and Special Districts.

MOTOR VEHICLE IN LIEU: A special license fee is imposed annually by the state on the market value of motor vehicles in lieu of local property taxes (Section 11005, Revenue and Taxation Code). In 2004, SB 1096 reduced the license fee from 2% to 0.65%. Section 1105 (a) of the Revenue and Taxation Code specified that 81.25% of the revenues were to be divided equally between cities and counties and apportioned on the basis of population.

In 1999, AB 1121 reduced the fee each year from 25% to 67.5% in 2003. The state “backfilled” the difference to the cities from its General Fund. In 2004, SB 1096 eliminated the backfill. The backfill was replaced with additional property tax revenue from ERAF.

TRANSIENT OCCUPANCY TAX: Hotels and motels pay 9% of their room rates. The total fee collected is 11%, which includes a 2% tourism fee, but the City retains only 9%.

UTILITY USER TAX: This is a 5% tax on utilities charged by gas and electric providers, and 4.5% tax for telecommunications providers such as Charter Communications, and other long-distance and wireless providers.

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FRANCHISE FEES: This fee is charged on the same utilities (except telephone) as outlined in the Utility Tax section. The fee is for the right to do business on or above City rights of way. The fees are as follows: Gas - 1% based on the 1937 Act computation, Electricity - 1% based on the 1937 Act computation, Garbage - 5%, and Cable TV - 5%.

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Financial Policies

FINANCIAL POLICIES AND PRACTICES OVERVIEW
The City’s budget development is shaped by several financial policies and practices (“policies”). These policies promote and ensure organizational stability, consistency, transparency, and accountability from year to year.

This section identifies some of the major policies and fiscal management tools that the City of Gilroy uses to maintain fiscal health and guide the development of the biennial budget.

GENERAL FUND FINANCIAL FORECAST
The Finance Department prepares the City’s Five-Year Financial Forecast, which projects the fiscal health of the City’s General Fund and aids the City Council and management in understanding the fiscal gaps that may exist between revenue projections and projected expenditure requirements.

Revenue estimates for the forecast are prepared through an objective, analytical process based on year-to-date trends, prior years’ data, and anticipated one-time adjustments, if any. The forecast does not include recessions in the model. In all instances, the City provides reasonable revenue projections to prevent undue or unbalanced reliance on certain revenues and to ensure the ability to provide ongoing services. The result of the Forecast is presented to Council as a chart indicating the total fund balance in the General Fund for five fiscal years, and identifies the reserve levels established. This chart is provided in the Budget Message for each Biennial Budget.

PROPOSITION 4 (GANN) APPROPRIATION LIMIT
For state and local governments, the California Government Code was established, beginning with Section 7900, as a limit on the amount of expenditures a governmental unit may appropriate in a given fiscal year in an effort to limit government spending. The Appropriation Limit is sometimes referred to as the Gann Limit, Gann Initiative or Prop 4 Limit. The Appropriation Limit mandates that the total annual appropriations subject to the limitation shall not exceed the prior year's Appropriations Limit, which can be adjusted for the change in cost of living and population, except as otherwise provided in the Government Code. Section 7910 of the code provides that the governing body of each jurisdiction shall annually establish its Appropriations Limit by resolution.

The Appropriations Limit is calculated by determining appropriations financed by proceeds of taxes in the 1978/79 base year and adjusting the limit each subsequent year for changes in the cost of living and population. This Appropriation Limit is the maximum limit of proceeds from taxes the City may collect or spend each year. Appropriations financed by proceeds of taxes are limited to actual revenues collected if they are lower than the limit. The Appropriations Limit may be amended at any time during the fiscal year to reflect new data.

The cost of living adjustment may be based upon the changes in the California per capita personal income or the percentage change in the local assessment roll from the preceding year due to the addition of local nonresidential new construction. The population adjustment may be based on changes in the City population or population growth within the County.

BALANCED BUDGET
The City’s policy is to adopt a balanced budget, which means that planned expenditures do not exceed planned funds available. Available funds may include the use of fund balances on hand, provided that the General Fund maintains a reserve level in line with the Council's adopted reserve policy. In the case of the General Fund, the reserve policy is 20% of annual expenditures for general operating needs and an additional 10% for economic uncertainties.

ADJUSTMENTS TO THE ADOPTED BUDGET
Per the City Charter, Section 1104, “At any meeting after the adoption of the budget, the Council may amend or supplement the budget so as to authorize the transfer of unused balances appropriated for one purpose to another purpose, or to appropriate available revenue not appropriated in the budget”. The City Council may amend or supplement the budget by a motion adopted by the affirmative votes of at least four members to authorize the transfer of unused balances between various funds or to appropriate available funds not included in the budget. The level at which expenditures may not legally exceed appropriations is the fund level. City Council approval is also required for all transfers from unappropriated fund balances or reserves.

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CONTINUED/CARRYOVER APPROPRIATIONS
The City’s Charter, Section 1104, states that “All appropriations shall lapse at the end of the fiscal year to the extent that they shall not have been expended or lawfully encumbered, except as otherwise provided by this Charter”. Encumbered appropriations from the previous fiscal year are carried over as continuing appropriations to the current fiscal year along with the encumbrance. Additionally, the City has established a carryover review process during which departments submit justification for unencumbered, available funds that are requested for carryover. The final list of previously unencumbered funds requested for carryover is then reviewed, and potentially modified by Council, and subsequently adopted by the City Council. The adopted carryover list becomes an adopted budget amendment to the current fiscal year’s appropriations. These continuing and carryover appropriations are not included in the Biennial Budget document.

GENERAL FUND RESERVES
The City strives to maintain a General Fund reserve amount equivalent to 30 percent of the General Fund expenditure budget. This reserve percentage comprises of a 20% reserve to cover unbudgeted costs or revenue shortfalls, and a 10% reserve for economic stability in severe economic downturns, with specific triggers regarding use. This combined reserve percentage is intended to provide a cushion against fluctuations in revenue and expenses.

ONE-TIME REVENUES
The City’s policy is to avoid the use of one-time revenues to fund ongoing operations. Usage of one-time revenue may be occasionally appropriate to bridge short-term gaps in available resources.

CASH/INVESTMENT MANAGEMENT
One of the City’s highest fiscal management priorities is maintaining the value of its cash and investment assets. The City values its cash and investments in accordance with the provisions of the Government and Accounting Standards Board (GASB) Statement No. 31, “Accounting and Financial Reporting for Certain Investments and External Investment Pools (GASB 31),” which requires governmental entities, including governmental external investment pools, to report certain investments at fair value in the statement of net assets/balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. Fair value is determined using published market prices.

Cash accounts for all funds are pooled for investment purposes, except for assets held by fiscal agents, to enhance safety and liquidity while maximizing interest earnings. Investments are stated at fair value, except for certain Certificates of Deposit and investment contracts that are reported at cost. These exceptions are made as they are not transferable, and they have terms that are not affected by changes in market interest rates. All highly liquid investments (including restricted assets) with a maturity of three months or less when purchased are considered cash equivalents. Cash and investments held on behalf of proprietary funds by the City Treasurer are considered highly liquid and are classified as cash equivalents for the purpose of presentations in the Statement of Cash Flows.

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Gilroy Charter Article XI. Fiscal Administration
Section 1100. Fiscal Year.

Unless otherwise provided by ordinance, the fiscal year of the City shall begin on the first day of July of each year and end on the thirtieth day of June of the following year.

Section 1101. Budget: Preparation and Submission.

At least thirty (30) days prior to the beginning of each fiscal year, the City Administrator shall submit to the Council a proposed budget for the ensuing fiscal year. The budget shall provide a complete financial plan for the budget year. It shall include the following:
(a) An itemized statement of estimated income and revenues from all sources for the year which the budget is to cover;
(b) An itemized statement of the proposed expenditures recommended by the City Administrator for each office, department, or agency for the year which the budget is to cover; and (c) Such other information as the City Administrator may deem essential, or as the Council may require. (Charter Amendment November 4, 1997)
Section 1102. Budget: Public Hearing.

Upon receipt of the proposed budget from the City Administrator, the Council shall proceed to consider the proposed budget and may increase, decrease or omit any item or insert new items therein. Before adopting the budget, the Council shall fix the time and place for holding a public hearing on the proposed budget and shall cause a notice thereof to be published not less than ten (10) days prior to said hearing by at least one (1) insertion in the official newspaper of the City. Copies of the proposed budget shall be available for inspection by the public in the office of the City Clerk at least ten (10) days prior to said hearing. At the time and place so advertised, or at any time and place to which such public hearing shall from time to time be adjourned, the Council shall hold a public hearing on the proposed budget at which interested persons desiring to be heard shall be given such opportunity.

Section 1103. Budget: Further Consideration And Adoption.

After the conclusion of the public hearing, the Council shall further consider the proposed budget and make any revisions thereto that it may deem advisable; provided, however, that if it shall increase the total proposed expenditures, the Council shall also increase the total anticipated revenues, but not beyond the reasonably anticipated revenues, so that the same, together with reasonably expected surpluses will at least equal such total expenditures. Thereafter, but prior to the beginning of the ensuing fiscal year, the Council shall adopt the budget with revisions, if any. Upon final adoption, the budget shall be in effect for the ensuing fiscal year. A copy of the adopted budget, certified to by the City Clerk, shall be placed on file in the office of the City Clerk where it shall be available for public inspection. The budget so certified shall be reproduced and copies made available for use of all officers, offices, departments and other agencies of the City and for use by civic organizations.

Section 1104. Budget: Appropriations.

From the effective date of the budget, the several amounts stated therein as proposed expenditures shall be and become appropriated to the several offices, agencies and departments for the respective objects and purposes therein specified. All appropriations shall lapse at the end of the fiscal year to the extent that they shall not have been expended or lawfully encumbered, except as otherwise provided by this Charter.

At any meeting after the adoption of the budget the Council may amend or supplement the budget so as to authorize the transfer of unused balances appropriated for one purpose to another purpose, or to appropriate available revenue not appropriated in the budget.

No officer, department or agency of the City shall, during any fiscal year, expend or incur any obligation to expend money for any purposes not authorized by or in excess of the amounts appropriated by any budget, as amended, for a given classification or expenditure.

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Section 1105. Tax System.

Unless otherwise provided by ordinance, the City shall use, for the purpose of municipal ad valorem property taxation, the County system of assessment and tax collection as such system is now provided by law or may hereafter be amended and insofar as such provisions are not in conflict with this Charter.

Section 1106. Tax Levy.

Except as prohibited by state law, the Council shall determine the amount of money required to be raised by ad valorem municipal property taxation and shall fix the ad valorem municipal tax rate each year and certify the same to the County authorities if the County system of ad valorem assessment and tax collection is used by the City. (Charter Amendment November 7, 1995)
Section 1107. Independent Audit.

The Council shall employ at the beginning of each fiscal year an independent certified public accountant who shall audit the books, records, and accounts of all officers and employees of the City who receive, administer or disburse public funds, and such other officers, employees, departments and agencies as the Council may direct. Such audit shall be made at such times as may be prescribed by the Council but shall be at least annually.

As soon as practicable after the end of the fiscal year, a final audit and report shall be submitted by such independent accountant to the Council. Three (3) copies of the audit shall be placed on file in the office of the City Clerk where they shall be available for public inspection.

Section 1108. Bonded Debt Limit.

The City shall not incur an indebtedness evidenced by general obligation bonds which shall in the aggregate exceed the sum of fifteen (15%) per cent of the total assessed valuation for purposes of City taxation of all the real and personal property within the City, exclusive of any indebtedness that has been or may hereafter be incurred for the purposes of acquiring, constructing, extending or maintaining municipal utilities for which purpose a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the State Constitution and of this Charter.

Section 1109. Contracts for Public Projects.

Every public project involving an expenditure of City monies greater than the amount allowed for informal bidding pursuant to Section 22032 of the California Public Contract Code, or successor statute, as the same may be amended from time to time, for the construction or improvement of public buildings, works, drains, sewers, utilities, parks and streets (exclusive of projects for maintenance and repair of streets) shall be let by contract to the lowest responsive and responsible bidder, or through best value contracting, after notice by one or more of the following methods:

A. Publication in a newspaper of general circulation in the City by one or more insertions, the first of which shall be at least seven (7) days before the time for opening bids. This method of publication shall be used if available;
B. Publication electronically so that the notice is publicly available to the general community of potential bidders;
C. Publication in a trade journal specified by the Uniform Cost Accounting Act Commission by one or more insertions, the first of which shall be at least seven (7) days before the time for opening bids; or D. By using a list of qualified contractors, which includes responsible contractors who have bid in the past and qualified contractors who ask to be included on the list.

The Council may reject any and all bids, if deemed excessive or unsatisfactory and readvertise for bids, or provide for the work to be procured in the open market, but in no case of open market procurements shall the price paid be higher than the responsible low bid rejected.

The Council, without advertising for bids, following the adoption of a resolution declaring that the project can be performed more economically by day labor, or the materials or supplies furnished at a lower price in the open market, may have the project done in the manner stated without further complying with the provisions of this section.

For contracts equal to or in excess of One Million Dollars ($1,000,000) the Council may negotiate and award a Design-Build Contract without formal public bidding if the Council finds that such a contract would save money or result in faster project completion. The process for competitively selecting a design-build contractor shall be consistent with the California Public Contract Code. (Charter Amendment November 4, 1997; Charter Amendment November 8, 2022)
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Section 1110. Requirements of Bids.

All bids or proposals shall be accompanied by either a certified or cashier’s check, or a bidder’s bond executed by a corporate surety authorized to engage in such business in the State of California, made payable to the City.

Such security shall be in an amount not less than that specified in the notice inviting bids or in the specifications referred to therein, or if no amount be so specified, then in an amount not less than ten percent (10%) of the aggregate amount of the bid. No person, firm or corporation shall be allowed to make or file or be interested in more than one bid or proposal for the same work. If it appears that the same person, firm or corporation is interested in more than one bid or proposal, all such bids or proposals shall be rejected. The security accompanying the accepted bid or proposal shall be held by the City Clerk until the contract has been entered into, whereupon said security shall be returned to said bidder. All securities accompanying the unsuccessful bids or proposals shall be returned to the proper parties.

If the successful bidder neglects or refuses to enter into the contract within the time specified in the notice inviting bids or specifications referred to therein, the security shall be declared forfeited to the City and shall be collected and paid into its general fund.

Section 1111. Contracts for Official Advertising.

The City shall procure services for the official advertising in a newspaper of general circulation in the City in accordance with the California Government Code and the City’s purchasing policy. (Charter Amendment November 8, 2022).

Section 1112. Actions Against the City.

No suit shall be brought on any claim for money or damages against the City or any officer, employee, board or commission thereof until a verified demand for same has been presented as herein provided and rejected in whole or in part. If rejected in part, suit may be brought to recover the whole. Except in those cases where a shorter time is otherwise provided by law, all claims for damages against the City must be presented to the City Clerk within ninety (90) days after the occurrence, event or transaction from which the damages allegedly arose, and shall set forth in detail the name and address of the claimant, the time, date, place and circumstances of the occurrence and the extent of the injuries or damages received; all other claims or demands shall be presented within ninety (90) days after the last item of the account or claim accrued.

In all cases such claims shall be approved or rejected in writing and the date thereof given. Failure to complete the action approving or rejecting any claim or demand within sixty (60) days from the day the same is filed with the City Clerk shall be deemed a rejection thereof.
(The Gilroy City Code is current through Ordinance 2025-01, passed January 27, 2025.) City of Gilroy | FY26 and FY27 Recommended Budget Page 55

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General Fund Reserve Policy
What is the General Fund?
The General Fund accounts for all resources except for those for which a separate fund is necessary for legal or administrative purposes. The primary sources of income include sales tax, property tax, utility users’ tax, franchise fees, building, engineering, planning, and hazmat fees, as well as transient occupancy tax. The primary uses are police and fire, community development (planning, housing, and building), public works (engineering, parks, streets, and landscape), recreation, and administration.

What is a General Fund Reserve?
The general fund reserve, or fund balance of the general fund, is a measure of the financial resources available.

It is like a savings account for the general fund. It has been built up over the years as a result of revenues exceeding expenditures ($ in was greater than $ out), primarily due to one-time savings. The reserve helps the City mitigate risks and provides a back-up for revenue shortfalls. The policy helps the City continue to provide the existing level of services for residents. In addition, the policy demonstrates continued prudent fiscal management and creditworthiness, to allow the City to maintain a sustainable financial structure.

The general fund reserve is intended to help the City when revenues temporarily fall short of expenditures. This can be in response to the challenges of a changing economic environment or during cyclical deficits when annual expenditures temporarily exceed revenues. The general fund reserve is maintained to cover unanticipated costs or fund one–time unbudgeted necessary costs (such as equipment/fleet failures or uninsured losses).

In more extreme cases, the General Fund is established as a safety net in the event of a disaster, requiring immediate response from the City. A major earthquake, flood, or terrorist attack could require cash to be on hand to immediately respond prior to the receipt of state or federal assistance. A catastrophic event could quickly exhaust the reserve and require a service level reduction (i.e., less money for parks, streets, recreation, etc.)
Gilroy’s General Fund Policy
In June 2017, the City Council adopted a new general fund reserve policy, consisting of an unrestricted minimum general fund reserve of 20% of annual general fund expenditures and an Economic Stability Reserve of 10% of annual general fund expenditures:

Type Description Minimum
Unrestricted Minimum Unbudgeted costs or
revenue shortfall
20% of G.F. expenditures
Economic Stability Specific triggers in a
severe economic
downturn
10% of G.F. expenditures
The Economic Stability Reserve would only be used in extraordinary circumstances, upon satisfaction of one of the following “economic triggers” and with the majority vote of the City Council:

State take-away of significant revenue
Large drop in property taxes
Major business closures (sales tax and/or utility users’ tax impact) Dramatic drop in development from projections
Large unexpected drop in sales taxes or other primary revenues due to severe recession The economic triggers cause the General Fund reserve to fall below a predetermined percentage of expenditures (e.g. 20%).

In the event the Economic Stability Reserve is used, the City is obligated to replenish the reserve by the end of the next biennial budget to 10% of the general fund expenditures for the given year.

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One-Time Use
The funds in the general fund reserve have a one-time use. This means that any use would reduce the reserve and funding would have to be rebuilt over time. No source of income exists to re-fund the reserve. Rebuilding the reserve could mean service reductions to “make ends meet” because “rebuilding or replenishing” the reserve means diversion of annual operating monies to the general fund reserve instead of funding services, projects or programs.

Credit Rating
Credit rating agencies monitor levels of fund balance and unrestricted fund balance in a government’s general fund to evaluate a government’s continued creditworthiness. Rating agencies consider the government’s fund balance policy, history of use of fund balances, and policy and practice of replenishment of fund balances when assigning ratings. Credit rating agencies favor increased levels of fund balance.

