HomeMy WebLinkAboutAgenda Bill 3A 06/21/2010a '~
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DATE:
TO:
FROM:
SUB.IECT:
June 21, 2010
Honorable Mayor and Members of the City Council through City Manager
Sandra Sato, Interim Finance Director
Resolution Setting the Gann Appropriations Limit for FY 2010-2011
.RECOMMENDATION:
It is recommended that the City Council approve the attached Resolution adopting the
Appropriations Limit for Fiscal Year 2010-2011 and .making the annual election for adjustment
factors.
BACKGROUND:
In November 1979, California voters added Article XIII-B to the California State Constitution,
which paced limitations on the Appropriations of .State and Local Governments. The Article
defined the process to calculate, the appropriations limit and required Cities to adopt resolutions
establishing the annual appropriations limits. Article XIII-B was amended in June 1990, by
Proposition 111. The amendment created the new base year of FY 1986-1987, and allowed
annual increases based on factors comprised of the change in population combined with either
the change in California per-capita personal income or with the change in the local assessment
roll due to local non-residential construction. Selection of one or the other of these two latter
factors is at the City's election. It also provided for the exclusion of capital expenditures over
$100,000 and required independent auditor review of the calculations. Guidelines were
developed to define and implement the changes and to establish the annual review requirements.
The City of Petaluma has complied with all applicable laws and regulations regarding the
Appropriation Limit requirements including Auditor reviews.
DISCUSSION:
The City of Petaluma's Appropriations Limit has increased significantly since 1987 by applying
the allowable factors as outlined above. Under the provisions of California .State law, the City is
required to establish an Annual Appropriations Limit commonly referred to as the "Gann Limit".
As is also required, detailed worksheets are provided showing the appropriations limit
calculations. These worksheets are included with this report and are available for public .review
and inspection at the City Clerk's office. The limit amount may be adjusted each year by the
application of annual adjustment factors of "Per Capita Income" and "Population" changes as
Agenda Review:
Dept.. Director, City Attorney Finance Director City Mana~er'''3
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provided by the California State Department of Finance (Attachment #3). The City of Petaluma
makes an annual election to choose the adjustment factors as provided by the California State
Department of Finance. The Limit for Fiscal Year 2010-2011 has been calculated. by using the
change in per-capita personal income and population growth as the factors to adjust the
appropriations limit, as provided by the California State Department of Finance. The change in
per-capita income was -2.54% combined with the change in population, 1.01 %, resulting
in a factor calculated to be a 2% decrease. This decrease adjusted the appropriations limit
downward from $112,863,464 in FY 2009-2010 to $111,107,699 for Fiscal Year 2010-2011.
The limit decreased by 2% or $1,755,765 from -the Fiscal Year 2009-2010. The Fiscal Year
2010-2011 Appropriations that are subject to the limit (Proceeds of Taxes) are calculated to
be $27,082,512. Only the proceeds of taxes are subject to the limit. Other revenues earned
by the General and certain Special Revenue Funds are excluded from the limit as non
proceeds of taxes (Attachment 2 Revenue Summary).
FINANCIAL IMPACTS:
The Appropriations Limit has never been a factor in considering the City's annual budget.
Currently, the City is spending $84,025,187 less than the appropriations limit of $111,107,699.
The total FY 2010-2011 appropriations subject to the limit are $27,082,512 (Proceeds of Taxes).
Examples of proceeds of taxes are Property Taxes, Sales Taxes, TOT Taxes, Business License
Taxes, Motor Vehicle In Lieu of Taxes, Gas Taxes, etc. These taxes are accounted for in the
General and various Special Revenue fiends.
