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CITY OF PETALUMA, CALIFORNIA
AGENDA BILL September 12, 2045
Meeting Date: September 12, 2005
Resolution Adopting FY 2005-2006 Gann Appropriations Limit
Meeting Time: ®3:00 PM
❑ 7:00 PM
Category (check one): N Consent Calendar U Public Hearing U New Business
❑ Unfinished Business ❑ Presentation
Department: I Director: I Contact Person: Phone Number:
Administrative Services I Steven Carmichael I Steven Carmichael 778-4323
Cost of Proposal: -Account Number:
NIA N/A
Amount Budgeted. Name of Fund:
N/A N/A
Attachments to Agenda Packet Item,
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
Summary Statement:
Under the provision of California State Law the City is required to set an Annual Appropriations Limit,
which is commonly referred to as the "Gann Limit." This Appropriations Limit is based on appropriations
that are originating from "Proceeds of Taxes" as defined by law. This appropriations limit amount is
adjusted each year by the application of annual adjustment factors, which include adjustments for
population growth and per capita income changes. These adjustment factors are 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 State. The Appropriations Limit for Fiscal Year 2005-2006 has
been calculated by using the increase in the per -capita income and population growth factors as provided.
The Fiscal Year 2005-2006 Appropriations Limit is $95,990,737. This Appropriations Limit increased
by 6.15% or $5,565,416 from Fiscal Year 2004-05 Limit of $90,425,321. The Fiscal Year 2005-2006
Appropriations that are subject to the Limit (Proceeds of Taxes) are calculated to be $26,785,059.
Recommended City Council Action/Suggested Motion:
Adopt the resolution setting the Gann Appropriations Limit and Making the Election to use the
Calculations Factors as provided by the California State Department of Finance.
Reviewed by Finance Director:.
Pate:
r Todav's Date:
August 17, 2005
Review ev:
Revision # and Date Revised:
it
Anprovre itv Manager:
Date:
File Code:
CITY OF PETALUMA, CALIFORNIA
SEPTEMBER 12, 2005
AGENDA REPORT
FOR
RESOLUTION ADOPTING FY 2005-2006 APPROPRIATIONS LIMIT
ErECUTIVE SUMMARY:
Under the provisions of California State law, the City is required to set an Annual Appropriations Limit
commonly referred to as the "Gann Limit". The limit amount may be adjusted each year by the
application of annual adjustment factors of "Per Capita Income" and "Population" changes as provided
by the California State Department of Finance. See Attachment 43.) 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 2005-2006 has been calculated by using the increase in the per -
capita income (statewide) and the City's population growth factors. The Fiscal Year 2005-2006
Appropriations Limit is calculated to be $95,990,737. This limit increased by 6.15% or $5,565,416
from the Fiscal Year 2004-2005 limit of $90,425,321. The Fiscal Year 2005-2006 Appropriations that
are subject to the limit (Proceeds of Taxes) are calculated to be $26,785,059.
BACKGROUND:
In November 1979, the people of California added Article XIII -13 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 require Cities to adopt resolutions setting the annual
appropriations limits. In June 1990, the people adopted Proposition 111 that amended Article XIII -B.
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 the change in the local assessment roll due to local non-residential construction. 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.
The City of Petaluma's Appropriations Limit has increased significantly since 1987 by applying the
allowable factors as outlined above. In the current Fiscal Year, the City is 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 5.26% combined with
the change in population, 0.85% --resulted in a factor calculated to be 6.15% increase. This increase
adjusted the appropriations limit upward from $90,425,321 in FY 2004-05 to $95,990,737 for Fiscal
Year 2005-2006.
As required by California State law, detailed worksheets have been provided showing the appropriations
limit calculations. These worksheets are included with this report and are available for public review
and inspection at the City Cleric's office.
ALTERNATIVES:
None, as California State law requires the adoption of an Annual Appropriations Limit.
4. FINANCIAL IMPACTS:
The Appropriations Limit has never been a factor in considering the City's annual budget. Currently,
the City is spending $69,205,679 less than the appropriations limit of $95,990,737. The total FY 2005-
2006 appropriations subject to the limit are $26,785,059 (Proceeds of Taxes). Obviously, this limit will
not affect the continued operations of the City currently, or for many years into the future.
CONCLUSION:
As in past years, the Appropriations limit has become less of a concern for the City of Petaluma, as the
City's expenditures subject to the "Gann Limit" do not come close to what the limit would allow.
Unless there are drastic changes in the way mmiicipal finance is structured, the appropriations limit will
continue to be a mathematical calculation and not a financial planning tool.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR COMPLETION:
The adopted resolution and worksheets will become part of the Fiscal Year 2005-2006 Adopted Budget
Document.