The City has outstanding indebtedness for its public facilities (Sunrise Fire Station, police station, Sports Park and corporation yard improvements), as well as indebtedness for the community library. The credit rating agencies review the general fund to determine whether it would be able to support the debt service on the public facilities bonds in the event that the public facilities development impact fund does not provide sufficient revenue. The credit rating agencies review the City’s general fund for the library bonds, even though an ad valorem property tax was established, as the ratings take into account the general local economy and the City’s finances to determine credit ratings. In the most recent review of Gilroy’s credit rating, the following key rating driver was stated regarding Gilroy’s finances:
“SOLID FINANCES: General fund financial operations feature strong fund balances, conservative reserve policies, and active management to align expenses with revenues.” As shown in the above excerpt from the City’s most recent Fitch credit rating review, a healthy general fund reserve and reserve policy is paramount to achieving and maintaining a strong credit rating.

Best Practices for General Fund Reserves
The Government Finance Officers Association (GFOA) has published best practices for determining the appropriate level of unrestricted fund balance in the general fund and for replenishing the general fund balance. The GFOA states that it is “essential that governments maintain adequate levels of fund balance to mitigate current and future risks (e.g. revenue shortfalls and unanticipated expenditures) and to ensure stable tax rates.”
The GFOA recommends that governments establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund. The guidelines should be set by the policy body and should provide a framework and specific plans to achieve the required fund balance. Cities should consider specifying the purposes for various portions of the fund balance (i.e. working capital, budget stabilization and funding for the response to emergencies). The amount of the general fund reserve should be based on a government’s own specific circumstances, but no less than two months of regular general fund operating revenues or regular general fund operating expenditures. Some governments may require a level of unrestricted fund balance in the general fund significantly in excess of this recommended minimum level. In establishing a policy governing the level of the reserve, a government should consider the following factors:

Predictability of revenues and volatility of expenditures (less predictability and more volatility necessitate higher reserve levels)
Perceived exposure to significant one-time outlays (disasters, immediate capital needs and state budget cuts)
Potential drain upon general fund resources from other funds or availability of resources in other funds (deficits in other funds may require a higher level of unrestricted general fund balance) Liquidity (having cash available to cover liabilities)
Commitments and assignments
The GFOA recommends that if a fund balance falls below a government’s policy level, it must have a solid plan to replenish fund balance levels. As mentioned above, credit rating agencies consider how an agency plans to replenish its reserves when necessary. A well-developed policy may therefore reduce the cost of borrowing.

Due to competing financial needs, rebuilding a general fund reserve can be challenging.

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The GFOA recommends that a general fund policy specifically describes the parts of a general fund reserve and how resources will be directed to fund balance replenishment. A policy may define that the revenue sources for replenishment might include non-recurring revenues, budget surpluses and excess resources in other funds.

The GFOA notes that year-end surpluses are an especially appropriate source for replenishing fund balance.

The replenishment policy should state the intent of replenishing fund balances as soon as economic conditions allow. The policy should also:

1. Define the time period for which the fund balance will be used as a “bridge” to ensure stable cash flow and provide service continuity.

2. Describe how the government’s expenditure levels will be adjusted to match any new economic realities that are behind the use of fund balance as a financing bridge.

3. Describe the time period over which the reserve will be replenished and the means by which it will be replenished.

A time period of one to three years is generally recommended by the GFOA; However, there are other factors to be considered. This includes special conditions that require a City to have more than the GFOA recommended minimum level that would justify quicker replenishment. Extreme events, such as a natural disaster, may justify a longer replenishment period. A replenishment plan should take into consideration credit rating agency expectations. A plan should establish a benchmark (e.g., after fund balances have dropped to a certain point below desired target levels) for when the use of fund balance is no longer acceptable, and milestones for the gradual replenishment of the reserve.

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Investment Policy
The City reviews and adopts an Investment Policy annually. The purpose of this Investment Policy (“Policy”) is to identify elements that will foster a prudent and systematic investment program that meets the City of Gilroy’s objectives through a diversified investment portfolio. This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds.

The investment policy document is provided as a link  in this section and included in the Supplemental Information section.

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FUND SUMMARIES
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All Funds
The City's accounting system is organized and operated on a fund basis. A fund is "an independent fiscal and accounting entity used to record all financial transactions related to the specific purpose for which the fund was created." Funds are established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

Gilroy Fund Types
The City has established the following Fund Types:

General Fund - used to account for and report all financial resources not accounted for and reported in another fund type. This fund typically includes resources that are not restricted, committed, or reserved for a specific purpose.

Special Revenue Funds - used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects.

Capital/Development Impact Funds - used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities or other capital assets.

Debt Service Funds - used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

Enterprise Funds - used to account for any activity for which a fee is charged to external users for goods or services. If an activity's principal revenue source meets any one of the following criteria, it is required to be reported as an enterprise fund:

An activity financed with debt that is secured solely by a pledge of the net revenues from fees and charges for the activity
Laws or regulations require that the activity's costs of providing services, including capital costs, be recovered with fees and charges, rather than with taxes or similar revenues.

Policies establish fees and charges designed to recover the activity's costs, including capital costs.

Internal Service Funds - used to report any activity that provides goods or services to other funds, departments or agencies of the government, or to other governments, on a cost-reimbursement basis.

Agency/Trust Funds - used to account for assets held in a trustee capacity or as a custodian for individuals, private organizations, other governmental units, and/or other funds.

The following respective sections will provide Fund Summaries by the aforementioned Fund Types. Included in the summaries are Revenues by Source, and Expenditures by Expense Type.

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Citywide Revenues by Source
2026 Recommended Revenues by Source
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((333666...555%%%))) TTTaaaxxxeeesss (((333333...555%%%)))
OOOttthhheeerrr FFFiiinnnaaannnccciiinnnggg SSSooouuurrrccceeesss (((888...444%%%))) GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((777...444%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((555...666%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((444...888%%%))) LLLiiiccceeennnssseeesss aaannnddd PPPeeerrrmmmiiitttsss (((111...999%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((111...888%%%))) FFFiiinnneeesss aaannnddd FFFooorrrfffeeeiiitttuuurrreeesss (((000...111%%%))) Budgeted and Historical Revenues by Source
Millions
Fines and Forfeitures
Licenses and Permits
Other Revenues
Use of Money and Property
Grants and Intergovernmental
Interfund Transfers
Other Financing Sources
Taxes
Charges for Services
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$50
$100
$150
$200
$250
City of Gilroy | FY26 and FY27 Recommended Budget Page 62

Revenue Source
Taxes $54,834,425 $55,654,420 $58,040,378 $58,013,279 $59,852,474 $62,076,709 Licenses and Permits $2,696,319 $3,437,189 $3,179,500 $3,236,375 $3,363,706 $3,496,116 Fines and Forfeitures $255,359 $238,128 $223,547 $188,629 $177,474 $177,474 Grants and
Intergovernmental
$9,442,965 $6,400,646 $16,681,017 $11,047,857 $13,215,861 $7,792,116 Charges for Services $51,209,963 $60,565,817 $78,503,033 $62,060,444 $65,175,215 $68,606,525 Use of Money and
Property
$5,053,621 $11,831,604 $3,605,698 $10,113,368 $8,594,426 $7,075,856 Other Revenues $2,214,364 $4,679,261 $11,376,633 $9,335,537 $3,178,989 $4,568,268 Interfund Transfers $8,799,253 $8,455,443 $11,526,103 $11,526,104 $10,035,379 $10,033,885 Other Financing
Sources
$14,610,331 $0 $12,500,000 $0 $15,000,000 $15,000,000
Total Revenue Source: $149,116,599 $151,262,508 $195,635,909 $165,521,593 $178,593,524 $178,826,949 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 63

Citywide Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((333111...999%%%))) CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((333000...444%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((111222...777%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((888...999%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((888...555%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((777...777%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Other Expenses and Charges
Internal Services Charges
Interfund Transfers Materials and Services
Capital Outlay
Personnel Expenses
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$50
$100
$150
$200
$250
City of Gilroy | FY26 and FY27 Recommended Budget Page 64

Expense Objects
Personnel
Expenses
$52,678,912 $60,574,140 $64,640,026 $62,501,108 $66,111,300 $69,064,777 Materials and
Services
$19,295,298 $20,684,043 $28,610,985 $26,166,692 $26,253,271 $27,421,591 Capital Outlay $11,345,832 $16,513,494 $88,713,757 $26,038,661 $63,006,816 $56,430,084 Interfund
Transfers
$13,537,526 $14,580,089 $20,684,645 $24,336,961 $18,353,149 $18,927,951 Internal Services
Charges
$11,413,825 $16,065,550 $15,970,385 $15,970,351 $17,626,343 $18,220,668 Other Expenses
and Charges
$32,535,541 $21,414,140 $15,043,664 $15,219,091 $15,933,968 $16,521,596 Total Expense
Objects:
$140,806,934 $149,831,456 $233,663,463 $170,232,864 $207,284,847 $206,586,667 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 65

Combined Fund Statement for Fiscal Year 2026
Combined Fund Statement for Fiscal Year 2027
City of Gilroy | FY26 and FY27 Recommended Budget Page 66

General Fund
This fund is used to account for all resources except for those where a separate fund is necessary for legal or administrative purposes. This fund includes the City's generalpurpose services that relate to public safety, public works, community development, finance, and administration.

General Fund Revenues by Source
2026 Recommended Revenues by Source
TTTaaaxxxeeesss (((777555...666%%%)))
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((111333...222%%%))) LLLiiiccceeennnssseeesss aaannnddd PPPeeerrrmmmiiitttsss (((444...555%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111...999%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((111...999%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((111...999%%%))) GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((000...888%%%))) FFFiiinnneeesss aaannnddd FFFooorrrfffeeeiiitttuuurrreeesss (((000...222%%%))) Budgeted and Historical Revenues by Source
Millions
Other Financing Sources
Fines and Forfeitures
Grants and Intergovernmental
Use of Money and Property
Interfund Transfers
Other Revenues
Licenses and Permits
Charges for Services
Taxes
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$20
$40
$60
$80
$100
City of Gilroy | FY26 and FY27 Recommended Budget Page 67

Revenue Source
Taxes $51,164,138 $51,994,687 $54,322,203 $54,360,893 $56,123,074 $58,314,034 Licenses and Permits $2,696,319 $3,437,189 $3,179,500 $3,236,375 $3,363,706 $3,496,116 Fines and Forfeitures $255,359 $238,128 $223,547 $188,629 $177,474 $177,474 Grants and
Intergovernmental
$1,001,873 $425,439 $912,924 $595,154 $630,642 $678,451 Charges for Services $7,002,258 $7,654,626 $7,478,724 $7,498,333 $9,790,405 $10,173,906 Use of Money and
Property
$1,783,855 $2,933,804 $888,240 $1,581,788 $1,388,841 $1,315,149 Other Revenues $1,067,380 $1,640,196 $1,052,437 $1,655,633 $1,396,449 $1,466,693 Interfund Transfers $800,805 $1,268,437 $1,839,929 $1,839,929 $1,406,635 $1,462,660 Other Financing
Sources
$22,500 $0 $0 $0 $0 $0
Total Revenue Source: $65,794,485 $69,592,505 $69,897,504 $70,956,734 $74,277,226 $77,084,483 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 68

General Fund Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((777111...777%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((111111...777%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((111111...777%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((333...333%%%))) CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((111...111%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((000...555%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Other Expenses and Charges
Capital Outlay
Interfund Transfers
Internal Services Charges
Materials and Services
Personnel Expenses
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$20
$40
$60
$80
$100
City of Gilroy | FY26 and FY27 Recommended Budget Page 69

Expense Objects
Personnel
Expenses
$43,474,427 $46,166,572 $51,595,885 $50,916,554 $54,190,726 $56,556,130 Materials and
Services
$7,069,133 $7,274,051 $10,065,907 $9,891,156 $8,808,968 $9,118,778 Capital Outlay $1,439,482 $3,789,591 $4,819,164 $2,051,403 $855,795 $662,512 Interfund
Transfers
$3,007,680 $1,999,998 $2,499,998 $2,499,998 $2,499,998 $2,499,998 Internal Services
Charges
$6,662,609 $9,869,326 $9,418,722 $9,419,425 $8,833,286 $9,026,800 Other Expenses
and Charges
$490,936 $358,151 $452,556 $452,556 $414,955 $414,956
Total Expense
Objects:
$62,144,266 $69,457,690 $78,852,232 $75,231,092 $75,603,727 $78,279,174 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 70

General Fund Expenditures by Department
2026 Recommended Expenditures by Department
PPPooollliiiccceee (((444333...555%%%)))
FFFiiirrreee (((222000...888%%%)))
PPPuuubbbllliiiccc WWWooorrrkkksss (((111111...888%%%))) CCCooommmmmmuuunnniiitttyyy DDDeeevvveeelllooopppmmmeeennnttt (((777...888%%%))) OOOttthhheeerrr GGGeeennneeerrraaalll GGGooovvveeerrrnnnmmmeeennnttt (((666...222%%%))) AAAdddmmmiiinnniiissstttrrraaatttiiiooonnn (((555...999%%%))) HHHuuummmaaannn RRReeesssooouuurrrccceeesss (((222...555%%%))) FFFiiinnnaaannnccceee (((111...666%%%)))
Budgeted and Historical Expenditures by Department
Millions
Finance
Human Resources
Other General Government
Administration
Community Development
Public Works
Fire
Police
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$20
$40
$60
$80
$100
City of Gilroy | FY26 and FY27 Recommended Budget Page 71

Expenditures
Other General
Government
$3,991,794 $5,185,536 $6,032,519 $6,125,272 $4,654,368 $4,845,077 Administration $4,883,922 $3,557,444 $4,519,819 $4,305,191 $4,454,456 $5,020,579 Finance $974,360 $1,132,647 $1,267,038 $1,174,466 $1,201,524 $1,177,165 Human Resources $1,540,513 $1,455,400 $1,841,700 $1,807,320 $1,867,098 $1,878,597 Police $25,974,573 $30,067,217 $32,701,391 $31,635,174 $32,913,585 $33,643,758 Fire $13,575,990 $15,942,135 $14,917,865 $15,552,150 $15,716,596 $16,423,611 Community
Development
$4,695,561 $5,223,865 $6,598,571 $6,325,523 $5,906,902 $6,131,209 Public Works $6,507,553 $6,893,445 $10,973,329 $8,305,996 $8,889,200 $9,159,178 Total Expenditures: $62,144,266 $69,457,690 $78,852,232 $75,231,092 $75,603,727 $78,279,174 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 72

Special
Revenue
Funds
Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects. The primary funding source category in this fund type is intergovernmental funds in the manner of tax sharing or grants from Federal, State, County, and other regional governments for transportation, public safety, and community development/housing-related services. The City's recreation division is also setup and operates as a Special Revenue Fund.

Special Revenue Funds Revenues by Source
2026 Recommended Revenues by Source
GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((666333...888%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111222...999%%%))) CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((777%%%))) TTTaaaxxxeeesss (((666...666%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((555...333%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((444...333%%%))) Budgeted and Historical Revenues by Source
Millions
Use of Money and Property
Other Revenues
Taxes
Charges for Services
Interfund Transfers
Grants and Intergovernmental
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$2.5
$5
$7.5
$10
$12.5
$15
$17.5
City of Gilroy | FY26 and FY27 Recommended Budget Page 73

Revenue Source
Taxes $809,735 $886,715 $922,700 $875,000 $899,400 $932,675 Grants and
Intergovernmental
$8,211,865 $5,243,256 $12,014,101 $7,395,290 $8,667,601 $7,113,665 Charges for Services $471,561 $659,496 $657,645 $673,058 $954,890 $977,011 Use of Money and
Property
$409,019 $817,679 $426,491 $910,761 $724,285 $647,490
Other Revenues $978,103 $1,019,367 $307,900 $399,436 $591,000 $793,000 Interfund Transfers $2,220,400 $2,348,253 $1,787,313 $1,787,313 $1,750,000 $1,750,000 Total Revenue Source: $13,100,683 $10,974,766 $16,116,149 $12,040,857 $13,587,176 $12,213,841 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 74

Special Revenue Funds Revenue by Fund
Special Revenues
Sidewalk Repair
Reserve Fund
$273,979 $319,064 $273,153 $329,799 $556,130 $543,395
Parking Management $945 $1,852 $0 $2,842 $0 $0
Gas Tax Funds $1,608,054 $1,789,856 $1,762,690 $1,801,085 $1,761,716 $1,746,131 Road Fund $1,389,031 $1,638,158 $1,585,067 $1,659,315 $1,619,060 $1,682,395 Measure B $3,001,584 $139,635 $4,530,816 $1,766,995 $2,533,243 $2,438,487 Transport/Mobility
Grant Fund
$3,747 $116,798 $1,637,500 $419,349 $1,542,282 $9,299
Vehicle Registration Fee
Fund
$362,889 $525,560 $433,887 $491,102 $489,261 $497,117
Ots Pd Grant $49,353 $98,025 $168,500 $91,343 $875 $875 Police Grants Fund $1,212,525 $407,107 $246,754 $332,732 $136,823 $119,698 Brd State&Comm Corr
Title Ii
$57,476 $89,068 $819,167 $424,311 $0 $0
Special Enforcement
Ops Fund
$2,631 $14,278 $2,875 $8,196 $10,968 $10,968
Begin Loan Fund $1,347 $3,730 $1,311 $4,149 $4,102 $4,102 Residential Dev Loan
Prog Fund
$4 $11 $0 $0 $0 $0
Prop 172 Sales Tax - P.S.