ATTACIIMENTS
1. Resolution Adopting Gann Appropriations Limit and Making Annual Elections
2. Appropriations Limit Calculations -Worksheets
3. California State Department of Finance Price (Per Capita Income) and Population
Computations and Information
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ATTACHMENT 1
RESOLUTION ADOPTING THE APPROPRIATIONS LIMIT FOR
FISCAL YEAR 2010-2011
AND MAKING THE ANNUAL ELECTION FOR ADJUSTMENT FACTORS
WHEREAS, the people of California on November 6, 1979, added Article XIII-B to the
California State Constitution placing various limitations on the Appropriations of State and Local
Governments; and
WHEREAS, the California State Legislature adopted Chapters 1205 and 1342 of the 1980
Statutes which implemented Article XIII-B; and
WHEREAS, the people of California on June 5, 1990 amended Article XIII-B effective on July
1, 1990; and
WF[EREAS, the provisions of the amendments have been interpreted by a coalition of statewide
organizations, and the organizations have issued through the League of California Cities revised
guideline to calculate the Appropriations Limit; and
WF[EREAS, section 7910 of the Government Code requires cities to adopt a resolution setting
the annual appropriations limit at a regularly scheduled meeting or a noticed special meeting; and
WHEREAS, the City of Petaluma has complied with the provisions of Article XIII-B in
calculation the appropriations limit for Fiscal Year 2010-2011;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that:
1. The Fiscal Year 2010-2011 Appropriations Limit shall be $111,107,699.
2. The Fiscal Year 2010-2011 Appropriations subject to the Limit is $27,082,512.
3. The annual election for Adjustment Factors shall be to use the growth in City
Population and the decrease in the Per-Capita Personal Income for the State of
California, as provided by the California State Department of Finance.
CITY OF PETALUMA, CA
APPROPRIATIONS LIMITS CALCULATION
FY2010-2011 ADOPTED BUDGET
APPROPRIATIONS LIMiT
A: Last Year's Limit -June 30, .2010
B. Adjustment Factors
1. Growth in City of Petaluma population
2. Growth in California Per Capita Income
Total Adjustment
C. Annual Adjustment $
D. Other Adjustments
Lost Responsibility (-)
Transfer to Private (-)
Transfer to Fees {-)
Assumed Responsibility {+)
SubTotal
E. Total Adjustments
F. This Year's Limit -June 30, 2011
ATTACHMENT .~2:
A. mount Source
$ 112,863,464 A opted Bu get
1.0101 State Finance
0.9746 State Finance
0.9844 (61 * B2 )
(1,755,765) (B*A)
(1,755,765) (C+D )
~ 111.107.699 (A+E)
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CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2010-2011
APPROPRIATIONS LIMIT ANALYSIS
Last Year's Appropriations Limit
Adjustment Factors
Change in Per Capita Personal Income
City Population Increase January 2009 to January 2010
Total Adjustment Factor
This Year's Appropriations Limit
Proceeds of-Taxes
Exclusion
27,082,512
this Year's Appropria#ions Subject to Limit
This Year's Appropriations Under Limit
$ 112,863,464
0.9746
1,0101
0.9844
' 111,107,699
27,082,512
$ 84,025,187
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CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2010-2011
Revenue Summary
TAXES
STATE
OTHER GOVERNMENTS
LOCALLY RAISED
USER FEES
OTHER MISCELLANEOUS AND INTERFUND TRANSFERS
INTEREST INCOME
Total
Proceds Non-Proceeds
of of
Taxes Taxes Exemptions Total
21,205,200 0 0 21,205,200
5,844,300 30,000 0 5,874,300
0 5,965,700 0 5,965,700
0 7,841,500 0 7,841,500
0 5,259,550 0 5,259,550
0 312,300 3,471,900 3,784,200
33,012 23,688 0 56,700
27,082,512 19,432,738 3,479,900 49,987,150
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r ~ ATTACHMENT 3
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.~ DEPARTMENT C1E ARNOLD SCHWARZENEGGER, GOVERNOR
C'9Llppp.N~p ~' ~ 9 ~ 5 L STREET ® 9ACgAMENTO GA ~ 95B 1 4-376 ® WWW.00 F.GA.GOV
May 2010
Dear Fiscal Officer:
Subject: Price and Population lnformation
Appropriations Limit
The California Revenue and Taxation Code, Section 2227, mandates the Department of Finance
(Finance) to transmit an estimate of the percentage change in population to .local governments. Each