RECOMMENDATION:
Adopt the resolution establishing the Appropriations Limit of $95,990,737 for Fiscal Year 2005-2006.
s:/budgeWudget 05/agenda/gann agenda bill
Attachment #1
RESOLUTION ADOPTING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2005-2006 AND
MAKING THE ANNULAL 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 19$0 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 guideline 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 the
appropriations limit for Fiscal Year 2005-2006;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that:
1. The Fiscal Year 2005-2006 Appropriations Limit shall be $95,990,737
2. The Fiscal Year 2005-2006 Appropriations subject to the Limit is $26,785,059
3. 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
CITY OF PETALUMA, CA
APPROPRIATIONS LIMITS CALCULATION
FY2006-2006 ADOPTED BUDGET
APPROPRIATIONS LIMIT
Amount Source
A. Last Year's Limit - June 30, 2005 $ 90,425,321 Adopted Budget
B. Adjustment Factors
1. Growth in City of Petaluma population 1.0085 State Finance
2. Growth in California Per Capita Income 1.0526 State Finance
Total Adjustment % 1.0615 (B1 - B2)
C. Annual Adjustment $ 5,565,416 ( B -A)
D. Other Adjustments
Lost Responsibility (-}
Transfer to Private (-}
Transfer to Fees (-)
Assumed Responsibility (+)
SubTotal
E. Total Adjustments 5,565,416 ( C+D )
F. This Year's Limit - June 30, 2006 $ 96,990,737 (A+E)
15
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2005-2006
APPROPRIATIONS LIMIT ANALYSIS
Last Year's Appropriations Limit
Adjustment Factors
Change in Per Capita Personal Income
City Population Increase January 2004 to January 20
Total Adjustment Factor
This Year's Appropriations Limit
Proceeds of Taxes
Exclusion
26,785,059
This Year's Appropriations Subject to Limit
$ 90,425,321
1.0526
1.0085
1.0615
$ 95,990,737
26,785,059
This Year's Appropriations Under Limit $ 69,205,679
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2005-2006
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
22,313,300
0
0
22,313,300
3,686,000
325,000
0
5,454,000
0
2,810,400
0
1,367,400
0
16,053,100
0
16,053,100
531,000
7,061,150
0
7,592,150
0
3,767,500
2,146,484
5,913,984
254,759
288,241
0
543,000
26,785,059
30,305,391
2,146,484
59,236,934
12/1 qF�i
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.r DEPARTMENT ❑F
91�RN,r F I N A N C E
May, 2005
Dear Fiscal Officer.
Subject: Price and Population Information
Appropriations Limit
ARNOLD SCHWARZENESSER, GOVERNOR
91 5 L STREET! SACFAMENTM CAN 9SE14-3906 ! Wl9W.o OF.CA..MV
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, 2005, in conjunction with a change in
the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2005-06. 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 2005-06 appropriations limit. Enclosure II provides
city and unincorporated county population percentage changes, and Enclosure IIA provides county and
incorporated areas population percentage changes. The population percentage change data excludes
federal and state institutionalized populations and military populations, as noted.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. Consult the Revenue and Taxation
Code, Section 2228, for the various population options available to special districts to assess population
change in their district. Article XIII B, Section 9, of the Stale Constitution exempts certain special districts
from the appropriations limit calculation mandate. Special districts required by law to calculate their
appropriations limit must present the calculation as part of their annual audit No State agency reviews the
appropriations limit
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 3, 2005.
Please Note: City population estimates are controlled to independently calculated county population
estimates. Due to county estimates revisions for 2001 through 2004 prior year city population estimates
for local areas have also been revised.
If you have any questions regarding this data, please contact the Demographic Research Unit
at (916) 323-4086.
Sincerely,
TOM CAMPBELL
Director
By:
STEPHEN W.KESSLER
Chief Deputy Director
Enclosure
No
May 1, 2005
Enclosure I
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 2005-2006 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2005-2006 5.26
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2005-2006
appropriation limit.
2005-2006_
Per Capita Change = 5.26 percent
Population Change =1.50 percent
Per Capita converted to a ratio:
Population converted to a ratio:
Calculation of factor for FY 2005-2006:
5.26+100 =1 0526
100
1.50+100 =1.015
100
1.0526 x 1.015 =1.0684
I
Enclosure II
335
Annual Percent Change in Population Minus Exclusions (')
13,241
January 1, 2004 to January 1, 2005 and Total Population, January 1,
2005
4.01
Total
County Percent Chance — POOnlaUDn Minus Exclusions —
Population
city 2004-2085 1-1-04 -1-05
1-1-2095
SONOMA
CLOVERDALE
335
7,97,
13,241
8241
CDTATI
4.01
7,054
7,357
7,337
HEALDSBURG
051
i i,E1
11,711
11,711
PE IIALUMA
O.B5
58,157
Ei6..-2
55,em
ROHNERT PARK:
027
4 329
42,4-'5
45445
SANTA ROSA
074
155,121
1552558
150,208
SEBASTOPOL
0.
i,rn
7,794
7,794
SONOMA
1.05
9,731
9,834
9,83",
WINDSOR
231,
24.899
25,4T
25A7z
UNINCORPORATED
022
150.370
150,B67
152703
COUNTYTOTAL
0.74
413,053
47—D,544
478,440
(') Exclusions include residents on federal ni Inslallallans and group quanels residents in sidle menial Insliliali ns and slate and ]mEan
mireclmnal inslilulions.
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