Fund
$303,265 $359,462 $373,871 $325,316 $326,424 $326,883
Community Dev Block
Grant Fund
$1,009,346 $558,223 $496,246 $496,246 $400,386 $400,024 Housing Trust Fund $830,983 $471,095 $295,334 $73,089 $352,010 $544,516 Los Arroyos Fund $146,514 $324,671 $9,204 $187,525 $211,274 $214,406 Comm Facilities District
Fund
$533,219 $606,363 $574,521 $634,427 $659,027 $683,491
Begin Reuse Fund $5,820 $10,486 $5,694 $18,254 $17,991 $17,991 Calhome Fund $5,938 $53,623 $5,779 $20,067 $19,839 $19,839 Fire Special Grants
Fund
$359 $993 $349 $1,105 $1,092 $1,092
Golf Course Fund $81,249 $51,411 $52,400 $134,617 $115,061 $123,078 Recreation Fund $2,173,875 $2,271,669 $2,327,533 $2,330,430 $2,405,824 $2,406,266 Opioid Settlement $46,551 $45,103 $270 $114,270 $8,129 $8,129 Neighborhood Safety
Unit
$0 $362,318 $142,550 $48,405 $153,393 $153,393
Federal Asset Seizure $0 $207,798 $0 $19,076 $10,209 $10,209 South County Youth
Task Force
$0 $508,412 $370,678 $306,812 $252,057 $252,057
Total Special Revenues: $13,100,683 $10,974,766 $16,116,149 $12,040,857 $13,587,176 $12,213,841 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 75

Special Revenue Funds Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((222555%%%))) CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((555888...333%%%))) PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((111000%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((222...888%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((222...666%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((111...333%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Other Expenses and Charges
Interfund Transfers
Internal Services Charges
Personnel Expenses
Materials and Services
Capital Outlay
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
City of Gilroy | FY26 and FY27 Recommended Budget Page 76

Expense Objects
Personnel
Expenses
$1,350,152 $948,953 $1,076,358 $920,340 $1,490,850 $1,555,782 Materials and
Services
$2,987,107 $3,443,944 $5,160,161 $4,153,596 $3,716,457 $3,857,468 Capital Outlay $4,007,879 $8,211,439 $11,269,235 $9,317,741 $8,649,848 $6,356,200 Interfund
Transfers
$282,140 $915,771 $386,111 $386,111 $383,433 $388,523
Internal Services
Charges
$271,245 $141,193 $144,583 $144,583 $415,602 $479,054
Other Expenses
and Charges
$335,512 $229,990 $259,870 $259,870 $190,000 $190,000
Total Expense
Objects:
$9,234,035 $13,891,289 $18,296,319 $15,182,241 $14,846,190 $12,827,027 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 77

Special Revenue Funds Expenditures by Department/Division 2026 Recommended Expenditures by Department/Division
PPPuuubbbllliiiccc WWWooorrrkkksss (((666555...222%%%))) RRReeecccrrreeeaaatttiiiooonnn (((222222...777%%%)))
CCCooommmmmmuuunnniiitttyyy DDDeeevvveeelllooopppmmmeeennnttt (((777...222%%%))) PPPooollliiiccceee (((444...999%%%)))
Budgeted and Historical Expenditures by Department/Division Millions
Other General Government
Police
Community Development
Recreation
Public Works
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
City of Gilroy | FY26 and FY27 Recommended Budget Page 78

Expenditures
Other General
Government
$0 $25,275 $0 $0 $0 $0
Police $1,286,442 $1,830,536 $2,318,676 $1,413,813 $730,593 $773,998 Community
Development
$1,348,567 $975,008 $985,540 $1,114,072 $1,064,845 $1,069,935 Recreation $1,755,215 $1,837,138 $2,203,145 $1,906,883 $3,367,661 $2,547,750 Public Works $4,843,811 $9,223,333 $12,788,958 $10,747,473 $9,683,091 $8,435,344 Total Expenditures: $9,234,035 $13,891,289 $18,296,319 $15,182,241 $14,846,190 $12,827,027 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 79

Special Revenue Funds Expenditures by Fund
Special Revenues
Sidewalk Repair
Reserve Fund
$158,677 $182,259 $841,391 $561,391 $527,588 $538,423
Parking Management $205,122 $38,828 $0 $0 $0 $0
Gas Tax Funds $2,103,422 $4,201,118 $2,453,436 $1,864,827 $2,335,130 $2,449,672 Road Fund $1,062,165 $2,381,155 $1,724,937 $3,298,609 $1,612,836 $1,769,897 Measure B $947,800 $1,883,892 $4,825,547 $3,331,956 $2,424,956 $2,443,223 Transport/Mobility Grant
Fund
$0 $113,546 $1,744,011 $409,437 $1,579,363 $1,879
Vehicle Registration Fee
Fund
$19,554 $25,685 $451,730 $641,734 $515,330 $540,199
Ots Pd Grant $30,754 $130,757 $168,500 $90,818 $0 $0
Police Grants Fund $894,389 $696,712 $265,957 $184,079 $100,000 $100,000 Brd State&Comm Corr
Title Ii
$64,341 $140,785 $819,167 $424,311 $0 $0
Special Enforcement
Ops Fund
$3,000 $3,000 $0 $3,000 $3,000 $3,000
Residential Dev Loan
Prog Fund
$0 $246 $0 $0 $0 $0
Prop 172 Sales Tax - P.S.

Fund
$293,958 $354,965 $372,700 $372,700 $239,365 $282,770
Community Dev Block
Grant Fund
$774,729 $551,864 $510,145 $499,563 $403,200 $403,200
Housing Trust Fund $425,749 $336,498 $388,995 $528,109 $565,245 $570,335 Los Arroyos Fund $128,865 $86,400 $86,400 $86,400 $96,400 $96,400 Comm Facilities District
Fund
$347,071 $396,850 $747,907 $639,519 $687,888 $692,051
Begin Reuse Fund $19,224 $0 $0 $0 $0 $0
Recreation Fund $1,755,215 $1,837,138 $2,203,145 $1,906,883 $3,367,661 $2,547,750 Opioid Settlement $0 $25,275 $0 $0 $0 $0
Neighborhood Safety
Unit
$0 $132,313 $142,550 $37,446 $142,550 $142,550
Federal Asset Seizure $0 $0 $150,000 $0 $0 $0
South County Youth
Task Force
$0 $372,005 $399,802 $301,459 $245,678 $245,678
Total Special Revenues: $9,234,035 $13,891,289 $18,296,319 $15,182,241 $14,846,190 $12,827,027 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 80

Capital
Project
Funds
Capital Project Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities or other capital assets. The primary revenue source in this Fund Type is development impact fees related to water, wastewater, storm drain, street trees, traffic, and public facilities. The Fund Type also accounts for major grant or bond-funded capital projects.

Capital Project Funds Revenue by Source
2026 Recommended Revenues by Source
OOOttthhheeerrr FFFiiinnnaaannnccciiinnnggg SSSooouuurrrccceeesss (((444999...888%%%))) CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((222666...222%%%))) GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((111333%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((999...999%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111...111%%%))) Budgeted and Historical Revenues by Source
Millions
Grants and Intergovernmental
Other Revenues
Interfund Transfers
Use of Money and Property
Charges for Services
Other Financing Sources
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
$60
City of Gilroy | FY26 and FY27 Recommended Budget Page 81

Revenue Source
Grants and
Intergovernmental
$181,530 $692,860 $3,753,992 $3,057,413 $3,917,618 $0
Charges for Services $7,021,901 $9,112,251 $27,549,986 $8,891,763 $7,885,000 $8,685,000 Use of Money and
Property
$971,771 $2,717,361 $867,118 $2,906,947 $2,973,339 $2,202,961 Other Revenues $783,676 $2,449,291 $6,153,663 $6,153,663 $0 $0 Interfund Transfers $124,999 $265,887 $1,740,958 $1,740,958 $344,459 $348,604 Other Financing
Sources
$0 $0 $12,500,000 $0 $15,000,000 $15,000,000
Total Revenue Source: $9,083,877 $15,237,650 $52,565,717 $22,750,744 $30,120,416 $26,236,565 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 82

Capital Project Funds Revenue by Fund
Capital Projects
Capital Project Fund $109,091 $2,799,346 $10,995,025 $7,743,110 $4,478,617 $240,046 Gilroy Community
Library Fund
$109,700 $284,842 $100,000 $264,921 $132,001 $16,452
Storm Drain
Development Fund
$67,880 $114,939 $373,611 $232,523 $189,045 $173,262
Street Tree
Development Fund
$10,400 $28,760 $4,329 $8,586 $13,455 $13,579
Stormwater Mngmt
Impact Fee
$794,089 $23,783 $9,122 $39,002 $36,084 $31,067
Traffic Impact Fund $3,817,235 $3,111,002 $9,623,193 $4,268,237 $2,864,731 $3,275,256 Sewer Development
Fund
$1,395,602 $2,944,523 $6,259,160 $3,178,363 $2,118,232 $2,202,283 Water Development
Fund
$423,497 $1,005,632 $1,621,933 $856,272 $538,566 $553,094 Public Facilities
Impact Fund
$2,174,852 $4,231,964 $23,579,344 $3,317,220 $19,749,685 $19,731,526 Downtown
Beautification
$181,530 $692,860 $0 $2,842,510 $0 $0
Total Capital Projects: $9,083,877 $15,237,650 $52,565,717 $22,750,744 $30,120,416 $26,236,565 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 83

Capital Project Funds Expenditure by Expense Type
2026 Recommended Expenditures by Expense Type
CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((888333...333%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111333...777%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((222...999%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((000...000444%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Personnel Expenses
Other Expenses and Charges
Materials and Services
Internal Services Charges
Interfund Transfers
Capital Outlay
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
City of Gilroy | FY26 and FY27 Recommended Budget Page 84

Expense Objects
Personnel
Expenses
$0 $0 $4,500 $0 $0 $0
Materials and
Services
$25,731 $234,762 $343,782 $531,122 $17,400 $14,900
Capital Outlay $6,722,043 $4,425,639 $36,534,895 $7,749,001 $37,240,407 $35,096,000 Interfund
Transfers
$4,731,699 $4,686,816 $7,049,001 $7,049,001 $6,135,768 $6,081,249 Internal Services
Charges
$14,731 $27,990 $29,170 $29,170 $1,296,717 $863,739
Other Expenses
and Charges
$58,858 $32,914 $0 $0 $0 $0
Total Expense
Objects:
$11,553,062 $9,408,120 $43,961,348 $15,358,294 $44,690,292 $42,055,888 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 85

Capital Project Funds Expenditure by Department
2026 Recommended Expenditures by Function
PPPuuubbbllliiiccc WWWooorrrkkksss (((111000000%%%)))
Budgeted and Historical Expenditures by Function
Millions
Fire
Public Works
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
City of Gilroy | FY26 and FY27 Recommended Budget Page 86

Expenditures
Fire $16,160 $407,391 $0 $0 $0 $0
Public Works $11,536,902 $9,000,729 $43,961,348 $15,358,294 $44,690,292 $42,055,888 Total
Expenditures:
$11,553,062 $9,408,120 $43,961,348 $15,358,294 $44,690,292 $42,055,888 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 87

Capital Project Funds Expenditures by Fund
Capital Projects
Capital Project Fund $2,045,998 $587,139 $3,823,849 $215,160 $5,846,199 $12,135,993 Gilroy Community
Library Fund
$0 $0 $800,000 $400,000 $5,135,491 $0
Storm Drain
Development Fund
$2,739 $7,038 $470,233 $760 $922,642 $220,875
Street Tree
Development Fund
$0 $238 $2,248 $2,248 $2,289 $2,303
Stormwater Mngmt
Impact Fee
$0 $0 $0 $0 $110,000 $113,000
Traffic Impact Fund $4,040,371 $2,847,825 $11,034,141 $3,174,233 $5,597,457 $3,523,475 Sewer Development
Fund
$1,563,218 $1,517,357 $3,709,109 $2,288,317 $3,229,571 $4,837,120 Water Development
Fund
$308,064 $16,491 $3,215,053 $1,357,705 $3,545,645 $976,702 Public Facilities
Impact Fund
$3,255,817 $3,500,178 $18,219,529 $5,232,685 $20,300,998 $20,246,420 Downtown
Beautification
$336,854 $931,853 $2,687,186 $2,687,186 $0 $0
Total Capital Projects: $11,553,062 $9,408,120 $43,961,348 $15,358,294 $44,690,292 $42,055,888 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 88

Debt Service
Funds
Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Revenues from various sources, including special tax assessments, are derived to pay the annual principal and interest payments. Additional information regarding the debt and related debt service schedules can be found under the "Debt" section of the budget book.

Debt Service Funds Revenue by Source
2026 Recommended Revenues by Source
IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((666000...777%%%))) TTTaaaxxxeeesss (((333777...111%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((222...222%%%))) Budgeted and Historical Revenues by Source
Millions
Other Financing Sources
Use of Money and Property
Taxes
Interfund Transfers
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
City of Gilroy | FY26 and FY27 Recommended Budget Page 89

Revenue Source
Taxes $1,927,859 $1,838,255 $1,897,950 $1,825,386 $1,875,000 $1,875,000 Use of Money and
Property
$40,642 $63,375 $22,568 $91,154 $110,409 $111,446
Interfund
Transfers
$3,287,894 $3,063,873 $3,067,998 $3,067,998 $3,068,113 $3,067,988 Other Financing
Sources
$14,587,831 $0 $0 $0 $0 $0
Total Revenue
Source:
$19,844,227 $4,965,503 $4,988,516 $4,984,538 $5,053,522 $5,054,434 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
Debt Service Funds Revenue by Fund
Debt Service
Gilroy Com Library
Ds Fund
$1,940,453 $1,877,743 $1,909,854 $1,879,010 $1,942,233 $1,943,535 Ca Energy Comm
Loan Fund
$100,453 $101,760 $100,487 $101,940 $100,914 $100,887
Lease Reven
Bonds Ds 2013
Fund
$16,445,942 $1,616,394 $1,616,580 $1,626,217 $1,626,823 $1,626,731 Lease Rev Bonds
Ser 2020A Fund
$1,357,379 $1,369,606 $1,361,595 $1,377,371 $1,383,552 $1,383,281 Total Debt Service: $19,844,227 $4,965,503 $4,988,516 $4,984,538 $5,053,522 $5,054,434 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 90

Debt Service Funds Expenditure by Expense Type
2026 Recommended Expenditures by Expense Type
OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((999999...666%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((000...333%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((000...000999%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Internal Services Charges
Materials and Services
Other Expenses and Charges
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
City of Gilroy | FY26 and FY27 Recommended Budget Page 91

Expense Objects
Materials and
Services
$13,412 $13,795 $15,868 $13,305 $14,200 $14,615
Internal Services
Charges
$0 $3,568 $3,719 $3,719 $4,326 $4,542
Other Expenses
and Charges
$20,499,495 $4,935,579 $4,904,602 $4,904,602 $4,902,176 $4,902,642 Total Expense
Objects:
$20,512,907 $4,952,943 $4,924,189 $4,921,626 $4,920,702 $4,921,799 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
Debt Service Funds Expenditures by Fund
Debt Service
Gilroy Com Library
Ds Fund
$1,841,001 $1,843,625 $1,843,082 $1,844,295 $1,845,641 $1,846,510 Ca Energy Comm
Loan Fund
$99,862 $100,353 $100,375 $100,375 $100,459 $100,488
Lease Reven
Bonds Ds 2013
Fund
$17,219,870 $1,656,437 $1,621,824 $1,619,586 $1,619,964 $1,620,163 Lease Rev Bonds
Ser 2020A Fund
$1,352,175 $1,352,528 $1,358,908 $1,357,370 $1,354,638 $1,354,638 Total Debt Service: $20,512,907 $4,952,943 $4,924,189 $4,921,626 $4,920,702 $4,921,799 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 92

Internal
Service
Funds
Internal Service Funds are used to report any activity that provides goods or services to other funds or departments on a cost-reimbursement basis. The City maintains six active internal services, including fleet, facilities, information technology, worker's compensation, general liability, and equipment/fixture outlay. The revenues are derived from charges for services to other departments in the organization. The allocation methodologies can vary, but generally aim to ensure a fair distribution of costs based on usage or other relevant factors.

Internal Service Funds Revenue by Source
2026 Recommended Revenues by Source
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((888555...666%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((777...111%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((555...111%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((222...222%%%))) Budgeted and Historical Revenues by Source
Millions
Other Revenues
Use of Money and Property
Interfund Transfers
Charges for Services
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
City of Gilroy | FY26 and FY27 Recommended Budget Page 93

Revenue Source
Charges for
Services
$10,507,286 $14,817,232 $14,689,290 $14,689,291 $14,724,920 $15,365,608 Use of Money
and Property
$398,336 $908,060 $470,647 $1,098,342 $882,598 $797,902 Other Revenues $332,935 $332,754 $2,043,178 $445,000 $371,000 $372,000 Interfund
Transfers
$819,009 $0 $845,506 $845,506 $1,222,572 $1,163,033
Total Revenue
Source:
$12,057,566 $16,058,046 $18,048,621 $17,078,139 $17,201,090 $17,698,543 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
Internal Service Funds Revenue by Fund
Fleet Services Fund $2,541,591 $2,708,123 $3,228,333 $3,339,187 $3,466,406 $3,547,839 Worker's
Compensation Fund
$1,565,505 $1,773,556 $1,716,146 $1,853,750 $2,309,647 $2,497,920 Liability Insurance
Fund
$1,563,418 $2,394,484 $2,967,996 $3,022,267 $3,260,303 $3,570,376 Facility Services Fund $2,681,037 $4,430,082 $4,444,990 $4,536,101 $4,217,529 $4,334,762 Information
Technology Fund
$2,960,426 $4,580,411 $3,971,420 $4,146,525 $3,870,793 $3,729,009 Equipment Outlay $745,589 $171,390 $1,719,736 $180,309 $76,412 $18,637 Total: $12,057,566 $16,058,046 $18,048,621 $17,078,139 $17,201,090 $17,698,543 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 94

Internal Service Funds Expenditure by Expense Type
2026 Recommended Expenditures by Expense Type
MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((444888...444%%%))) CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((222444...555%%%))) PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((111333...777%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((888...666%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((444...777%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Interfund Transfers
Internal Services Charges
Capital Outlay
Other Expenses and Charges
Personnel Expenses
Materials and Services
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
City of Gilroy | FY26 and FY27 Recommended Budget Page 95

Expense Objects
Personnel
Expenses
$1,847,977 $5,866,527 $2,768,088 $2,560,385 $2,783,813 $2,902,240 Materials and
Services
$6,923,143 $7,335,741 $9,470,442 $9,074,225 $9,804,786 $10,462,500 Capital Outlay $326,787 $373,869 $8,667,079 $3,765,015 $4,968,766 $1,631,000 Interfund
Transfers
$107,848 $0 $686,000 $686,000 $0 $0
Internal Services
Charges
$605,301 $690,580 $764,572 $763,181 $951,056 $947,815
Other Expenses
and Charges
$2,072,241 $5,630,124 $1,323,159 $1,651,897 $1,741,250 $1,889,130 Total Expense
Objects:
$11,883,297 $19,896,842 $23,679,340 $18,500,703 $20,249,671 $17,832,685 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 96

Internal Service Funds Expenditure by Fund
2026 Recommended Expenditures by Fund
IIInnnfffooorrrmmmaaatttiiiooonnn TTTeeeccchhhnnnooolllooogggyyy FFFuuunnnddd (((222333...666%%%))) FFFaaaccciiillliiitttyyy SSSeeerrrvvviiiccceeesss FFFuuunnnddd (((222111...222%%%))) FFFllleeeeeettt SSSeeerrrvvviiiccceeesss FFFuuunnnddd (((111777...777%%%))) LLLiiiaaabbbiiillliiitttyyy IIInnnsssuuurrraaannnccceee FFFuuunnnddd (((111444...444%%%))) EEEqqquuuiiipppmmmeeennnttt OOOuuutttlllaaayyy (((111222...777%%%))) WWWooorrrkkkeeerrr'''sss CCCooommmpppeeennnsssaaatttiiiooonnn FFFuuunnnddd (((111000...444%%%))) Budgeted and Historical Expenditures by Fund
Millions
Equipment Outlay
Worker's Compensation Fund
Fleet Services Fund
Liability Insurance Fund
Facility Services Fund
Information Technology Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
City of Gilroy | FY26 and FY27 Recommended Budget Page 97

Fleet Services Fund $2,377,550 $3,622,847 $4,339,173 $4,249,906 $3,579,364 $2,961,475 Worker's
Compensation Fund
$666,065 $3,009,788 $1,453,673 $1,892,478 $2,113,047 $2,308,224 Liability Insurance
Fund
$2,394,187 $2,872,751 $2,963,661 $2,786,431 $2,918,882 $3,188,613 Facility Services Fund $3,117,697 $4,507,700 $5,261,329 $4,306,353 $4,289,690 $4,649,941 Information
Technology Fund
$3,211,362 $5,779,073 $4,819,148 $4,079,535 $4,780,943 $4,724,432 Equipment Outlay $116,436 $104,683 $4,842,356 $1,186,000 $2,567,745 $0 Total: $11,883,297 $19,896,842 $23,679,340 $18,500,703 $20,249,671 $17,832,685 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 98

Enterprise
Funds
Enterprise Funds are used to account for any activity for which a fee is charged to external users for goods or services. The City owns and operates its own water and wastewater utilities. The revenues are derived from water and wastewater rates assessed to the utility customers and fund the ongoing operations, maintenance, and planning and implementation of capital improvements to the infrastructure.