local jurisdiction must use their percentage change in population factor for January 1, 2010, in conjunction
with a change in the cost of living, ar price factor, to calculate their appropriations limit for fiscal year
2010-2011. Enclosure I provides the change in California's per capita personal income and an example
for utilizing the price factor and population percentage change factor to calculate the 2010-2011
appropriations limit. Enclosure II provides city and unincorporated county population percentage
changes, and Enclosure IIA provides county's and incorporated area's summed population percentage
changes. The population percentage change data excludes federal and state institutionalized populations
and military populations.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. Consult the Revenue and Taxation
Code, Section 2228 for further information regarding the appropriation limit. You can access the Code
from the following website: "http://www.leginfo.ca.gov/calaw.html" check box: "Revenue and Taxation
Code" and enter 2228 for the search term to learn more about the various population change factors
available to special districts to calculate their appropriations limit. Article XIlI B, Section 9(C}, of the State
Constitution exempts certain special districts from the appropriations limit calculation mandate. Consult
the following website: "httpa/www.leginfo.ca. ovq /_constl.article 138" for additional information. Special
districts required by law to calculate their appropriations limit must present the calculation as part of their
annual audit. Any questions special districts have on this issue should be referred to their respective
county for clarification, or to their legal representation, or to the law itself. No State agency reviews the
local appropriations limits.
Population Certification
The population certification program applies only to cities and counties. Revenue and Taxation Code
Section 11005.6 mandates Finance to automatically certify any population estimate that exceeds the
current certified population with the State Controller's Office. Finance will certify the higher estimate to
the State Controller by June 9, 2090.
Please Note: Prior year's city population estimates may be revised.
If you have any questions regarding this data, please contact the Demographic Research Unit at
(916) 323-4086.
May 2010
Enclosure I
A. Price Factor: Article XI II B specifies that local jurisdictions select their
cost-of-living factor #o compute their appropriation limit by a vote of their governing
body. The cast-of-living factor provided here is per capita personal income. If the
percentage change in per capita personal income is selected, the percentage
change to be used in setting the 2010-2011 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over.prior year
2010-2011 -2.54
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2010-2011
appropriation limit.
2010-2011:
Per Capita Cost of Living Change = -2.54 percent
Population Change = 1.03 percent
Per Capita Cost of Living converted to a ratio:
Population converted to a ratio:
Calculation of factor for FY 2010-2011:
-2.54 + 100 = .9746
100
1..03 + 100 = 1.0103
100
.9746 x 1.0103 = .9846
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Enclosure !I
Annual Percent Change in Population Minus Exclusions
January 1, 2009 to January 1, 2010 and Total Populatlon, January 1, 2010
ota
County Percent Chance -Population Minus Exclusions -- Population
City 2009-2010 1-1-09 i•1-10 1-1-2070
Sonoma
Cloverdale 0.78 8,569 8,636 8,636
Cotati 0.78 7,418 7,476 7,476
Healds burg 1.11 11,800 11,931 11,931
Petaluma 1.01 57,817 58,401 58,401
Rohnert Park 0.74 43,081 43,398 43,398
Santa Rosa 1.08 181,716 163,436 163,436
Sebastopol 2.56 7,745 7,943 7,943
Sonoma 0.94 9,984 10,078 10,078
Windsor 0.90 26,714 26,955 26,955
Unincorporated 1.74 151,042 153,673 155,031
County Total 1.24 485,886 491,927 493,285
(•) Facclusians inGude residents on federal military installations and group quarters residents In state mental Institutions, slate and federal
conedional institutions and veteran homes.
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