HomeMy WebLinkAboutStaff Report 3.B 06/04/2018Agenda Item #3.B
DATE: June 4, 2018
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Corey Garberolio, Finance Director 0.
SUBJECT: Resolution Adopting the Appropriations Limit for Fiscal Year 2018-2019 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 2018-2019 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 qualified capital
expenditures 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 Clerk'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 2018-2019
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 3.67%
combined with the change in population, 1.70 %, resulting in a factor calculated to be a 5.43%
increase. This increase adjusted the appropriations limit upwards from $147,697,843 in FY
2017-2018 to $155,721,366 for Fiscal Year 2018-2019, an increase of $8,023,523. The Fiscal
Year 2018-2019 appropriations that are subject to the limit are calculated to be $38,205,732.
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 $117,515,634 less than the appropriations limit of $155,721,366.
The total FY 2018-2019 appropriations subject to the limit are $38,205,732 (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 2018-2019 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 2018-2019
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 2018-2019.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that:
The Fiscal Year 2018-2019 Appropriations Limit shall be $155,721,366.
2. The Fiscal Year 2018-2019 Appropriations subject to the limit is $38,205,732.
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.
APPROPRIATIONS LIMITS CALCULATION
FY2018-2019 ADOPTED BUDGET Attachment #2
APPROPRIATIONS LIMIT
Amount Source
A. Last Year's Limit - June 30, 2018 $ 147,697,843 Adopted Budget
B. Adjustment Factors
1. Growth in City of Petaluma population 1.0170 State Finance
2. Growth in California Per Capita Income 1.0367 State Finance
Total Adjustment % 1.0543 (131 -132)
C. Annual Adjustment $ 8,023,523 ( B*A)
D. Other Adjustments
Lost Responsibility (-) -
Transfer to Private (-) -
Transfer to Fees (-) -
Assumed Responsibility (+) -
SubTotal -
E. Total Adjustments 8,023,523 ( C+D )
F. This Year's Limit - June 30, 2019 155.721.366 (A+E)
E
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2018-2019
APPROPRIATIONS LIMIT ANALYSIS
Last Year's Appropriations Limit $ 147,697,843
Adjustment Factors
Change in Per Capita Personal Income 1.0367
City Population Increase January 2017 to January 2018 1.0170
Total Adjustment Factor 1.0543
This Year's Appropriations Limit $ 155,721,366
Proceeds of Taxes 38,205,732
Exclusion
This Year's Appropriations Subject to Limit 38,205,732
This Year's Appropriations Under Limit $ 117,515,634
5
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2018-2019
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
30,178,102
0
0
30,178,102
7,722,872
262,552
0
7,985,424
0
1,481,938
0
1,481,938
0
13,033,721
0
13,033,721
0
6,874,362
0
6,874,362
0
26,000
5,264,569
5,290,569
304,758
174,316
0
479,074
38,205,732
21,852,889
5,264,569
65,323,190
on
ANT Off.
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O �
�c DEPARTMENT'OF
°q�-FORN�P F I N A N C E
OFFICE OF TME DIRECTOR
May 2018
Dear Fiscal Officer:
Attachment # 3
EDMUND G. BROWN JR. - GOVERNOR
STATE CAPITOL ■ ROOM 114r ■ SACRAMENTO CA ■ 9BB 1 44998 111WWW -.CA.00V
Subject: Price Factor and Population Information
Appropriations Limit
California Revenue and Taxation Code section 2227 requires the Department of 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, 2018, in
conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit
for fiscal year 2018-19.. 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 2018-19 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. California 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 section and the California Constitution can be
accessed at the following website: htto://Ieainfo.leaislature.ca.aov/faces/codes.xhtmi.
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 program applies only to cities and counties. California 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 1, 2018.
Please Note: The 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 M. COSTA
Chief Deputy Director
U tai 1itQiii
7
May 2018
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 2018-19 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2018-19 3.67
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2018-19
appropriation limit.
2018-19:
Per Capita Cost of Living Change = 3.67 percent
Population Change = 0.78 percent
Per Capita Cost of Living converted to a ratio:
Population converted to a ratio:
3.67 + 100 = 1.0367
100
0.78 + 100 = 1.0078
100
Calculation of factor for FY 2018-19: 1.0367 x 1.0078 =1.0448
Fiscal Year 2018-19
Attachment B
Annual Percent Change in Population Minus Exclusions*
January 1, 2017 to January 1, 2018 and Total Population, January 1, 2018
Total
County Percent Chance --- Population Minus Exclusions --- Population
City 2017-2018 1-1-17 1-1-18 1-1-2018
Sonoma
Cloverdale
1.62
8,988
9,134
9,134
Cotati
3.53
7,453
7,716
7,716
Healdsburg
2.59
11,757
12,061
12,061
Petaluma
1.70
61,657
62,708
62,708
Rohnert Park
2.61
42,490
43,598
43,598
Santa Rosa
0.24
178,064
178,488
178,488
Sebastopol
2.12
7,624
7,786
7,786
Sonoma
2.87
11,072
11,390
11,390
Windsor
2.07
27,492
28,060
28,060
Unincorporated
-3.72
147,002
141,540
142,391
County Total
-0.22 503,599 502,481 , 503,332
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