Enterprise Funds Revenue by Source
2026 Recommended Revenues by Source
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((888555...222%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((666...666%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((666%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((222...222%%%))) Budgeted and Historical Revenues by Source
Millions
Grants and Intergovernmental
Other Revenues
Use of Money and Property
Interfund Transfers
Charges for Services
FY2023
FY2024
FY2025
FY2026
FY2027
$-10
$0
$10
$20
$30
$40
$50
City of Gilroy | FY26 and FY27 Recommended Budget Page 99

Revenue Source
Grants and
Intergovernmental
$47,697 $39,091 $0 $0 $0 $0
Charges for Services $26,206,957 $28,322,212 $28,127,388 $30,308,000 $31,820,000 $33,405,000 Use of Money and
Property
$1,430,166 $4,347,936 $886,143 $3,480,482 $2,467,298 $1,951,557 Other Revenues -$950,648 -$766,431 $1,819,455 $681,805 $820,540 $1,936,575 Interfund Transfers $1,543,668 $1,506,917 $2,244,400 $2,244,400 $2,243,600 $2,241,600 Total Revenue Source: $28,277,840 $33,449,724 $33,077,386 $36,714,687 $37,351,438 $39,534,732 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 100

Enterprise Funds Revenue by Fund
2026 Recommended Revenue by Department
SSSeeewwweeerrr (((555222...222%%%)))
WWWaaattteeerrr (((444777...888%%%)))
Budgeted and Historical 2026 Revenue by Department
Millions
Water
Sewer
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
City of Gilroy | FY26 and FY27 Recommended Budget Page 101

Revenue
Sewer
Charges for Services $12,970,764 $13,982,756 $13,797,388 $14,965,000 $15,564,000 $16,186,000 Use of Money and
Property
$825,082 $2,424,009 $381,629 $1,873,627 $1,138,803 $967,653 Other Revenues -$1,569,117 -$1,711,102 $1,814,455 $383,600 $533,750 $1,633,665 Interfund Transfers $1,543,668 $1,506,917 $2,244,400 $2,244,400 $2,243,600 $2,241,600 Total Sewer: $13,770,398 $16,202,579 $18,237,872 $19,466,627 $19,480,153 $21,028,918 Water
Grants and
Intergovernmental
$47,697 $39,091 $0 $0 $0 $0
Charges for Services $13,236,193 $14,339,456 $14,330,000 $15,343,000 $16,256,000 $17,219,000 Use of Money and
Property
$605,083 $1,923,927 $504,514 $1,606,855 $1,328,495 $983,904 Other Revenues $618,469 $944,671 $5,000 $298,205 $286,790 $302,910 Total Water: $14,507,442 $17,247,145 $14,839,514 $17,248,060 $17,871,285 $18,505,814 Total Revenue: $28,277,840 $33,449,724 $33,077,386 $36,714,687 $37,351,438 $39,534,732 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 102

Enterprise Funds Expenditure by Expense Type
2026 Recommended Expenditures by Expense Type
CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((222444...555%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((222000...333%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((111666...999%%%))) PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((111666...666%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((111333...333%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((888...444%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Materials and Services
Internal Services Charges
Personnel Expenses
Other Expenses and Charges
Interfund Transfers
Capital Outlay
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$20
$40
$60
$-20
$80
City of Gilroy | FY26 and FY27 Recommended Budget Page 103

Expense Objects
Personnel
Expenses
$6,006,356 $7,592,088 $9,195,196 $8,103,829 $7,645,911 $8,050,625 Materials and
Services
$2,226,908 $2,347,263 $3,522,727 $2,470,858 $3,857,840 $3,917,590 Capital Outlay -$1,150,358 -$287,043 $27,423,383 $3,155,501 $11,292,000 $12,684,372 Interfund
Transfers
$5,405,681 $6,975,428 $10,063,535 $13,715,851 $9,333,950 $9,958,181 Internal Services
Charges
$3,859,939 $5,332,866 $5,609,590 $5,610,244 $6,125,323 $6,898,683 Other Expenses
and Charges
$8,185,311 $9,342,335 $7,223,050 $7,067,500 $7,803,600 $8,241,600 Total Expense
Objects:
$24,533,836 $31,302,937 $63,037,482 $40,123,783 $46,058,624 $49,751,051 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 104

Enterprise Funds Expenditure by Fund
2026 Recommended Expenditures by Fund
WWWaaattteeerrr FFFuuunnnddd (((555555...111%%%)))
SSSeeewwweeerrr FFFuuunnnddd (((444444...999%%%)))
Budgeted and Historical Expenditures by Fund
Millions
Water Fund
Sewer Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
$60
$70
City of Gilroy | FY26 and FY27 Recommended Budget Page 105

Sewer Fund
Personnel
Expenses
$2,557,556 $2,473,413 $4,146,647 $3,580,042 $3,057,510 $3,214,886 Materials and
Services
$482,699 $458,323 $915,849 $376,854 $853,095 $854,770
Capital Outlay -$71,109 $23,791 $7,342,567 $1,061,226 $3,329,500 $7,097,000 Interfund
Transfers
$5,051,988 $6,526,929 $9,605,354 $13,257,670 $8,750,885 $9,349,181 Internal Services
Charges
$1,526,286 $2,122,521 $2,251,887 $2,252,214 $2,425,908 $2,791,895 Other Expenses
and Charges
$3,057,849 $3,564,668 $2,260,950 $2,260,950 $2,253,600 $2,251,600 Total Sewer Fund: $12,605,269 $15,169,645 $26,523,254 $22,788,956 $20,670,498 $25,559,332 Water Fund
Personnel
Expenses
$3,448,800 $5,118,675 $5,048,549 $4,523,787 $4,588,401 $4,835,739 Materials and
Services
$1,744,209 $1,888,940 $2,606,878 $2,094,004 $3,004,745 $3,062,820 Capital Outlay -$1,079,250 -$310,834 $20,080,816 $2,094,275 $7,962,500 $5,587,372 Interfund
Transfers
$353,693 $448,499 $458,181 $458,181 $583,065 $609,000
Internal Services
Charges
$2,333,653 $3,210,345 $3,357,703 $3,358,030 $3,699,415 $4,106,788 Other Expenses
and Charges
$5,127,462 $5,777,667 $4,962,100 $4,806,550 $5,550,000 $5,990,000 Total Water Fund: $11,928,567 $16,133,292 $36,514,227 $17,334,827 $25,388,126 $24,191,719 Total: $24,533,836 $31,302,937 $63,037,482 $40,123,783 $46,058,624 $49,751,051 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 106

Agency and
Trust Funds
Agency and Trust Funds are used to account for assets held in a trustee capacity or as a custodian for individuals, private organizations, other governmental units, and/or other funds. For the City of Gilroy, these include: Highway 152 Special Assessment Fund, Employee Wellness Fund, Museum Endowment Trust Fund, Henry Miller Donation Fund, Senior Advisory Board, and Miscellaneous Trust and Deposits Fund.

Agency and Trust Funds Revenue by Source
2026 Recommended Revenues by Source
TTTaaaxxxeeesss (((999555...222%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((444...888%%%))) Budgeted and Historical Revenues by Source
Millions
Other Revenues
Interfund Transfers
Use of Money and Property
Taxes
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$1
$0.25
$0.5
$0.75
$1.25
City of Gilroy | FY26 and FY27 Recommended Budget Page 107

Revenue Source
Taxes $932,693 $934,763 $897,525 $952,000 $955,000 $955,000 Use of Money and
Property
$19,759 $43,348 $44,412 $43,894 $47,656 $49,351
Other Revenues $400 $398 $0 $0 $0 $0
Interfund
Transfers
$1,549 $2,076 $0 $0 $0 $0
Total Revenue
Source:
$954,401 $980,586 $941,937 $995,894 $1,002,656 $1,004,351 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
Agency and Trust Funds Revenue by Fund
Deposit Revolving
Fund
$0 $1,287 $30,454 $0 $1,232 $1,232
Trusts Specific Fund $5,287 $10,092 $3,399 $10,769 $449 $449 Henry Miller Poor $346 $689 $241 $755 $684 $635
Hwy 152 Bond Series
2018 Fund
$947,821 $964,197 $906,974 $981,730 $999,306 $1,001,104 Museum
Endowment Trust
$743 $3,913 $727 $2,187 $537 $483
Sr Advisory Board $204 $407 $142 $453 $448 $448
Total: $954,401 $980,586 $941,937 $995,894 $1,002,656 $1,004,351 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 108

Agency and Trust Funds Expenditure by Expense Type
2026 Recommended Expenditures by Expense Type
OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((999666...333%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((333...777%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((000...000000444%%%))) Budgeted and Historical Expenditures by Expense Type
Millions
Interfund Transfers
Internal Services Charges
Materials and Services
Other Expenses and Charges
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$0.2
$0.4
$0.6
$0.8
$1
City of Gilroy | FY26 and FY27 Recommended Budget Page 109

Expense Objects
Materials and
Services
$43,791 $29,345 $32,099 $32,430 $33,620 $35,740
Interfund Transfers $2,478 $2,061 $0 $0 $0 $0
Internal Services
Charges
$0 $27 $29 $29 $33 $35
Other Expenses
and Charges
$893,188 $885,047 $880,427 $882,666 $881,987 $883,268
Total Expense
Objects:
$939,457 $916,480 $912,554 $915,125 $915,640 $919,043
Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
Agency and Trust Funds Expenditure by Fund
Deposit Revolving
Fund
$6,751 $0 $0 $0 $0 $0
Trusts Specific Fund $1,200 $1,025 $0 $0 $0 $0
Henry Miller Poor $0 $49 $0 $1,039 $1,100 $1,100
Hwy 152 Bond Series
2018 Fund
$929,184 $914,119 $912,554 $912,886 $913,340 $916,743
Museum
Endowment Trust
$2,322 $1,287 $0 $1,200 $1,200 $1,200
Total: $939,457 $916,480 $912,554 $915,125 $915,640 $919,043 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 110

Fund
Balances
The City's current chart of accounts has approximately 60 different funds, excluding the South County Regional Wastewater Authority (SCRWA) funds. The tables on the next several pages outline the change in fund balances.

City of Gilroy | FY26 and FY27 Recommended Budget Page 111

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Change in Fund Balance Fiscal Year 2026
Fund Fund Name
FY26 Projected
Beginning
Balance
FY26 Revenues
& Transfers
FY26
Expenditures &
Transfers
FY26
Projected
Ending
Balance
100 GENERAL FUND $ 31,645,797 $ 74,277,226 $ 75,603,727 $ 30,319,295 104 GENERAL FIXED ASSETS FUND - - - -
106 GENERAL LONG TERM DEBT FUND - - - -
200 SIDEWALK REPAIR RESERVE FUND 1,386,127 556,130 527,588 1,414,669 205 GAS TAX FUNDS 1,340,773 1,761,716 2,335,130 767,359 210 ROAD FUND 400,214 1,619,060 1,612,836 406,438
212 MEASURE B 806,476 2,533,243 2,424,956 914,763
215 TRANSPORT/MOBILITY GRANT FUND 244,897 1,542,282 1,579,363 207,816 220 VEHICLE REGISTRATION FEE FUND 1,704,362 489,261 515,330 1,678,293 222 NEIGHBORHOOD SAFETY UNIT 240,964 153,393 142,550 251,807 223 OTS PD GRANT 19,453 875 - 20,328
225 POLICE GRANTS FUND 420,222 136,823 100,000 457,045
226 FEDERAL ASSET SEIZURE 226,874 10,209 - 237,083
227 SOUTH COUNTY YOUTH TASK FORCE 141,760 252,057 245,678 148,139 228 BRD STATE&COMM CORR TITLE II - - - -
229 SPECIAL ENFORCEMENT OPS FUND 177,077 10,968 3,000 185,045 230 BEGIN LOAN FUND 91,159 4,102 - 95,261
235 RESIDENTIAL DEV LOAN PROG FUND - - - -
240 PROP 172 SALES TAX - P.S. FUND 131,890 326,424 239,365 218,949 245 COMMUNITY DEV BLOCK GRANT FUND 11,933 400,386 403,200 9,119 250 HOUSING TRUST FUND 743,422 352,010 565,245 530,187
255 LOS ARROYOS FUND 971,291 211,274 96,400 1,086,165
260 COMM FACILITIES DISTRICT FUND 1,866,911 659,027 687,888 1,838,050 265 BEGIN REUSE FUND 399,810 17,991 - 417,801
270 CALHOME FUND 440,875 19,839 - 460,714
275 FIRE SPECIAL GRANTS FUND 24,271 1,092 - 25,363
280 GOLF COURSE FUND 57,465 115,061 - 172,526
290 RECREATION FUND 2,049,897 2,405,824 3,367,661 1,088,060 293 OPIOID SETTLEMENT 180,649 8,129 - 188,778
400 CAPITAL PROJECT FUND 13,297,548 4,478,617 5,846,199 11,929,966 405 GILROY COMMUNITY LIBRARY FUND 5,501,092 132,001 5,135,491 497,602 410 STORM DRAIN DEVELOPMENT FUND 1,779,929 189,045 922,642 1,046,332 420 STREET TREE DEVELOPMENT FUND 185,312 13,455 2,289 196,478 422 STORMWATER MNGMT 856,874 36,084 110,000 782,958
425 TRAFFIC IMPACT FUND 18,622,114 2,864,731 5,597,457 15,889,388 430 SEWER DEVELOPMENT FUND 17,859,324 2,118,232 3,229,571 16,747,985 435 WATER DEVELOPMENT FUND 6,656,486 538,566 3,545,645 3,649,407 440 PUBLIC FACILITIES IMPACT FUND 1,068,864 19,749,685 20,300,998 517,551 487 DOWNTOWN BEAUTIFICATION 0 - - 0
500 GILROY COM LIBRARY DS FUND 1,479,394 1,942,233 1,845,641 1,575,986 505 CA ENERGY COMM LOAN FUND 23,663 100,914 100,459 24,118 510 LEASE REVEN BONDS DS 2013 FUND 197,058 1,626,823 1,619,964 203,917 520 LEASE REV BONDS SER 2020A FUND 714,981 1,383,552 1,354,638 743,895 600 FLEET SERVICES FUND 2,480,480 3,466,406 3,579,364 2,367,522 605 WORKER'S COMPENSATION FUND 4,665,336 2,309,647 2,113,047 4,861,936 610 LIABILITY INSURANCE FUND 2,643,294 3,260,303 2,918,882 2,984,715 615 FACILITY SERVICES FUND 2,544,398 4,217,529 4,289,690 2,472,237 620 INFORMATION TECHNOLOGY FUND 3,300,298 3,870,793 4,780,943 2,390,148 625 EQUIPMENT OUTLAY 2,981,911 76,412 2,567,745 490,578 700 SEWER FUND 32,691,835 19,480,153 20,670,498 31,501,490 City of Gilroy | FY26 and FY27 Recommended Budget Page 112

705 WATER FUND 33,944,778 17,871,285 25,388,126 26,427,937 800 DEPOSIT REVOLVING FUND 27,384 1,232 - 28,616
805 TRUSTS SPECIFIC FUND 9,987 449 - 10,436
808 SR ADVISORY BOARD 9,950 448 - 10,398
809 HENRY MILLER POOR 15,755 684 1,100 15,339
810 HWY 152 BOND SERIES 2018 FUND 963,738 999,306 913,340 1,049,704 814 MUSEUM ENDOWMENT TRUST 12,526 537 1,200 11,863
City of Gilroy | FY26 and FY27 Recommended Budget Page 113

Change in Fund Balance Fiscal Year 2027
Fund Fund Name
FY27 Projected
Beginning
Balance
FY27 Revenues
& Transfers
FY27
Expenditures &
Transfers
FY27
Projected
Ending
Balance
100 GENERAL FUND $ 30,319,295 $ 77,084,483 $ 78,279,174 $ 29,124,605 200 SIDEWALK REPAIR RESERVE FUND 1,414,669 543,395 538,423 1,419,641 205 GAS TAX FUNDS 767,359 1,746,131 2,449,672 63,818
210 ROAD FUND 406,438 1,682,395 1,769,897 318,936
212 MEASURE B 914,763 2,438,487 2,443,223 910,027
215 TRANSPORT/MOBILITY GRANT FUND 207,816 9,299 1,879 215,236 220 VEHICLE REGISTRATION FEE FUND 1,678,293 497,117 540,199 1,635,211 222 NEIGHBORHOOD SAFETY UNIT 251,807 153,393 142,550 262,650 223 OTS PD GRANT 20,328 875 - 21,203
225 POLICE GRANTS FUND 457,045 119,698 100,000 476,743
226 FEDERAL ASSET SEIZURE 237,083 10,209 - 247,292
227 SOUTH COUNTY YOUTH TASK FORCE 148,139 252,057 245,678 154,518 228 BRD STATE&COMM CORR TITLE II - - - -
229 SPECIAL ENFORCEMENT OPS FUND 185,045 10,968 3,000 193,013 230 BEGIN LOAN FUND 95,261 4,102 - 99,363
235 RESIDENTIAL DEV LOAN PROG FUND - - - -
240 PROP 172 SALES TAX - P.S. FUND 218,949 326,883 282,770 263,062 245 COMMUNITY DEV BLOCK GRANT FUND 9,119 400,024 403,200 5,943 250 HOUSING TRUST FUND 530,187 544,516 570,335 504,368
255 LOS ARROYOS FUND 1,086,165 214,406 96,400 1,204,171 260 COMM FACILITIES DISTRICT FUND 1,838,050 683,491 692,051 1,829,490 265 BEGIN REUSE FUND 417,801 17,991 - 435,792
270 CALHOME FUND 460,714 19,839 - 480,553
275 FIRE SPECIAL GRANTS FUND 25,363 1,092 - 26,455
280 GOLF COURSE FUND 172,526 123,078 - 295,604
290 RECREATION FUND 1,088,060 2,406,267 2,547,750 946,577 293 OPIOID SETTLEMENT 188,778 8,129 - 196,907
400 CAPITAL PROJECT FUND 11,929,966 240,046 12,135,993 34,019 405 GILROY COMMUNITY LIBRARY FUND 497,602 16,452 - 514,054 410 STORM DRAIN DEVELOPMENT FUND 1,046,332 173,262 220,875 998,719 420 STREET TREE DEVELOPMENT FUND 196,478 13,579 2,303 207,754 422 STORMWATER MNGMT 782,958 31,067 113,000 701,025
425 TRAFFIC IMPACT FUND 15,889,388 3,275,256 3,523,475 15,641,169 430 SEWER DEVELOPMENT FUND 16,747,985 2,202,283 4,837,120 14,113,148 435 WATER DEVELOPMENT FUND 3,649,407 553,094 976,702 3,225,799 440 PUBLIC FACILITIES IMPACT FUND 517,551 19,731,526 20,246,420 2,657 487 DOWNTOWN BEAUTIFICATION 0 - - 0
500 GILROY COM LIBRARY DS FUND 1,575,986 1,943,535 1,846,510 1,673,011 505 CA ENERGY COMM LOAN FUND 24,118 100,887 100,488 24,517 510 LEASE REVEN BONDS DS 2013 FUND 203,917 1,626,731 1,620,163 210,485 520 LEASE REV BONDS SER 2020A FUND 743,895 1,383,281 1,354,638 772,538 600 FLEET SERVICES FUND 2,367,522 3,547,839 2,961,475 2,953,886 605 WORKER'S COMPENSATION FUND 4,861,936 2,497,920 2,308,224 5,051,632 610 LIABILITY INSURANCE FUND 2,984,715 3,570,376 3,188,613 3,366,478 615 FACILITY SERVICES FUND 2,472,237 4,334,762 4,649,941 2,157,058 620 INFORMATION TECHNOLOGY FUND 2,390,148 3,729,009 4,724,432 1,394,725 625 EQUIPMENT OUTLAY 490,578 18,637 - 509,215
700 SEWER FUND 31,501,490 21,028,918 25,559,332 26,971,076 705 WATER FUND 26,427,937 18,505,814 24,191,719 20,742,032 800 DEPOSIT REVOLVING FUND 28,616 1,232 - 29,848
City of Gilroy | FY26 and FY27 Recommended Budget Page 114

