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On June 2nd, after nearly five months of dedicated collaboration among city staff, commissions, and the community, the Gilroy City Council adopted the two-year fiscal budget for 2026 and 2027. With just over $200 million allocated for each year, this budget, which goes into effect on July 1, reflects our community’s shared vision and commitment to a strong, service-oriented future.
The adopted budget is comprised of multiple funding sources, many of which are legally restricted and designated for specific uses. Understanding how these funds operate is essential to appreciating how city services are financed and delivered. Below are three examples.
Enterprise Funds are generated through user fees for specific city services, such as water and sewer. These funds are tightly regulated and must be used exclusively for the operations, maintenance, and capital improvements of the services they support. In other words, revenue collected from water customers cannot be redirected to pay for unrelated services, like recreation or police.
The Capital Development and Impact Fund is primarily composed of “impact fees” paid by residential and commercial developers. These funds are used to support one-time infrastructure projects that accommodate city growth, such as new parks, public buildings, or storm drain systems. Unlike the General Fund, this fund is not designed to support ongoing operations or staffing costs.
The General Fund is the most flexible of the city’s financial tools. It is primarily supported by property taxes, sales taxes, and other revenue sources such as business licenses and service fees. While discretionary in nature, the vast majority of General Fund dollars are used to support essential and ongoing city operations, including police, fire, planning, administration, recreation, and other personnel-driven services.
As Gilroy continues to grow, many residents have voiced concern that public services are not keeping pace with growth. The City Council shares this concern. As such, a key focus during budget deliberations was identifying strategies to sustainably increase the city’s ongoing, unrestricted revenue—especially to support vital services that depend on staffing.
One of the most promising pathways to generate additional General Fund revenue is through increased local economic activity. In recognition of this, Gilroy has established its first-ever Economic Development Department. This department will be responsible for implementing a comprehensive strategy to strengthen the local economy, primarily by driving sales tax revenue.
A thriving local economy not only supports business growth and job creation but also helps fund the services residents rely on. Economic development fuels infrastructure improvements, attracts innovation, and fosters equitable opportunities for residents. For Gilroy, this work is about more than prosperity—it’s about ensuring that city services can meet both the needs and wants of our community.
While public safety remains a top priority, and expense, the Council is equally committed to enhancing quality of life services—such as traffic management, noise mitigation, city beautification and certainly recreation. The community has made it clear that these services matter. Council believes that through sound economic development, we can invest in both the essentials and the enhancements that make Gilroy a great place to live, work, and play.
In keeping with the tradition of a summer recess, there will be no Coffee with the Mayor in July. We look forward to reconnecting in early August and continuing our work together toward a brighter, more responsive Gilroy.
Sincerely,
Mayor Greg Bozzo
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