HomeMy WebLinkAboutStaff Report 3.C 06/20/2016Agenda Item #3.0
DATE: June 20, 2016
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: William Mushallo, Finance Director 6�5�
SUBJECT: Resolution Adopting the Appropriations Limit for Fiscal Year 2016-2017 and
Making the Annual Election for Adjustment Factors
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution Adopting the
Appropriations Limit for Fiscal Year 2016-2017 and Making the Annual Election for Adjustment
Factors.
BACKGROUND
In November 1979, California voters added Article XIII -B to the California State Constitution,
which placed 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. 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 available for public review and inspection at the City Cleric's
office. The limit amount may be adjusted by the City each year by applying the annual
adjustment factors of "Per Capita Income" and "Population" changes as provided by the
California State Department of Finance (Attachment #3). The Limit for Fiscal Year 2016-2017
has been calculated by using the change in per -capita personal income and population growth as
the factors to adjust the appropriations limit. The change in per -capita income was 5.37%
combined with the change in population, .74 %, resulting in a factor calculated to be a 6.15%
increase. This increase adjusted the appropriations limit upward from $133,177,296 in FY 2015-
2016 to $141,367,351 for Fiscal Year 2016-2017, an increase of $8,190,055. The Fiscal Year
2016-2017 appropriations that are subject to the limit are calculated to be $32,946,574. 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.
FINANCIAL IMPACTS
'The appropriations limit has never been a factor in considering the City's annual budget.
Currently, the City is spending $108,420,777 less than the appropriations limit of $141,367,351.
The total FY 2016-2017 appropriations subject to the limit are $32,946,574 (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 Funds.
ATTACHMENTS
1. Resolution Adopting the Appropriations Limit for Fiscal Year 2016-2017 and Making the
Annual Election for Adjustment Factors
2. Appropriations Limit Calculations — Worksheets
3. California State Department of Finance Price (Per Capita Income) and Population
Computations and Information
2
ATTACHMENT 1
RESOLUTION ADOPTING THE APPROPRIATIONS LIMIT FOR
FISCAL YEAR 2016-2017
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
WHEREAS, 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
guidelines to calculate the appropriations limit; and
WHEREAS, 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 of the appropriations limit for Fiscal Year 2016-2017.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that:
The Fiscal Year 2016-2017 Appropriations Limit shall be $141,367,351.
2. The Fiscal Year 2016-2017 Appropriations subject to the limit is $32,946,574.
The annual election for Adjustment Factors shall be to use the growth in City Population
and the increase in the Per -Capita Personal Income for the State of California, as
provided by the California State Department of Finance.
APPROPRIATIONS LIMITS CALCULATION
FY2016-2017 ADOPTED BUDGET Attachment #2
APPROPRIATIONS LIMIT
11
Amount
Source
A_ Last Year's Limit - ,June 30, 2016
133,177,290
Adopted Budget
B. Adjustment Factors
1. Growth in City of Petaluma population
1.0074
State Finance
2_ Growth in California Per Capita Income
1.0537
State Finance
Total Adjustment %
1.0515
(B1 -132)
C_ Annual Adjustment $
8,190,055
( B*A)
D_ Other Adjustments
Lost Responsibility (-)
-
Transfer to Private
Transfer to Fees (-)
-
Assumed Responsibility (+)
-
SubTotal
-
E. Total Adjustments
8,190,055
( C+D )
F. This Year's Limit - June 30, 2017
1141.357.351
( A+E)
11
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2016-2017
APPROPRIATIONS LIMIT ANALYSIS
Last Year's Appropriations Limit
Adjustment Factors
Change in Per Capita Personal Income
City Population Increase January 2015 to January 20,16
Total Adjustment Factor