805 TRUSTS SPECIFIC FUND 10,436 449 - 10,885
808 SR ADVISORY BOARD 10,398 448 - 10,846
809 HENRY MILLER POOR 15,339 635 1,100 14,874
810 HWY 152 BOND SERIES 2018 FUND 1,049,704 1,001,104 916,743 1,134,065 814 MUSEUM ENDOWMENT TRUST 11,863 483 1,200 11,146
City of Gilroy | FY26 and FY27 Recommended Budget Page 115

FUNDING SOURCES
City of Gilroy | FY26 and FY27 Recommended Budget Page 116

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General Fund Revenue Analysis
The General Fund’s primary source of revenue is taxes, representing 76% of total General Fund revenues. This includes sales tax, property tax, transient occupancy tax, utility user tax, and business license fees. General Fund revenues are estimated to be $74.3 million in FY26 and $77.1 million in FY27, representing an average growth from FY25 of about 4% year-over-year. There are now signs of the economy “cooling off” as economic growth returns to more normal and sustainable levels. As a result, the City’s tax-based revenues are projected to have slower growth compared to prior years, notably in the sales tax category, which is expected to remain flat with little to no growth over the next two years. The method of revenue analysis and forecast varies by each revenue type but generally includes qualitative and quantitative factors such as global, regional, and local market research and trends, legislative impacts, and historical trends in growth rates.

Sales Tax - Sales tax revenue is projected to be $20.4 million in FY26, a nominal decrease of 1% from FY25 year-end projections, and projected to increase by 1% to $20.6 million in FY27. Sales Tax revenue is the most significant tax revenue source for the General Fund, representing 27% of the total General Fund revenues. Gilroy's current sales tax rate is 9.125%, and the City receives 1% of the total rate as its local share. Sales Tax revenue has been the most significant tax revenue source for the General Fund, generally representing about 33% of the total General Fund revenues in recent years, and is, however, expected to be surpassed by Property Tax in FY25. For FY26, sales tax will comprise 27% of the total General Fund revenues. Gilroy's current sales tax rate is 9.125%, and the City receives 1% of the rate as its local share. Sales tax continues to be susceptible to volatility as it is significantly tied to the ability of our residents/customers to purchase non-essential or discretionary items. Sales tax is projected to remain relatively flat, with little to no growth for the next two fiscal years, and is expected to return to a normal growth rate after FY27 of about 2% annually. The relatively flat and no increase over the next two years is attributed to a slowdown in consumer spending on taxable goods. High and rising housing, insurance, groceries, healthcare, and energy costs continue to consume personal income, thus shifting the spending towards nontaxable services and away from taxable goods and items, further demonstrating the volatility and eroding nature of the revenue source as it relies directly on consumers’ discretionary spending.

Property Tax - Property tax revenue is projected to be $22.9 million in FY26, an increase of 8% from FY25, and projected to increase by 5% to $23.9 million in FY27. Property tax revenue has been the second-largest tax revenue source for the General Fund, representing 31% of the total General Fund revenues, and is, however, expected to be the largest tax revenue source beginning in FY25, due to the decline in sales tax.

Property tax is a stable revenue source and has historically been easier to predict accurately. A portion of the annual property tax revenue collected by the County goes to the Educational Revenue Augmentation Fund (ERAF) to support local school districts. When the amount contributed to ERAF exceeds the minimum cost of funding local schools, excess funds are returned to the County, Cities, and Special Districts. The City is projected to receive $2.6 million in FY26 and $2.7 million in FY27 from excess ERAF.

This amount is included in the aforementioned total property tax revenues for the respective fiscal years. Excess ERAF calculation continues to be challenged through the legal system by the State of California, which could lower the amount of excess ERAF the City receives; however, no resolution has been achieved by the State and the County of Santa Clara, which apportions the amounts to the entities in the County.

Utility User Tax (UUT) - Utility Users Tax (UUT) Utility taxes are projected to be $8.2 million in FY26, an increase of 4% from FY25, and projected to increase by 4% to $8.5 million in FY27. UUT represents about 11% of the total General Fund revenues. Taxes are assessed against the value of energy and telecommunications, such as gas, electricity, steam, cable, and phone charges. The current tax rates are

4.5% for telecommunications and 5% for gas and electricity.

Franchise Tax - The City receives three types of Franchise Tax, which include refuse/garbage, cable TV, natural gas, and electricity. The franchise tax is projected to be $2.6 million in FY26, an increase of 4% from FY25, and projected to increase by 4% to $2.7 million in FY27.

Transient Occupancy Tax (TOT) - The Transient Occupancy Tax (TOT) is projected to be $1.9 million in FY26, an increase of 3% from FY25, and is projected to increase by 24% to $2.1 million in FY27. The significant increase in FY27 is due to the assumption of a new hotel coming online. Currently, four new hotels are undergoing reviews at various stages of the development process. Two of the four are further along in the process, with one expecting to obtain building permits and break ground this year. As such, City of Gilroy | FY26 and FY27 Recommended Budget Page 117

the recommended budget reflects the reasonable assumption of one hotel coming online by FY27. The City’s TOT revenue comes from a 9% tax on hotel room rentals under 30 days, including RV parks.

Business License - Businesses pay Business License (BL) fees for the use of City services and the costs associated with business regulation. The BL revenues are projected to be $0.8 million in both FY26 and FY27.

Charges for Services/Licenses and Permits - These categories for the General Fund primarily include user fees assessed by various departments and development-related building permits. The City receives revenue from development, including planning, permitting, and building inspections. In FY 26 and 27, the development-related revenues are projected to be $5.7 million and $6.0 million, respectively. The City last updated its city-wide user fee schedule in 2022, which included a mechanism to adjust it annually based on a consumer price index (CPI) to keep pace with the costs of providing services and help the City maintain its cost recovery goal. Per Council direction and the Gilroy City Code, a comprehensive user fee study is to be conducted every five years to ensure fees reflect the actual cost of providing the service and holistically look at updating existing or adding new fees. The recommended budget includes a work plan item for the comprehensive user fee study over the next two fiscal years.

City of Gilroy | FY26 and FY27 Recommended Budget Page 118

General Fund Revenues by Source
2026 Recommended Revenues by Source
TTTaaaxxxeeesss (((777555...666%%%)))
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((111333...222%%%))) LLLiiiccceeennnssseeesss aaannnddd PPPeeerrrmmmiiitttsss (((444...555%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111...999%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((111...999%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((111...999%%%))) GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((000...888%%%))) FFFiiinnneeesss aaannnddd FFFooorrrfffeeeiiitttuuurrreeesss (((000...222%%%))) Budgeted and Historical Revenues by Source
Millions
Other Financing Sources
Fines and Forfeitures
Grants and Intergovernmental
Use of Money and Property
Interfund Transfers
Other Revenues
Licenses and Permits
Charges for Services
Taxes
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$20
$40
$60
$80
$100
City of Gilroy | FY26 and FY27 Recommended Budget Page 119

Revenue Source
Taxes $51,164,138 $51,994,687 $54,322,203 $54,360,893 $56,123,074 $58,314,034 Licenses and Permits $2,696,319 $3,437,189 $3,179,500 $3,236,375 $3,363,706 $3,496,116 Fines and Forfeitures $255,359 $238,128 $223,547 $188,629 $177,474 $177,474 Grants and
Intergovernmental
$1,001,873 $425,439 $912,924 $595,154 $630,642 $678,451 Charges for Services $7,002,258 $7,654,626 $7,478,724 $7,498,333 $9,790,405 $10,173,906 Use of Money and
Property
$1,783,855 $2,933,804 $888,240 $1,581,788 $1,388,841 $1,315,149 Other Revenues $1,067,380 $1,640,196 $1,052,437 $1,655,633 $1,396,449 $1,466,693 Interfund Transfers $800,805 $1,268,437 $1,839,929 $1,839,929 $1,406,635 $1,462,660 Other Financing
Sources
$22,500 $0 $0 $0 $0 $0
Total Revenue Source: $65,794,485 $69,592,505 $69,897,504 $70,956,734 $74,277,226 $77,084,483 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 120

Special Revenues Fund Analysis
The primary funding source category in this fund type is intergovernmental funds in the form of tax sharing or grants from Federal, State, County, and other regional governments. For the City of Gilroy, the primary sources and uses are for Public Works (Transportation), Public Safety (Police Special Grants/Task Forces), and Community Development (CDBG/Housing). The method of revenue analysis and forecasting varies by each special revenue type. Projections are based on estimates provided by various intergovernmental agencies that provide the funds, including the federal, state, and county governments.

Public Works - $9.2 million in FY26, and $7.6 million in FY27.

Highway User Tax Account (HUTA) Gas Taxes: revenues of $1.8 million for both FY26 and FY27.

The New Road Maintenance and Rehabilitation Fund, also known as SB 1 funding, is estimated to be $1.6 million and $1.7 million for FY26 and FY27, respectively. Measure B - $2.5 million and $2.4 million in FY26 and FY27, respectively.

Transportation Mobility Grant - In FY26, the city is expected to receive $1.3 million in congressional federal grant funds for the Lions Creek Trail project.

Public Safety - The Police Department is expected to receive $.9 million in special grant revenues for both FY26 and FY27.

The Board of State and Community Corrections Title II grant ended FY25; at this time, it is unknown if the grant will be extended.

South County Youth Task Force - $0.3 million in both FY26 and FY27.

Neighborhood Safety Unit - $0.2 million in both FY26 and FY27.

Proposition 172 Sales Tax - $0.3 million in both FY26 and FY27.

Community Development - The Community Development Department is expected to receive $1.0 million in FY26 and $1.2 million in FY27.

CDBG Entitlement Grant funds - $0.4 million in both FY26 and FY27; this amount reflects the City's annual ongoing CDBG allocation amount.

Housing Trust and Other Begin/Los Arroyos Funds - $0.6 million in FY26 and $0.8 million in FY27, primarily projected monies to be received from below market rate (BMR) home loan repayments or equity share payments from sales of BMR homes.

Special Revenue Funds Revenue by Source
2026 Recommended Revenues by Source
GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((666333...888%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111222...999%%%))) CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((777%%%))) TTTaaaxxxeeesss (((666...666%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((555...333%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((444...333%%%))) City of Gilroy | FY26 and FY27 Recommended Budget Page 121

Budgeted and Historical Revenues by Source
Millions
Use of Money and Property
Other Revenues
Taxes
Charges for Services
Interfund Transfers
Grants and Intergovernmental
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$2.5
$5
$7.5
$10
$12.5
$15
$17.5
Revenue Source
Taxes $809,735 $886,715 $922,700 $875,000 $899,400 $932,675 Grants and
Intergovernmental
$8,211,865 $5,243,256 $12,014,101 $7,395,290 $8,667,601 $7,113,665 Charges for Services $471,561 $659,496 $657,645 $673,058 $954,890 $977,011 Use of Money and
Property
$409,019 $817,679 $426,491 $910,761 $724,285 $647,490
Other Revenues $978,103 $1,019,367 $307,900 $399,436 $591,000 $793,000 Interfund Transfers $2,220,400 $2,348,253 $1,787,313 $1,787,313 $1,750,000 $1,750,000 Total Revenue Source: $13,100,683 $10,974,766 $16,116,149 $12,040,857 $13,587,176 $12,213,841 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 122

Special Revenues by Department/Division
2026 Recommended Revenue by Department/Divsion
PPPuuubbbllliiiccc WWWooorrrkkksss (((666777...444%%%))) RRReeecccrrreeeaaatttiiiooonnn (((111777...777%%%)))
CCCooommmmmmuuunnniiitttyyy DDDeeevvveeelllooopppmmmeeennnttt (((777...444%%%))) PPPooollliiiccceee (((666...666%%%)))
GGGooolllfff CCCooouuurrrssseee (((000...888%%%)))
OOOttthhheeerrr GGGeeennneeerrraaalll GGGooovvveeerrrnnnmmmeeennnttt (((000...000666%%%))) FFFiiirrreee (((000...000000888%%%)))
Budgeted and Historical Revenue by Department/Division
Millions
Fire
Other General Government
Golf Course
Police
Community Development
Recreation
Public Works
FY2023
FY2024
FY2025
FY2026FY2027
$0
$2.5
$5
$7.5
$10
$12.5
$15
$17.5
City of Gilroy | FY26 and FY27 Recommended Budget Page 123

Revenue
Other General
Government
$46,551 $45,103 $270 $114,270 $8,129 $8,129
Police $1,625,251 $2,046,467 $2,124,395 $1,556,191 $890,749 $874,083 Fire $359 $993 $349 $1,105 $1,092 $1,092
Community
Development
$1,999,951 $1,421,838 $813,568 $799,330 $1,005,602 $1,200,878 Golf Course $81,249 $51,411 $52,400 $134,617 $115,061 $123,078 Recreation $2,173,875 $2,271,669 $2,327,533 $2,330,430 $2,405,824 $2,406,266 Public Works $7,173,448 $5,137,284 $10,797,634 $7,104,914 $9,160,719 $7,600,315 Total Revenue: $13,100,683 $10,974,766 $16,116,149 $12,040,857 $13,587,176 $12,213,841 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 124

Special Revenues by Fund
Sidewalk Repair Reserve
Fund
$273,979 $319,064 $273,153 $329,799 $556,130 $543,395
Parking Management $945 $1,852 $0 $2,842 $0 $0
Gas Tax Funds $1,608,054 $1,789,856 $1,762,690 $1,801,085 $1,761,716 $1,746,131 Road Fund $1,389,031 $1,638,158 $1,585,067 $1,659,315 $1,619,060 $1,682,395 Measure B $3,001,584 $139,635 $4,530,816 $1,766,995 $2,533,243 $2,438,487 Transport/Mobility Grant
Fund
$3,747 $116,798 $1,637,500 $419,349 $1,542,282 $9,299
Vehicle Registration Fee
Fund
$362,889 $525,560 $433,887 $491,102 $489,261 $497,117
Ots Pd Grant $49,353 $98,025 $168,500 $91,343 $875 $875 Police Grants Fund $1,212,525 $407,107 $246,754 $332,732 $136,823 $119,698 Brd State&Comm Corr
Title Ii
$57,476 $89,068 $819,167 $424,311 $0 $0
Special Enforcement
Ops Fund
$2,631 $14,278 $2,875 $8,196 $10,968 $10,968
Begin Loan Fund $1,347 $3,730 $1,311 $4,149 $4,102 $4,102 Residential Dev Loan
Prog Fund
$4 $11 $0 $0 $0 $0
Prop 172 Sales Tax - P.S.

Fund
$303,265 $359,462 $373,871 $325,316 $326,424 $326,883
Community Dev Block
Grant Fund
$1,009,346 $558,223 $496,246 $496,246 $400,386 $400,024 Housing Trust Fund $830,983 $471,095 $295,334 $73,089 $352,010 $544,516 Los Arroyos Fund $146,514 $324,671 $9,204 $187,525 $211,274 $214,406 Comm Facilities District
Fund
$533,219 $606,363 $574,521 $634,427 $659,027 $683,491
Begin Reuse Fund $5,820 $10,486 $5,694 $18,254 $17,991 $17,991 Calhome Fund $5,938 $53,623 $5,779 $20,067 $19,839 $19,839 Fire Special Grants Fund $359 $993 $349 $1,105 $1,092 $1,092 Golf Course Fund $81,249 $51,411 $52,400 $134,617 $115,061 $123,078 Recreation Fund $2,173,875 $2,271,669 $2,327,533 $2,330,430 $2,405,824 $2,406,266 Opioid Settlement $46,551 $45,103 $270 $114,270 $8,129 $8,129 Neighborhood Safety
Unit
$0 $362,318 $142,550 $48,405 $153,393 $153,393
Federal Asset Seizure $0 $207,798 $0 $19,076 $10,209 $10,209 South County Youth
Task Force
$0 $508,412 $370,678 $306,812 $252,057 $252,057
Total: $13,100,683 $10,974,766 $16,116,149 $12,040,857 $13,587,176 $12,213,841 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 125

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Capital and Development Impact Revenues Analysis
The primary revenue source in this Fund-Type is development impact fees for public facilities, traffic, storm drain, sewer, waste, and street trees. The revenues are collected as a result of new development approval and the required contributions to development impact funds to offset infrastructure impacts. Total revenues in this fund type are expected to be $30.1 million in FY26 and $26.2 million in FY27, which includes a total of $30 million of bond financing to fund the Gilroy Ice Center project over the two years. The method of revenue analysis and forecasting varies by each capital revenue type. Projections are based on estimates provided by the Public Works and Community Development Departments and are generally based on known development projects in the pipeline and grant revenue estimates provided by intergovernmental agencies, including Federal, State, and County governments.

