The URL can be used to link to this page

Home My WebLink AboutStaff Report 09/19/2011 3.B �A A .I tE vni # DATE: September 19, 2011 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Bill Mushallo, Finance Director SUBJECT: Resolution Setting the Gann Appropriations Limit for FY 2011 -2012 RECOMMENDATION: It is recommended that the City Council approve the attached Resolution adopting the Appropriations Limit for Fiscal Year 2011 -2012 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 included with this report and 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 Agenda Rev' Dept. D • City Attorney Finance D recto' City Manager Year 2011 -2012 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 2.51% combined with the change in population, .88. %, resulting in a factor calculated to be a 3.4% increase: This increase adjusted the appropriations limit upward from $111,107,699 in FY 2010 -2011 to $114,898,791 for Fiscal Year 2011 -2012, an increase of $3,791,092. The Fiscal Year 2011 -2012 Appropriations that are subject to the limit are . calculated to be $2:7;777,929. 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 $87,120,862 less than the appropriations limit of $114,898,791. The total FY 2011 -2012 appropriations subject to the limit are $27,777,929 (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 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 • ATTACI`IMENT 1 RESOLUTION ADOPTING THE APPROPRIATIONS .LIMIT FOR FISCAL YEAR 2011-2012 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, 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 2011 -2012; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that: 1. The Fiscal Year 2011 -2012 Appropriations Limit shall be $114,898,791. 2. The Fiscal Year 2011 -2012 Appropriations subject to the Limit is $27,777,929. 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. G CITY OF PETALUMA, CA APPROPRIATIONS LIMITS CALCULATION FY2011 -2012 ADOPTED BUDGET APPROPRIATIONS LIMIT Amount Source A. Last Year's Limit - June 30, 2011 $ 111,107,699 Adopted Budget B. Adjustment Factors 1. Growth in City of Petaluma population 1.0088 State Finance 2. Growth in California Per Capita Income 1.0251 State Finance Total Adjustment % 1.0341 (B1 * B2 ) C. Annual Adjustment $ 3,791,092 (B *A) D. Other Adjustments Lost Responsibility ( -) - Transfer to Private ( -) - Transfer to Fees ( -) - Assumed Responsibility ( +) - SubTotal - E. Total Adjustments 3,791,092 (C+D) F. This Year's Limit - June 30, 2012 $ 114,898,791 ( A +E) CITY OF PETALUMA, CA APPROPRIATIONS ,LIMIT ANALYSIS FISCAL YEAR 2011- 2012 APPROPRIATIONS LIMIT ANALYSIS Last Year's Appropriations Limit $ 111,107,699 Adjustment Factors Change in Per Capita Personal Income 1.0251 City Population Increase January 2010 to January 2011 1.0088 Total Adjustment Factor 1.0341 This Year's Appropriations Limit $ 114,898,791 Proceeds of Taxes 27,777,929 Exclusion This Year's Appropriations Subject to Limit 27,777,929 This Year's Appropriations Under Limit $ 87,120,862 CITY OF PETALUMA, CA APPROPRIATIONS LIMIT ANALYSIS FISCAL YEAR 2011 -2012 Revenue Summary Proceds Non - Proceeds of of Taxes Taxes Exemptions Total TAXES 21,899,700 0 0 21,899,700 STATE 5,788,750 55,000 0 5,843,750 OTHER GOVERNMENTS 0 8,555,770 0 8,555,770 LOCALLY RAISED 0 6,391,200 0 6,391,200 USER FEES 0 4,656,900 0 4,656,900 'OTHER MISCELLANEOUS AND INTERFUND TRANSFERS 0 337,300 3,067,500 3,404,800 INTEREST INCOME 89,479 64,621 0 154,100 Total 27,777,929 20,060,791 3,067,500 50,906;220 tO