This Year's Appropriations Limit
Proceeds of Taxes
Exclusion
32,946,574
This Year's Appropriations Subject to Limit
This Year's Appropriations Under Limit
$ 133,177,296
1.0537
1.0074
1.0615
$ 141,367,351
32,946,574
$ 108,420,777
5
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2016-2017
Revenue Summary
TAXES
STATE
OTHER GOVERNMENTS
LOCALLY RAISED
USER FEES
OTHER MISCELLANEOUS AND INTERFUND TRANSFERS
INTEREST INCOME
Total
Proceeds
Non -Proceeds
of
of
Taxes
Taxes
Exemptions
Total
26,918,240
0
0
26,918,240
5,946,419
3,431,598
0
9,378,017
0
2,778,271
0
2,778,271
0
11,162,983
0
11,162,983
0
6,489,791
0
6,489,791
0
467,000
2,968,557
3,435,557
81,915
60,642
0
142,557
32,946,574 24,390,285 2,968,557 60,305,416
101
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OFFICE OF THE DIRECTOR
May 2016
Dear Fiscal Officer:
Attachment # 3
EoMUNO r., WROWr4 JR, - (BOVERNOF+
MTATC CAPITOL A FxOOH 1 145 N SACRAMENTO CAN @nB 14.4WVB N WWW.00r.0A,G01
Subject: Price Factor and Population Information
Appropriations Limit
The California Revenue and Taxation Code, section 2227, requires 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, 2016,
in conjunction with a change in the cost of living, or price factor, to calculate their appropriations
limit for fiscal year 2016-17_ Attachment A 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 2016-17 appropriations limit_ Attachment B provides the city and unincorporated
county population percentage change_ Attachment C provides the population percentage change
for counties and their summed incorporated areas_ 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_ The Revenue and Taxation
Code, section 2228 provides additional information regarding the appropriations limit
Article XIII B, section 9(C) of the California Constitution exempts certain special districts from the
appropriations limit calculation mandate. The Code and the California Constitution can be
accessed at the following website: hfp://Ieginfo_legis[ature.ca.govlfaces/codes.xhtnlL
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 requirement should be
directed to their county, district legal counsel, or the law itself. No state agency reviews the local
appropriations limits.
Population Certification
The population certification pr�gram 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 Controllers Office_ Finance will certify
the higher estimate to the State Controller by June 1, 2016_
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.
MICHAEL COHEN
Director
By:
AMY COSTA
Chief Deputy Director
May 2016
Attachment A
A_ Price Factor_ Article XIII B specifies that local jurisdictions select their cost of living
factor to compute their appropriation limit by a vote of Their governing body_ The cost
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 fiscal year 2016-17 appropriation limit is.
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2016-17 5.37
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2016-'17
appropriation limit.
2016-17;
Per Capita Cost of Living Change = 5.37 percent
Population Change = 0.90 percent
Per Capita Cost of Living converted to a ratio:
Population converted to a ratio_
Calculation of factor for FY 2016-17.
5.37 + 100 =,1-0537
'I 00
0.90+100 ='1-0090
100
'1.0537 x 1.0090 = 1.0632
Fiscal Year 2416-17
Attachment B
Annual Percent Change in Population Minus Exclusions*
January 1, 2016 to January 1, 2016 and Total Population, January 1, 2016
Total
County Percent Change -- Population Minus Exclusions -- Population
city 2015-2016 1-1-15 1-1-16 1-1-2016
Sonoma
Cloverdale
0.30
8,799
8,825
8,825
Cotati
0.13
7,144
7,153
7,153
Healdsburg
0.27
'11,667
'11,699
11,699
Petaluma
0.74
59,934
60,375
60,375
Rohnert Park
0.49
41,797
42,003
42,003
Santa Rosa
0.68
174,475
175,667
175,667
Sebastopol
0.33
7,502
7,527
7,527
Sonoma
0.36
'10,826
10,865
10,865
Windsor
0.26
26,961
27,031
27,031
Unincorporated
0.41
149,151
'149,760
'150,814
County Total
0.53 498,256 500,905 501,959
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