Excluding the bond financing amount of $15.0 million, FY26 revenue is estimated to have a decrease of $7.6 million over FY25 year-end projected revenues, primarily for development impact fees. In addition, the Downtown Beautification project grant, which ended FY25, is projected to reimburse $3.9 million for Gourmet Alley improvements by the end of FY25.

Excluding the bond financing amount of $15.0 million, FY27 revenue is estimated to be $11.2 million, compared to $15.1 million in FY26. This is primarily due to a decrease in grant funding for FY27.

Also included in this Fund-Type is the City's Capital Projects Fund - which is expected to receive a $3.0 million grant for the San Ysidro Healthy Living Improvements, $0.3 million for Corporation Yard EV and EV Charging Projects in FY26, and $0.7 million for the Gateway Senior Apartment Pedestrian Crossing Safety Improvements in FY26.

Capital and Development Impact Revenues by Source
2026 Recommended Revenues by Source
OOOttthhheeerrr FFFiiinnnaaannnccciiinnnggg SSSooouuurrrccceeesss (((444999...888%%%))) CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((222666...222%%%))) GGGrrraaannntttsss aaannnddd IIInnnttteeerrrgggooovvveeerrrnnnmmmeeennntttaaalll (((111333%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((999...999%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((111...111%%%))) City of Gilroy | FY26 and FY27 Recommended Budget Page 126

Budgeted and Historical Revenues by Source
Millions
Grants and Intergovernmental
Other Revenues
Interfund Transfers
Use of Money and Property
Charges for Services
Other Financing Sources
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
$60
Revenue Source
Grants and
Intergovernmental
$181,530 $692,860 $3,753,992 $3,057,413 $3,917,618 $0
Charges for Services $7,021,901 $9,112,251 $27,549,986 $8,891,763 $7,885,000 $8,685,000 Use of Money and
Property
$971,771 $2,717,361 $867,118 $2,906,947 $2,973,339 $2,202,961 Other Revenues $783,676 $2,449,291 $6,153,663 $6,153,663 $0 $0 Interfund Transfers $124,999 $265,887 $1,740,958 $1,740,958 $344,459 $348,604 Other Financing
Sources
$0 $0 $12,500,000 $0 $15,000,000 $15,000,000
Total Revenue Source: $9,083,877 $15,237,650 $52,565,717 $22,750,744 $30,120,416 $26,236,565 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 127

Capital and Development Impact Revenues by Fund
2026 Recommended Revenue by Fund
PPPuuubbbllliiiccc FFFaaaccciiillliiitttiiieeesss IIImmmpppaaacccttt FFFuuunnnddd (((666555...666%%%))) CCCaaapppiiitttaaalll PPPrrrooojjjeeecccttt FFFuuunnnddd (((111444...999%%%))) TTTrrraaaffiffifficcc IIImmmpppaaacccttt FFFuuunnnddd (((999...555%%%))) SSSeeewwweeerrr DDDeeevvveeelllooopppmmmeeennnttt FFFuuunnnddd (((777%%%))) WWWaaattteeerrr DDDeeevvveeelllooopppmmmeeennnttt FFFuuunnnddd (((111...888%%%))) SSStttooorrrmmm DDDrrraaaiiinnn DDDeeevvveeelllooopppmmmeeennnttt FFFuuunnnddd (((000...666%%%))) GGGiiilllrrroooyyy CCCooommmmmmuuunnniiitttyyy LLLiiibbbrrraaarrryyy FFFuuunnnddd (((000...444%%%))) Budgeted and Historical Revenue by Fund
Millions
Downtown Beautification
Street Tree Development Fund
Gilroy Community Library Fund
Stormwater Mngmt Impact Fee
Storm Drain Development Fund
Capital Project Fund
Water Development Fund
Sewer Development Fund
Traffic Impact Fund
Public Facilities Impact Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
$60
City of Gilroy | FY26 and FY27 Recommended Budget Page 128

Capital Project Fund $109,091 $2,799,346 $10,995,025 $7,743,110 $4,478,617 $240,046 Gilroy Community
Library Fund
$109,700 $284,842 $100,000 $264,921 $132,001 $16,452
Storm Drain
Development Fund
$67,880 $114,939 $373,611 $232,523 $189,045 $173,262
Street Tree
Development Fund
$10,400 $28,760 $4,329 $8,586 $13,455 $13,579
Stormwater Mngmt
Impact Fee
$794,089 $23,783 $9,122 $39,002 $36,084 $31,067
Traffic Impact Fund $3,817,235 $3,111,002 $9,623,193 $4,268,237 $2,864,731 $3,275,256 Sewer Development
Fund
$1,395,602 $2,944,523 $6,259,160 $3,178,363 $2,118,232 $2,202,283 Water Development
Fund
$423,497 $1,005,632 $1,621,933 $856,272 $538,566 $553,094 Public Facilities
Impact Fund
$2,174,852 $4,231,964 $23,579,344 $3,317,220 $19,749,685 $19,731,526 Downtown
Beautification
$181,530 $692,860 $0 $2,842,510 $0 $0
Total: $9,083,877 $15,237,650 $52,565,717 $22,750,744 $30,120,416 $26,236,565 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 129

Enterprise Fund Revenue Analysis
The primary revenue source for this fund type is charges for services, which are derived from water and wastewater utility rates assessed to and paid by the utility customers. The total revenues for the Enterprise Funds are expected to be $37.4 million in FY26, an increase of 13% from FY25, and projected to increase by 6% to $39.5 million in FY27. Every five years, the City reviews water and sewer rates through a cost-of-service rate study. The City Council approved the most recent rate study recommendations on October 16, 2023, and the updated rates took effect on January 1, 2024. The rate study recommended annual increases from 2024 through 2028, and the recommended budget reflects the programmed increases.

Wastewater (Sewer) - The City’s current wastewater revenues are estimated to be $19.5 million in FY26 and $21.0 million in FY27. Of this, $15.6 million is generated directly as charges for services in FY26, and $16.2 million in FY27. The remainder consists of interest earnings and interfund transfers related to the Debt Service on the 2021 Wastewater Bonds. In addition, there is a one-time reimbursement of expenses included by the City of Morgan Hill, for its respective share of the Morgan Hill - Gilroy Joint Trunk Line Repairs project that is expected to commence and be completed over the next two years.

Water - The City’s current water revenues are estimated to be $17.8 million in FY26 and $18.5 million in FY27. Of this, $16.2 million is generated directly as charges for services in FY26, and $17.2 million in FY27.

The remainder primarily consists of interest earnings.

Enterprise Funds Revenue by Source
2026 Recommended Revenues by Source
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((888555...222%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((666...666%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((666%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((222...222%%%))) City of Gilroy | FY26 and FY27 Recommended Budget Page 130

Budgeted and Historical Revenues by Source
Millions
Grants and Intergovernmental
Other Revenues
Use of Money and Property
Interfund Transfers
Charges for Services
FY2023
FY2024
FY2025
FY2026
FY2027
$-10
$0
$10
$20
$30
$40
$50
Revenue Source
Grants and
Intergovernmental
$47,697 $39,091 $0 $0 $0 $0
Charges for Services $26,206,957 $28,322,212 $28,127,388 $30,308,000 $31,820,000 $33,405,000 Use of Money and
Property
$1,430,166 $4,347,936 $886,143 $3,480,482 $2,467,298 $1,951,557 Other Revenues -$950,648 -$766,431 $1,819,455 $681,805 $820,540 $1,936,575 Interfund Transfers $1,543,668 $1,506,917 $2,244,400 $2,244,400 $2,243,600 $2,241,600 Total Revenue Source: $28,277,840 $33,449,724 $33,077,386 $36,714,687 $37,351,438 $39,534,732 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 131

Enterprise Funds Revenue by Fund
2026 Budgeted Revenue by Fund
SSSeeewwweeerrr FFFuuunnnddd (((555222...222%%%)))
WWWaaattteeerrr FFFuuunnnddd (((444777...888%%%)))
Budgeted and Historical Revenue by Fund
Millions
Water Fund
Sewer Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$10
$20
$30
$40
$50
Sewer
Fund
$13,770,398 $16,202,579 $18,237,872 $19,466,627 $19,480,153 $21,028,918 Water
Fund
$14,507,442 $17,247,145 $14,839,514 $17,248,060 $17,871,285 $18,505,814 Total: $28,277,840 $33,449,724 $33,077,386 $36,714,687 $37,351,438 $39,534,732 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 132

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Debt Service Revenue Analysis
The revenues for this fund type are derived primarily from special tax assessments, and via interfund transfers from other funds to budget and pay for the annual principal and interest payment on the City's debt. Debt Service Funds are expected to receive $5.0 million in FY26 and FY27. The special tax assessments are primarily for the outstanding General Obligation Bonds for the Gilroy Community Library. The amounts are dictated by the annual required debt service obligation. The interfund transfers are from the Public Facilities Fund to pay for the 2020A and 2022A refunding Lease Revenue Bonds.

Debt Service Funds Revenue by Source
2026 Recommended Revenues by Source
IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((666000...777%%%))) TTTaaaxxxeeesss (((333777...111%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((222...222%%%))) City of Gilroy | FY26 and FY27 Recommended Budget Page 133

Budgeted and Historical Revenues by Source
Millions
Other Financing Sources
Use of Money and Property
Taxes
Interfund Transfers
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
Revenue Source
Taxes $1,927,859 $1,838,255 $1,897,950 $1,825,386 $1,875,000 $1,875,000 Use of Money and
Property
$40,642 $63,375 $22,568 $91,154 $110,409 $111,446
Interfund
Transfers
$3,287,894 $3,063,873 $3,067,998 $3,067,998 $3,068,113 $3,067,988 Other Financing
Sources
$14,587,831 $0 $0 $0 $0 $0
Total Revenue
Source:
$19,844,227 $4,965,503 $4,988,516 $4,984,538 $5,053,522 $5,054,434 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 134

Debt Service Funds Revenue by Fund
2024 Budgeted Revenue by Fund
GGGiiilllrrroooyyy CCCooommm LLLiiibbbrrraaarrryyy DDDsss FFFuuunnnddd (((333888...444%%%))) LLLeeeaaassseee RRReeevvveeennn BBBooonnndddsss DDDsss 222000111333 FFFuuunnnddd (((333222...222%%%))) LLLeeeaaassseee RRReeevvv BBBooonnndddsss SSSeeerrr 222000222000AAA FFFuuunnnddd (((222777...444%%%))) CCCaaa EEEnnneeerrrgggyyy CCCooommmmmm LLLoooaaannn FFFuuunnnddd (((222%%%))) Budgeted and Historical Revenue by Fund
Millions
Ca Energy Comm Loan Fund
Lease Rev Bonds Ser 2020A Fund
Lease Reven Bonds Ds 2013 Fund
Gilroy Com Library Ds Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
$25
City of Gilroy | FY26 and FY27 Recommended Budget Page 135

Gilroy Com Library
Ds Fund
$1,940,453 $1,877,743 $1,909,854 $1,879,010 $1,942,233 $1,943,535 Ca Energy Comm
Loan Fund
$100,453 $101,760 $100,487 $101,940 $100,914 $100,887
Lease Reven Bonds
Ds 2013 Fund
$16,445,942 $1,616,394 $1,616,580 $1,626,217 $1,626,823 $1,626,731 Lease Rev Bonds
Ser 2020A Fund
$1,357,379 $1,369,606 $1,361,595 $1,377,371 $1,383,552 $1,383,281 Total: $19,844,227 $4,965,503 $4,988,516 $4,984,538 $5,053,522 $5,054,434 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 136

Internal Service Funds Revenue Analysis
Internal Service Funds account for the financing of goods and/or services provided by one department to other departments within the City. The Internal Service Funds accumulate the costs related to the service provided and then the costs are charged to the department receiving the goods and/or services based on the quantity of service received. These funds are accounted for separately from the overall totals, as their charges for services and expenditures would have the effect of doubling the total expenditure citywide, since they are essentially transferring money between funds.

Charges for services are tied to the cost of providing the services and replacement costs for equipment within each of these funds. The amount is then allocated as user charges to the benefiting departments. The only other revenue that is typically received in these funds includes interest income on money held within the fund, repayment of any internal loans, and any transfers that are made occasionally for one-time purchases.

Overall, the user charges are expected to slightly decrease in FY26 compared to FY25 due to the higher onetime investments in the fleet made in FY25. User charges are expected to increase in FY27 compared to FY26.

The Fleet Fund is budgeted to receive $2.1 million in FY26 and $2.3 million in FY27 as internal service charges for providing fleet-related maintenance to various departments. In addition, the Fleet Fund will receive $0.5 million as a one-time transfer from the General Fund in FY26 and FY27 for additional fleet investments, and $0.7 million as a repayment of an inter-fund loan from the Public Facilities Fund in FY26 and in FY27.

The Facilities Fund is budgeted to receive $4.0 million in FY26 and $4.1 million in FY27 as internal service charges to various departments. In addition, the Fund will utilize fund balance to fund $0.3 million in FY26 and $0.4 million in FY27 for various city facilities repairs and improvements.

The Information Technology Fund is budgeted to receive $3.6 million in FY26 and $3.5 million in FY27 as internal service charges for providing IT-related services to the various departments. In addition, the IT fund will utilize fund balances to fund one-time major IT-related equipment replacement and other technology projects.

The Equipment Outlay Fund is budgeted to utilize its remaining available fund balance for several improvements at the Chestnut and Las Animas Fire Stations to modernize the facilities. Worker's Compensation Fund is budgeted to receive $2.1 million in FY26 and $2.3 million in FY27 as worker's compensation charge to the various operating departments for related claims cost and excess insurance premiums.

The General Liability Fund is budgeted to receive $2.9 million in FY26 and $3.2 million in FY27 as insurance charges to various operating departments to pay for related insurance premiums for Citywide assets.

City of Gilroy | FY26 and FY27 Recommended Budget Page 137

Internal Services Revenue by Source
2026 Recommended Revenues by Source
CCChhhaaarrrgggeeesss fffooorrr SSSeeerrrvvviiiccceeesss (((888555...666%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((777...111%%%))) UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((555...111%%%))) OOOttthhheeerrr RRReeevvveeennnuuueeesss (((222...222%%%))) Budgeted and Historical Revenues by Source
Millions
Other Revenues
Use of Money and Property
Interfund Transfers
Charges for Services
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$2.5
$5
$7.5
$10
$12.5
$15
$17.5
$20
City of Gilroy | FY26 and FY27 Recommended Budget Page 138

Revenue Source
Charges for
Services
$10,507,286 $14,817,232 $14,689,290 $14,689,291 $14,724,920 $15,365,608 Use of Money
and Property
$398,336 $908,060 $470,647 $1,098,342 $882,598 $797,902 Other Revenues $332,935 $332,754 $2,043,178 $445,000 $371,000 $372,000 Interfund
Transfers
$819,009 $0 $845,506 $845,506 $1,222,572 $1,163,033
Total Revenue
Source:
$12,057,566 $16,058,046 $18,048,621 $17,078,139 $17,201,090 $17,698,543 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 139

Internal Services Revenue by Fund
2026 Recommended Revenue by Fund
FFFaaaccciiillliiitttyyy SSSeeerrrvvviiiccceeesss FFFuuunnnddd (((222444...555%%%))) IIInnnfffooorrrmmmaaatttiiiooonnn TTTeeeccchhhnnnooolllooogggyyy FFFuuunnnddd (((222222...555%%%))) FFFllleeeeeettt SSSeeerrrvvviiiccceeesss FFFuuunnnddd (((222000...222%%%))) LLLiiiaaabbbiiillliiitttyyy IIInnnsssuuurrraaannnccceee FFFuuunnnddd (((111999%%%))) WWWooorrrkkkeeerrr'''sss CCCooommmpppeeennnsssaaatttiiiooonnn FFFuuunnnddd (((111333...444%%%))) EEEqqquuuiiipppmmmeeennnttt OOOuuutttlllaaayyy (((000...444%%%))) Budgeted and Historical Revenue by Fund
Millions
Equipment Outlay
Worker's Compensation Fund
Fleet Services Fund
Liability Insurance Fund
Information Technology Fund
Facility Services Fund
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$5
$10
$15
$20
City of Gilroy | FY26 and FY27 Recommended Budget Page 140

Fleet Services Fund $2,541,591 $2,708,123 $3,228,333 $3,339,187 $3,466,406 $3,547,839 Worker's
Compensation Fund
$1,565,505 $1,773,556 $1,716,146 $1,853,750 $2,309,647 $2,497,920 Liability Insurance
Fund
$1,563,418 $2,394,484 $2,967,996 $3,022,267 $3,260,303 $3,570,376 Facility Services Fund $2,681,037 $4,430,082 $4,444,990 $4,536,101 $4,217,529 $4,334,762 Information
Technology Fund
$2,960,426 $4,580,411 $3,971,420 $4,146,525 $3,870,793 $3,729,009 Equipment Outlay $745,589 $171,390 $1,719,736 $180,309 $76,412 $18,637 Total: $12,057,566 $16,058,046 $18,048,621 $17,078,139 $17,201,090 $17,698,543 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 141

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Agency and Trust Funds Revenue Analysis
The primary revenue source for this fund type is taxes. The total revenues for this Fund Type are expected to be $1.0 million in FY26 and FY27. The tax revenues are special tax assessments levied on the Highway 152 assessment district improvements which were bond funded. The annual levy is assessed and remitted to the City, which in turn uses it to pay the annual debt service. This Fund Type also receives an interest allocation on monies held within respective Agency and Trust Funds.

Agency and Trust Funds Revenue by Source
Recommended 2026 Revenues by Source
TTTaaaxxxeeesss (((999555...222%%%)))
UUUssseee ooofff MMMooonnneeeyyy aaannnddd PPPrrrooopppeeerrrtttyyy (((444...888%%%))) Budgeted and Historical Revenues by Source
Millions
Other Revenues
Interfund Transfers
Use of Money and Property
Taxes
FY2023
FY2024
FY2025
FY2026
FY2027
$0
$1
$0.25
$0.5
$0.75
$1.25
City of Gilroy | FY26 and FY27 Recommended Budget Page 142

Revenue Source
Taxes $932,693 $934,763 $897,525 $952,000 $955,000 $955,000 Use of Money and
Property
$19,831 $43,390 $44,491 $43,894 $47,656 $49,351
Other Revenues $2,918 $4,084 $0 $0 $0 $0
Interfund
Transfers
$2,478 $2,076 $0 $0 $0 $0
Total Revenue
Source:
$957,921 $984,313 $942,016 $995,894 $1,002,656 $1,004,351 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
Agency and Trust Funds Revenue by Fund
Deposit Revolving
Fund
$0.00 $1,287.13 $30,454.00 $0.00 $1,232.00 $1,232.00
Trusts Specific Fund $5,287.02 $10,092.36 $3,399.00 $10,769.00 $449.00 $449.00 Henry Miller Poor $345.69 $689.31 $241.00 $755.00 $684.00 $635.00 Hwy 152 Bond Series
2018 Fund
$947,820.81 $964,197.32 $906,974.00 $981,730.00 $999,306.00 $1,001,104.00 Employee Wellness $3,519.86 $3,727.19 $79.00 $0.00 $0.00 $0.00 Museum
Endowment Trust
$743.39 $3,912.69 $727.00 $2,187.00 $537.00 $483.00
Sr Advisory Board $204.09 $406.92 $142.00 $453.00 $448.00 $448.00 Total: $957,920.86 $984,312.92 $942,016.00 $995,894.00 $1,002,656.00 $1,004,351.00 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 143

PERSONNEL
City of Gilroy | FY26 and FY27 Recommended Budget Page 144

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Personnel
Overall Personnel Discussion
Personnel costs account for the largest category of expenses for the City. Personnel citywide is $66.1 million or 32% of total expenses ($207.3 million). The General Fund share of personnel costs is $54.2 million or 82% of the total $66.1 million. Changes in personnel costs can have dramatic implications, due to the large base to which any change is applied. It is some of these changes that have been discussed, and will continue to be discussed, as the City endures the ever-present threats of CalPERS pension liabilities and personnel cost increases.

Changes in Personnel and Cost
Since 2020, Gilroy has experienced a 9% growth in population from 57,084 in FY20 and projection for FY25 of 62,205 according to the California Department of Finance. During the same period, the City's workforce has grown by about 3% from 284 Full Time Equivalent (FTE) at the start of 2020 to 292 at the beginning of 2025. The recommended budgets for FY26 and FY27 represent a few strategic investments in the workforce to continue to meet the demands of all Gilroy residents and the continued organization of the Utilities Department. Overall, personnel costs are projected to be $66.1 million and $69.1 million in FY26 and FY27, respectively.

The City is currently undergoing labor negotiations with the Gilroy Police Officers Association (GPOA) and Gilroy Management Association (GMA), to renew memorandum of understanding (MOU)s which expire June 30, 2025.

Labor Agreements with the AFSCME, Local 101 General and Supervisory Units, and the Gilroy Firefighters Association, IAFF, Local 2805, are in effect until June 30, 2026. Fiscal impact changes related to the final negotiated MOUs will be presented to the City Council and will include any related budgetary adjustments at the time of approval.

CalPERS
CalPERS will be impacting the City’s financial position at an increasing rate for many fiscal years to come.

CalPERS costs are budgeted at $16.7 million in FY26 and $17.4 million in FY27, including the Unfunded Accrued Liability (UAL) payments of $10.4 million and $10.9 million in FY26 and FY27, respectively.

UAL is the most rapidly growing component of pension costs, primarily due to plan assumption changes involving mortality rates and less-than-assumed rates of investment return, increasing the annual payments the City makes to fund the current pension obligations. This UAL represents the shortfall/gap between what is needed to pay retiree benefits and the current assets the City has in its accounts with CalPERS. The City’s current UAL as of June 30, 2023, is $117.4 million with a funded status of 68% and does not consider the investment rate of return of 9.3% experienced by CalPERS for FY24, which is slightly higher than CalPERS' target investment rate of return of 6.8%. Considering the FY24 investment return, the City’s UAL is projected to decrease to $111.0 million as of June 30, 2024.

In recent years, the City Council has taken actions to address the City’s pension obligations, including establishing and funding a Section 115 Trust, adopting a pension funding policy, and making annual contributions to the Section 115 Trust (which sets aside current funds for future pension liability payments) according to the adopted policy. As of February 2025, the Pension Section 115 Trust has a balance of $4.5 million, with an annual rate of return of 11%. Given the year-over-year projected increases of the annual UAL payments, continuing to grow the Pension Trust through additional deposits and investment earnings is recommended and will help lessen the impact on the General Fund in future years when UAL payments are highest.

Below is an illustrative example of City’s current UAL payments through 2043, which assumes 6.8% discount rate for CalPERS, 9.3% FY24 CalPERS investment return, and that CalPERS will meet its target of 6.8% investment returns for FY25 and onwards, as well as the City’s continuing its contributions to the Pension Trust based on Council adopted policy. It is expected that in the next couple of years, beginning in FY29, the City will be able to leverage the Pension Trust (withdraw funds) in a strategic manner, to help pay for a portion of the annual UAL payments and lessen the burden to the City’s General Fund which will preserve City services until the pension cliff is lowered in 2034.

City of Gilroy | FY26 and FY27 Recommended Budget Page 145

Health Insurance Benefit
The City offers a cafeteria plan for medical insurance. The cafeteria plan has historically increased 5% per year.

However, as a result of the last labor negotiations, certain bargaining groups agreed to freeze the respective 5% increase in City contributions for health in exchange for other benefits. Based on current coverage selection by employees, health benefit costs are budgeted at $7.0 million in FY26, and projected to increase by approximately 4% to $7.3 million in FY27. As previously mentioned, at least two of the bargaining units are currently undergoing labor negotiations for MOUs expiring on June 30, 2025. Any fiscal impacts resulting for the final agreed-upon terms will be communicated to the Council and related budgetary adjustments presented, as necessary, at a future date.

Contra Personnel Cost
A Contra Personnel Account is used within the General Fund to account for expected personnel cost savings due to vacancies throughout the Fiscal Year. Personnel costs budgeted constitute the cost assuming the City is fully staffed for the entire year. However, in practice there are enough retirements and employee turnover each year that the budgeted amounts are rarely reached. This leaves funding unused to provide services to residents.

The use of the Contra Personnel Account allows the City to utilize these personnel savings and appropriate them to sustain and even enhance service levels.

The average rate of savings over the past several years is approximately 8%. This percentage is being applied to personnel costs in the General Fund such as salary, CalPERS, medical insurance, and Medicare costs to derive a Contra Personnel amount of $4.3 million in FY26 and $4.4 million in FY27.

Workers' Compensation Claims
The City has experienced dramatic increases in workers' compensation claims costs in recent years. The average annual cost of claims for the period of FY21 – FY23 was $675,436 per year. Comparing this average cost to the FY24 claims costs ($1,152,085) documents that claims costs increased by over 70%. As a result, the related workers' compensation liability has increased dramatically from $3.6 million in FY21 to $7.7 million as of FY24.

The City has attempted to accumulate adequate funds in the Workers' Compensation Fund to address the increasing liability. However, it has an outstanding unfunded liability of approximately $3.0 million as of June 30, 2024. As a result, the workers' compensation charge has been increased for FY26 to address the unfunded liability.

Positions Added or Reclassified
As part of the budgeting process, strategic investments in personnel have been made to enhance the level of service for the residents of Gilroy. Below are the positions that are being added or reclassified for this biennial budget:

Add 1.0 FTE Economic Development Director (Administration) Add 1.0 FTE Recreation Supervisor (Administration)
Add 1.0 FTE Recreation Coordinator (Administration)
Add 1.0 FTE Management Analyst for Recreation Division (Administration) Add 1.0 FTE Fire Division Chief (Fire)
Reclassify 2.0 FTE Firefighters to Fire Captains in FY26 (Fire) Reclassify 3.0 FTE Firefighters to Fire Engineers in FY27 (Fire) Add 1.0 FTE Water Quality Specialist (Utilities)
Add 1.0 FTE Water Operator (Utilities)
City of Gilroy | FY26 and FY27 Recommended Budget Page 146

Reclassify 1.0 FTE Maintenance Worker II to Water Operator (Utilities) Reclassify 1.0 FTE Operations Services Supervisor to Water Systems Superintendent (Utilities) Reclassify 1.0 FTE Office Assistant II to Management Assistant (Utilities) Add 1.0 FTE Accounting Asisstant (Finance)
Reclassify 1.0 FTE Management Analyst to Senior Management Analyst (Community Development) City of Gilroy | FY26 and FY27 Recommended Budget Page 147

Position Control List Citywide
The table below shows the number of full-time positions included in the FY26 and FY27 Recommended Budgets. This table does not include the seven positions for Mayor and Council members.

POSITION
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Accountant 2 2 2 2
Accounting Assistant I/II 7 7 8 8
Accounting Technician - Payroll 1 1 1 1
Accounting Technician I/II 0 0 0 0
Administrative Services & Human Resources
Director/Risk Manager 1 1 1 1
Assistant to the City Administrator 1 1 1 1
Building Inspector I/II 3 3 3 3
Building Official 1 1 1 1
Business Manager 1 1 1 1
City Administrator 1 1 1 1
City Clerk 1 1 1 1
City Engineer/Transportation Engineer 1 1 1 1
Code Enforcement Officer 2 2 2 2
Communication and Engagement Manager 1 1 1 1
Community Coordinator 1 1 1 1
Community Development Director 1 1 1 1
Community Engagement Coordinator 2 2 2 2
Community Resilience Coordinator 1 1 1 1
Community Services Officer 4 4 4 4
Custodian 1 1 1 1
Deputy Director of Community Development 0 1 1 1
Deputy Director of Public Works 1 1 1 1
Deputy Fire Marshal/Haz Mat Supervisor 1 0 0 0
Detention Services Officer 5 5 5 5
Economic Development Director 0 0 1 1
Economic Development Manager 1 1 1 1
Emergency Services & Volunteer Coordinator 1 1 1 1
Engineer I/II 7 6 6 6
Engineering Technician/Inspector I/II/III 3 3 3 3
Environmental Engineer 1 1 1 1
Environmental Programs Manager 1 1 1 1
Equipment Mechanic 2 2 2 2
Facilities and Fleet Superintendent 1 1 1 1
Facilities Maintenance Specialist 2 2 2 2
Finance Director 1 1 1 1
Finance Manager 2 2 2 2
Financial Analyst 1 1 1 1
Fire Administration Technician 1 1 1 1
Fire Captain 10 10 12 12
Fire Chief 1 1 1 1
Fire Division Chief 3 3 4 4
Fire Engineer 9 9 9 12
City of Gilroy | FY26 and FY27 Recommended Budget Page 148

POSITION
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Fire Marshal 0 1 1 1
Firefighter I/II 19 21 19 16
Geographic Information Systems Analyst 1 1 1 1
Hazardous Materials Inspector I/II 2 2 2 2
HCD Technician 1 0 0 0
Housing and Community Services Coordinator 0 1 1 1
Housing and Community Services Manager 1 1 1 1
Human Resources Analyst 2 2 2 2
Human Resources Technician II 1 1 1 1
IT Applications Analyst 1 1 1 1
IT Manager 1 1 1 1
IT Technician I/II 1 1 1 1
Maintenance Worker I/II 25 25 24 24
Management Analyst 7 7 7 7
Management Assistant 6 6 7 7
Network Administrator 1 1 1 1
Office Assistant I/II 4 4 3 3
Operations Services Supervisor 3 4 3 3
Permit Technician 3 3 3 3
Planner I/II 2 2 2 2
Planning Manager 1 1 1 1
Planning Technician 1 1 1 1
Police Captain 3 3 3 3
Police Chief 1 1 1 1
Police Corporal 8 9 9 9
Police Crime Analyst 1 1 1 1
Police Officer 44 45 45 45
Police Records Supervisor 1 1 1 1
Police Records Technician I/II 6 6 6 6
Police Sergeant 11 11 11 11
Project Manager 0 1 1 1
Property and Evidence Technician 1 1 1 1
Public Safety Communications Supervisor 1 1 1 1
Public Safety Communicator 13 14 14 14
Public Safety Systems Administrator 1 1 1 1
Public Works Director 1 1 1 1
Recreation Coordinator 1 1 2 2
Recreation Manager 1 1 1 1
Recreation Supervisor 1 1 2 2
Senior Civil Engineer 2 3 3 3
Senior Environmental Engineer 1 1 1 1
Senior Equipment Mechanic 1 1 1 1
Senior Facilities Maintenance Specialist 1 1 1 1
Senior Hazardous Materials Inspector 1 1 1 1
Senior Maintenance Worker 5 5 5 5
Senior Management Analyst 0 0 1 1
Senior Planner 2 2 2 2
Supervising Accounting Technician 1 1 1 1
City of Gilroy | FY26 and FY27 Recommended Budget Page 149

POSITION
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Supervising Code Enforcement Officer 1 1 1 1
Utilities Director 1 1 1 1
Utilities Operations Manager 0 1 1 1
Water Operator 0 0 2 2
Water Quality Specialist 0 0 1 1
Water Systems Superintendent 0 0 1 1
Youth Task Force Coordinator 1 1 1 1
TOTAL FULL-TIME PERSONNEL 282 291 299 299
City of Gilroy | FY26 and FY27 Recommended Budget Page 150

Position Control List by Department
The table below shows the number of full-time positions by Department included in the FY26 and FY27 Recommended Budgets. This table does not include the seven positions for Mayor and Council members.

DEPARTMENT
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
ADMINISTRATION 15 15 18 18
Assistant to the City Administrator 1 1 1 1
City Administrator 1 1 1 1
City Clerk 1 1 1 1
Community Coordinator 1 1 0 0
Communication and Engagement Manager 1 1 1 1
Community Engagement Coordinator 1 1 1 1
Community Resilience Coordinator 1 1 1 1
Economic Development Director 0 0 1 1
Economic Development Manager 1 1 1 1
Emergency Services & Volunteer Coordinator 1 1 1 1
Management Analyst 1 1 2 2
Management Assistant 1 1 1 1
Office Assistant I/II 1 1 1 1
Recreation Coordinator 1 1 2 2
Recreation Manager 1 1 1 1
Recreation Supervisor 1 1 2 2
ADMINISTRATIVE SERVICES 14 14 14 14
Administrative Services & Human Resources
Director/Risk Manager 1 1 1 1
Custodian 1 1 1 1
Equipment Mechanic 2 2 2 2
Facilities Maintenance Specialist 2 2 2 2
Facilities and Fleet Superintendent 1 1 1 1
Human Resources Analyst 2 2 2 2
Human Resources Technician II 1 1 1 1
Management Assistant 2 2 2 2
Senior Equipment Mechanic 1 1 1 1
Senior Facilities Maintenance Specialist 1 1 1 1
COMMUNITY DEVELOPMENT 26 27 27 27
Building Inspector I/II 3 3 3 3
Building Official 1 1 1 1
Code Enforcement Officer 2 2 2 2
Community Development Director 1 1 1 1
Deputy Director of Community Development 0 1 1 1
Deputy Fire Marshal/Haz Mat Supervisor 1 0 0 0
Fire Marshal 0 1 1 1
Hazardous Materials Inspector I/II 2 2 2 2
HCD Technician 1 0 0 0
Housing and Community Services Coordinator 0 1 1 1
Housing and Community Services Manager 1 1 1 1
Management Analyst 1 1 0 0
Management Assistant 1 1 1 1
City of Gilroy | FY26 and FY27 Recommended Budget Page 151

DEPARTMENT
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Office Assistant I/II 1 1 1 1
Permit Technician 3 3 3 3
Planner I/II 2 2 2 2
Planning Technician 1 1 1 1
Planning Manager 1 1 1 1
Supervising Code Enforcement Officer 1 1 1 1
Senior Hazardous Materials Inspector 1 1 1 1
Senior Management Analyst 0 0 1 1
Senior Planner 2 2 2 2
FINANCE 21 21 22 22
Accountant 2 2 2 2
Accounting Assistant I/II 7 7 8 8
Accounting Technician - Payroll 1 1 1 1
Finance Director 1 1 1 1
Finance Manager 2 2 2 2
Financial Analyst 1 1 1 1
Geographic Information Systems Analyst 1 1 1 1
IT Applications Analyst 1 1 1 1
IT Manager 1 1 1 1
IT Technician I/II 1 1 1 1
Network Administrator 1 1 1 1
Public Safety Systems Administrator 1 1 1 1
Supervising Accounting Technician 1 1 1 1
FIRE 44 46 47 47
Fire Administration Technician 1 1 1 1
Fire Captain 10 10 12 12
Fire Chief 1 1 1 1
Fire Division Chief 3 3 4 4
Fire Engineer 9 9 9 12
Firefighter I/II 19 21 19 16
Management Analyst 1 1 1 1
POLICE 104 107 108 108
Community Coordinator 0 0 1 1
Community Engagement Coordinator 1 1 1 1
Community Services Officer 4 4 4 4
Police Crime Analyst 1 1 1 1
Detention Services Officer 5 5 5 5
Management Analyst 1 1 1 1
Management Assistant 1 1 1 1
Office Assistant I/II 1 1 1 1
Police Captain 3 3 3 3
Police Chief 1 1 1 1
Police Corporal 8 9 9 9
Police Officer 44 45 45 45
Police Records Technician I/II 6 6 6 6
Police Sergeant 11 11 11 11
Property and Evidence Technician 1 1 1 1
Public Safety Communications Supervisor 1 1 1 1
City of Gilroy | FY26 and FY27 Recommended Budget Page 152

DEPARTMENT
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Public Safety Communicator 13 14 14 14
Police Records Supervisor 1 1 1 1
Youth Task Force Coordinator 1 1 1 1
PUBLIC WORKS 31 32 32 32
City Engineer/Transportation Engineer 1 1 1 1
Deputy Director of Public Works 1 1 1 1
Engineer I/II 5 5 5 5
Engineering Technician/Inspector I/II/III 3 3 3 3
Environmental Programs Manager 1 1 1 1
Maintenance Worker I/II 10 10 10 10
Management Analyst 2 2 2 2
Management Assistant 1 1 1 1
Operations Services Supervisor 2 2 2 2
Project Manager 0 1 1 1
Public Works Director 1 1 1 1
Senior Civil Engineer 2 2 2 2
Senior Maintenance Worker 2 2 2 2
UTILITIES 27 29 31 31
Utilities Director 1 1 1 1
Utilities Operations Manager 0 1 1 1
Business Manager 1 1 1 1
Engineer I/II 2 1 1 1
Environmental Engineer 1 1 1 1
Maintenance Worker I/II 15 15 14 14
Management Analyst 1 1 1 1
Management Assistant 0 0 1 1
Office Assistant I/II 1 1 0 0
Operations Services Supervisor 1 2 1 1
Senior Civil Engineer 0 1 1 1
Senior Environmental Engineer 1 1 1 1
Senior Maintenance Worker 3 3 3 3
Water Operator 0 0 2 2
Water Quality Specialist 0 0 1 1
Water Systems Superintendent 0 0 1 1
TOTAL FULL-TIME PERSONNEL 282 291 299 299
City of Gilroy | FY26 and FY27 Recommended Budget Page 153

Personnel Summary by Division

DIVISION
FY24
Amended
FY25
Amended
FY26
Recommended
FY27
Recommended
Backflow Prevention 0.6 0.7 0.9 0.9
Building 8.5 8.5 7.0 7.0
City Administrator 3.0 3.0 3.0 3.0
City Clerk 2.0 2.0 2.0 2.0
Code Enforcement 0.0 0.0 3.0 3.0
Community Development Administration 2.0 3.0 4.8 4.8
Community Engagement 2.0 2.0 2.0 2.0
Customer Service 4.0 4.0 0.0 0.0
Economic Development 1.0 1.0 2.0 2.0
Emergency Operations Center 2.0 2.0 2.0 2.0
Engineering 4.3 5.3 13.7 13.7
Environmental 1.0 1.0 1.0 1.0
Facilities Administration 5.0 5.0 5.0 5.0
Finance Administration 3.7 3.7 3.7 3.7
Finance Sewer Utility Billng 5.8 5.8 6.1 6.1
Finance Water Utility Billing 5.6 5.6 6.1 6.1
Fire Administration 3.0 3.0 3.0 3.0
Fire Operations 41.0 43.0 44.0 44.0
Firehazmat Pretreat 2.7 2.7 2.3 2.3
Fleet Administration 4.0 4.0 4.0 4.0
Haz Mat Fire Pretreatment 1.4 1.4 2.0 2.0
Housing And Community Services 2.0 2.0 2.0 2.0
Human Resources Admin 5.0 5.0 5.0 5.0
IT Administration 6.0 6.0 6.2 6.2
Landscaping 7.0 7.0 8.5 8.5
Planning 5.5 5.5 6.0 6.0
Police Administration 9.0 9.0 11.0 11.0
Police Communications 14.0 15.0 15.0 15.0
Police Investigations 8.0 8.0 8.0 8.0
Police Patrol Operations 64.0 66.0 66.0 66.0
Police Records 9.0 9.0 8.0 8.0
Community Facilities Fund 0.0 0.0 0.5 0.5
Recreation Administration 5.0 5.0 7.0 7.0
SCRWA Administration 2.0 2.0 2.5 2.5
Sewer System 16.0 17.5 10.8 10.8
Street Maintenance 5.2 5.2 6.8 6.8
Water System 22.0 22.4 18.6 18.6
TOTAL FULL-TIME PERSONNEL 282.0 291.0 299.0 299.0
City of Gilroy | FY26 and FY27 Recommended Budget Page 154

Personnel Summary by Department
PPPooollliiiccceee 111000888 FFFTTTEEE (((333666...111222%%%))) FFFiiirrreee 444777 FFFTTTEEE (((111555...777222%%%))) PPPuuubbbllliiiccc WWWooorrrkkksss 333222 FFFTTTEEE (((111000...777000%%%))) UUUtttiiillliiitttiiieeesss 333111 FFFTTTEEE (((111000...333777%%%))) CCoommmmuunniittyy DDeevveellooppmmeenntt
2277 FFTTEE ((99..0033%%))
Community Development
27 FTE (9.03%)
FFFiiinnnaaannnccceee 222222 FFFTTTEEE (((777...333666%%%))) AAAdddmmmiiinnniiissstttrrraaatttiiiooonnn 111888 FFFTTTEEE (((666...000222%%%))) AAAdddmmmiiinnniiissstttrrraaatttiiivvveee SSSeeerrrvvviiiccceeesss 111444 FFFTTTEEE (((444...666888%%%))) Personnel Summary by Fund Type
GGGeeennneeerrraaalll FFFuuunnnddd 222333000 FFFTTTEEE (((777666...999222%%%))) EEEnnnttteeerrrppprrriiissseee FFFuuunnndddsss 444777 FFFTTTEEE (((111555...777222%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceee FFFuuunnndddsss 111555 FFFTTTEEE (((555...000222%%%))) SSSpppeeeccciiiaaalll RRReeevvveeennnuuueee FFFuuunnndddsss 777 FFFTTTEEE (((222...333444%%%))) Recommended Budgets for FY26 and FY27 have a total of 299 full-time positions.

City of Gilroy | FY26 and FY27 Recommended Budget Page 155

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DEPARTMENTS
City of Gilroy | FY26 and FY27 Recommended Budget Page 156

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All Departments Summary
The City of Gilroy is organized into nine primary operating departments, which include:

City Council
Administration
Administrative Services
Finance
Community Development
Fire
Police
Utilities
Public Works
The below matrix illustrates the relationship between the City's departments and the respective fund types.

Department
General
Fund
Special
Revenue
Capital
Internal
Service
Enterprise Agency/Trust
City Council X
Administration X X X
Administrative
Services
X X X
Finance X X X X
Community
Development
X X X
Fire X X X
Police X X
Utilities X X
Public Works X X X X
Citywide Organizational Chart
City of Gilroy | FY26 and FY27 Recommended Budget Page 157

Citywide Expenditures by Expense Type
Recommended 2026 Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((333111...999%%%))) CCCaaapppiiitttaaalll OOOuuutttlllaaayyy (((333000...444%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((111222...777%%%))) IIInnnttteeerrrfffuuunnnddd TTTrrraaannnsssfffeeerrrsss (((888...999%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((888...555%%%))) OOOttthhheeerrr EEExxxpppeeennnssseeesss aaannnddd CCChhhaaarrrgggeeesss (((777...777%%%))) Expense Objects
Personnel
Expenses
$52,678,912 $60,574,140 $64,640,026 $62,501,108 $66,111,300 $69,064,777 Materials and
Services
$19,295,298 $20,684,043 $28,610,985 $26,166,692 $26,253,271 $27,421,591 Capital Outlay $11,345,832 $16,513,494 $88,713,757 $26,038,661 $63,006,816 $56,430,084 Interfund
Transfers
$13,537,526 $14,580,089 $20,684,645 $24,336,961 $18,353,149 $18,927,951 Internal Services
Charges
$11,413,825 $16,065,550 $15,970,385 $15,970,351 $17,626,343 $18,220,668 Other Expenses
and Charges
$32,535,541 $21,414,140 $15,043,664 $15,219,091 $15,933,968 $16,521,596 Total Expense
Objects:
$140,806,934 $149,831,456 $233,663,463 $170,232,864 $207,284,847 $206,586,667 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 158

City Council
Overall Department Description
The Gilroy City Council serves as the governing body of the City vested with the regulatory and corporate power of the municipal corporation. The Council establishes policy and gives direction and guidance to the City Administrator for the effective and efficient operation of City services to enhance the lives of the citizens of Gilroy.

The objectives of the City Council include:

Enact laws, regulations, and policies with respect to municipal affairs by acting on the recommendations of staff and advisory bodies at council meetings.

Appoint members to the City advisory bodies in accordance with the City's Charter and City Code.

Provide guidance to the City negotiating team related to collective bargaining agreements.

Actively maintain membership in groups such as the League of California Cities, Cities Association of Santa Clara and Sister Cities, and represent the City in the activities of these organizations.

Respond to and act upon input, requests and feedback received from the community.

Meet with the City Executive Management Team on an annual basis to promote team building, enhance communications, and develop goals and objectives for subsequent fiscal years.

City Council Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((999444...999%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((555...111%%%))) City of Gilroy | FY26 and FY27 Recommended Budget Page 159

Expense Objects
Personnel
Expenses
$198,622 $216,654 $219,580 $265,917 $323,566 $335,865
Materials and
Services
$42,722 $18,770 $21,870 $22,424 $17,235 $24,225
Total Expense
Objects:
$241,344 $235,425 $241,450 $288,341 $340,801 $360,090
Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 160

Administration
Jimmy Forbis
City Administrator
Overall Department Description
The Administration Department is a central services department that provides oversight and guidance to all departments within the City of Gilroy. Operational oversight of the Department is provided by the City Administrator through general direction provided to the offices contained within. These offices include the following:

City Administrator
City Attorney
City Clerk
Communication and Engagement
Economic Development
Emergency Services
Recreation
Administration Organizational Chart
City of Gilroy | FY26 and FY27 Recommended Budget Page 161

Administration Expenditures by Division/Function
2026 Recommended Expenditures by Division/Function
RRReeecccrrreeeaaatttiiiooonnn (((444555%%%)))
EEEcccooonnnooommmiiiccc DDDeeevvveeelllooopppmmmeeennnttt (((111555...777%%%))) CCCiiitttyyy AAAdddmmmiiinnniiissstttrrraaatttooorrr (((111222...999%%%))) CCCiiitttyyy AAAttttttooorrrnnneeeyyy (((777...888%%%))) CCCooommmmmmuuunnniiicccaaatttiiiooonnnsss &&& EEEnnngggaaagggeeemmmeeennnttt (((666...999%%%))) EEEmmmeeerrrgggeeennncccyyy SSSeeerrrvvviiiccceeesss (((666...333%%%))) CCCiiitttyyy CCCllleeerrrkkk (((555...555%%%)))
Expenditures
Administration
City Administrator $936,286 $789,971 $1,023,026 $880,312 $965,765 $990,797 City Attorney $612,281 $721,655 $584,761 $632,518 $580,000 $580,000 Communications &
Engagement
$346,712 $385,745 $561,373 $416,194 $513,009 $539,685
City Clerk $570,540 $304,424 $624,631 $561,367 $410,517 $727,130 Emergency Services $33,277 $447,908 $505,855 $481,670 $467,664 $482,969 Economic
Development
$12,414 $672,316 $978,724 $1,044,789 $1,176,700 $1,339,908 Total Administration: $2,511,509 $3,322,019 $4,278,369 $4,016,850 $4,113,655 $4,660,489 Recreation $1,755,215 $1,837,138 $2,203,145 $1,906,883 $3,367,661 $2,547,750 Total Recreation: $1,755,215 $1,837,138 $2,203,145 $1,906,883 $3,367,661 $2,547,750 Total Expenditures: $4,266,724 $5,159,157 $6,481,514 $5,923,733 $7,481,316 $7,208,239 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025
Projected
Actuals
FY2026
Recommended
Budget
FY2027
Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 162

City Administrator
Jimmy Forbis
City Administrator
Description
The City Administrator serves as the administrative head of the city organization, providing direction to staff on the implementation of the City Council's goals and objectives on behalf of the community. The City Administrator is responsible for the day-to-day efficient performance of all City operations, implementing Council policy, formulating staff recommendations to Council on policy and other matters, and preparing and submitting the annual budget. The City Administrator also serves as the Director of Emergency Services, guiding the effective response of City resources during emergency events. The City Administrator’s Office (CAO) will continue to provide the City Council with professional and thorough support in examining and analyzing issues of community importance.

FY24 and FY25 Highlights
Provided administrative support to the re-formed Downtown Committee for the two years authorized by the City Council.

Hired a full-time, fully grant-funded Community Resilience Coordinator, who has taken steps to advance community readiness for natural and human-made emergencies.

Undertook efforts to address littering, illegal dumping and garbage issues, including the creation of a part-time litter removal team, created community cleanup days, and worked through other departments to help address litter issues.

Continued pursuit of the recreation destination economic development approach, including the Gilroy Ice Center, and evaluating the 536 Acres at Hecker Pass, including completing the Surplus Lands Act process on all 536 acres.

Secured a consultant and commenced the public engagement process of the Civic Center Master Plan update.

FY26 and FY27 Workplan
Implement Council's Strategic Plan for FY26 and FY27.

Complete the update of the Civic Center Master Plan, including analysis of potential funding options.

Continued progress towards the Ice Center at the Sports Park.

Enhance the City's Economic Development efforts by forming the Economic Development Department.

Further evaluate the City's customer service strategies, and identify potential improvements to resident and customer experiences.

FY26 and FY27 Activity Goals
Presentation of the final, updated Civic Center Master Plan to Council.

Conduct a comparison citizen satisfaction survey in FY27.

Attainment of Council's Strategic Plan deliverables.

Financial/Budget Implications
None.

City of Gilroy | FY26 and FY27 Recommended Budget Page 163

City Administrator Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((888666%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((999...555%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((444...555%%%))) Expense Objects
Personnel
Expenses
$808,618 $715,476 $888,056 $754,506 $830,566 $854,306
Materials and
Services
$127,668 $35,076 $92,591 $83,427 $91,950 $91,950
Internal Services
Charges
$0 $39,420 $42,379 $42,379 $43,249 $44,541
Total Expense
Objects:
$936,286 $789,971 $1,023,026 $880,312 $965,765 $990,797 Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 164

City Attorney
Andrew Faber
City Attorney
Description
The City Attorney serves as the legal advisor to the City Council and staff, providing legal representation and analysis on policy and day-to-day business matters under consideration. The City contracts with Berliner Cohen, LLP for City Attorney services. The City Attorney attends City Council and Planning Commission meetings and fulfills duties under the provisions of the City Charter. The objectives of the City Attorney include:

Provide guidance to the City Council and staff on all new state and federal laws and regulations that may impact the City.

Serve as legal counsel, attending all regular City Council and Planning Commission meetings.

Conduct an initial review of contracts and agreements.

Review and approve, as to form and content, ordinances, resolutions, contracts, and other legal documents.

Advise the Council and staff on questions of law.

Represent the City in legal actions and other actions to which the City is a party.

City Attorney Expenditures by Expense Type
Expense Objects
Materials and
Services
$612,281 $721,655 $584,761 $632,518 $580,000 $580,000
Total Expense
Objects:
$612,281 $721,655 $584,761 $632,518 $580,000 $580,000
Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 165

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City Clerk
Vacant
City Clerk
Description
The City Clerk is appointed by the City Council and reports to the City Administrator. The City Clerk’s Office (CCO) is responsible for election administration, and serves as a legislative auditor, filing officer, the official custodian of city records, and compliance officer for federal, state, and local statutes, including the Political Reform Act of 1974, the Brown Act, and the Public Records Act. The City Clerk provides administrative support to the City Council and manages public inquiries and official functions. The City Clerk coordinates the preparation and assembly of agendas for the City Council and attends, records, and prepares the minutes of the City Council. The City Clerk serves as the Clerk of the City Council, the Secretary to the Gilroy Public Facilities Financing Authority, and the Secretary to the Open Government Commission.

FY24 and FY25 Highlights
Managed the November 2024 General Municipal Election for three City Council Member Seats, the Mayor's Seat, and a Special Election for the Measure C Public Safety Sales Tax Ballot measure.

Created a New Candidate Guide, supported candidates, and produced all public election information.

Transitioned to new agenda and meeting management software.

Implemented a new Boards, Commissions, and Committees application system.

FY26 and FY27 Workplan
Manage the new software application for agenda and meeting management and video hosting for all boards, commissions, and committees.

Scan all boards, commissions, and committees' resolutions, minutes, and agendas into the City's digital repository, Laserfiche, to increase transparency.

Develop and evaluate options for enhanced record-keeping and document management practices.

Management of the November 2026 General Municipal Election.

Review of the Records Retention Schedule.

Implement new software to archive text messages, emails, and social media pages to help be in compliance with the California Public Records Act.

Engage in continuing education for all staff in the City Clerk's Office.

FY26 and FY27 Activity Goals
Create the 2026 Candidate Guide and election public information.

Utilize existing software and identify additional options to further enhance and improve efficiencies within the City Clerk's Office workflow.

Continue education and training for City Clerk Office staff to obtain certifications and specialized training to enhance the services of the Office.

City of Gilroy | FY26 and FY27 Recommended Budget Page 166

Workload Indicators
Workload indicators for the City Clerk's Office are based on Calendar Years (CY), given that the Fair Political Practices Commission and other regulatory and reporting requirements the Division is subject to are based on calendar year reporting.

Measure
Actuals
CY24
Budget
CY25
Projected
CY25
Recommended
CY26
Recommended
CY27
Number of
Public
Records
Requests
Processed
411 400 425 450 450
Number of
FPPC
Candidate
Filings
Processed
51 30 11 50 10
Number of
FPPC Conflict
of Interest
Filings
Processed
83 110 65 75 75
City of Gilroy | FY26 and FY27 Recommended Budget Page 167

City Clerk Expenditures by Expense Type
2026 Recommended Expenditures by Expense Type
PPPeeerrrsssooonnnnnneeelll EEExxxpppeeennnssseeesss (((888444...999%%%))) MMMaaattteeerrriiiaaalllsss aaannnddd SSSeeerrrvvviiiccceeesss (((888...111%%%))) IIInnnttteeerrrnnnaaalll SSSeeerrrvvviiiccceeesss CCChhhaaarrrgggeeesss (((777%%%))) Expense Objects
Personnel
Expenses
$308,053 $223,210 $335,035 $247,637 $348,584 $364,911
Materials and
Services
$262,487 $54,935 $261,344 $285,478 $33,100 $332,525
Internal Services
Charges
$0 $26,280 $28,252 $28,252 $28,833 $29,694
Total Expense
Objects:
$570,540 $304,424 $624,631 $561,367 $410,517 $727,130
Name FY2023
Actual
FY2024
Actual
FY2025
Amended
FY2025 Projected
Actuals
FY2026 Recommended
Budget
FY2027 Recommended
Budget
City of Gilroy | FY26 and FY27 Recommended Budget Page 168

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Communication and Engagement
Rachelle Bedell
Communication and Engagement Manager
Description
Effective communication and meaningful engagement are critical to building trust, encouraging civic participation, and ensuring community voices are reflected in local government decisions.

The Communication and Engagement Office leads the City's efforts to inform, involve, and connect with the community. It provides strategic advice and supports City leadership on communications, community relations, and public issues, while also taking direct action to keep residents informed and engaged.

The Communication and Engagement Office:

Develops and implements communication strategies that ensure timely, accurate, and accessible information about City operations, special events, emergencies, and policy decisions.

Manages the City's communication platforms, including the website, social media channels, newsletters, and press releases.

Coordinates media relations and serves as the City's primary point of contact for news organizations.

Guides and supports community engagement efforts across departments, helping design outreach that invites meaningful public input and participation.

Advises management on effective messaging, emerging public concerns, and strategies to strengthen community trust and transparency.

Builds relationships with residents, businesses, and community organizations to foster dialogue, collaboration, and civic pride.

FY24 and FY25 Highlights
Expanded Office Capacity: Successfully added a full-time Communications and Engagement Coordinator by converting a part-time position, increasing the office’s capacity from 1.5 to 2 full-time positions. This expansion significantly enhanced the City's ability to manage daily communications, support departments, and implement proactive community engagement efforts.

Justice, Equity, Diversity, and Inclusion (JEDI) Initiative: Effectively co-led the City’s JEDI Initiative by coordinating a cross-departmental team, facilitating engagement with key community stakeholders, managing both internal (employee) and external (community) surveys, and organizing citywide training sessions. These efforts laid the groundwork for future policy and cultural shifts within the organization to support a more inclusive and equitable Gilroy.

Gourmet Alley Project Outreach: Developed and co-managed a comprehensive outreach and coordination plan for the Gourmet Alley project. This included sending weekly construction and project updates to stakeholders, holding regular meetings with downtown businesses, and collaborating closely with business owners and City departments to identify challenges and implement timely solutions—minimizing disruptions and supporting business continuity throughout the project.

Civic Center Master Plan Engagement: Led the public outreach for the Civic Center Master Plan, ensuring consistent communication through regular updates and messaging. Worked directly with various community partners and interest groups, and supported multiple community meetings to gather public input and raise awareness about the planning process for this important civic project.

District-Based Elections Outreach: Led the City’s outreach and education efforts for the transition to district-based elections, ensuring residents were informed, engaged, and had opportunities to participate throughout the process. Efforts included developing bilingual material, including mailers, flyers, messaging and website content; creating clear and accessible messaging; coordinating community workshops; and ensuring Spanish-language interpretation was available at all events and in all materials to support broad and inclusive community engagement.

City of Gilroy | FY26 and FY27 Recommended Budget Page 169