HomeMy WebLinkAboutStaff Report 3.F 06/18/2012 weALU Ag-evtda-Itenwv#3 . F
Zg5$`
DATE: June 18, 2012
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 2012-2013
RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution adopting the
Appropriations Limit for Fiscal Year 2012-2013 and making the annual election for adjustment
factors.
BACKGROUND
In November 1979, California voters added ArticleXIII-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 animal 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 Clerk's
office. The limit amount may be adjusted by the City each year by applying the annual
Agenda ReviewOR City Attorney Finance Director City Manager ara.
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 2012-2013
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 3.77%
combined with the change in population, .23 %, resulting in a factor calculated to be a 4.0%
increase. This increase adjusted the appropriations limit upward from $114,898,791 in FY 2011-
2012 to $119,504,706 for Fiscal Year 2012-2013, an increase of $4,605,915. The Fiscal Year
2012-2013 Appropriations that are subject to the limit are calculated to be $25,681,596. 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 $93,823,110 less than the appropriations limit of$119,504,706.
The total FY 2012-2013 appropriations subject to the limit are $25,681,596 (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
I. 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
ATTACHMENT I
RESOLUTION ADOPTING THE APPROPRIATIONS LIMIT FOR
FISCAL YEAR 2012-2013
AND MAKING THE ANNUAL ELECTION FOR ADJUSTMENT FACTORS
WHEREAS, the people of California on November 6, 1979, added Article XIJI-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
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 2012-2013;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma that:
1. The Fiscal Year 2012-2013 Appropriations Limit shall be $119,504,706.
2. The Fiscal Year 2012-2013 Appropriations subject to the Limit is $25,681,596.
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.
3
Attachment ?/2
CITY OF PETALUMA, CA
APPROPRIATIONS LIMITS?CALCULATION
FY2012 72013 ADOPTED'BUDGET°
APPROPRIATIONS LIMIT
Amount Source
A. Last Year's Limit-June 30, 2012 $ 114,898,791 Adopted Budget
B.Adjustment Factors
1. Growth in City of Petaluma population 1.0023 State Finance
2. Growth in California Per Capita Income 1.0377 State Finance
Total Adjustment% 1.0401 ( B1 * B2)
C. Annual Adjustment$ 4,605,915 ( B'A)
D. Other Adjustments
Lost Responsibility(-) -
Transfer to Private(-) -
Transfer to Fees (-) -
Assumed Responsibility(+) -
SubTotal -
E. Total Adjustments 4,605,915 ( C+D)
F. This Year's Limit-June 30, 2013 $ 119;504.706 (A+E)
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT'ANALYSIS
FISCAL YEAR 2012-2013
APPROPRIATIONS LIMIT ANALYSIS
Last Year's Appropriations Limit $ 114,898,791
Adjustment Factors
Change in Per Capita Personal Income 1.0377
City Population Increase January 2011 to January 2012 1.0023
Total Adjustment Factor 1.0401
This Year's Appropriations Limit $ 119,504,706
Proceeds of Taxes 25,681,596
Exclusion
This Year's Appropriations Subject to Limit 25,681,596
Thi&Year's:Appropriations Under Limit $ 93,823,110
Sr
CITY OF PETALUMA, CA
APPROPRIATIONS LIMIT ANALYSIS
FISCAL YEAR 2012-2013
Revenue Summary
Proceds Non-Proceeds
of of
Taxes Taxes Exemptions Total
TAXES 20,279,448 0 0 20,279,448
STATE 5,338,840 40,000 0 5,378,840
OTHER GOVERNMENTS 0 8,379,597 0 8,379,597
LOCALLY RAISED 0 6,970,153 0 6,970,153
USER FEES 0 4,531,782 0 4,531,782
OTHER MISCELLANEOUS AND INTERFUND TRANSFERS 0 191,905 2,625,783 2,817,688
INTEREST INCOME 63,308 49,705 0 113,013
Total 25,681,596 20,163,142 2,625,783 48,470,521
6
��Nr Op
AN
A. • Al.
•
w IIII n Attachment #3'
o m
* :DEPARTMENT OF EDMUND G. BROWN JR, • GOVERNOR
FINANCE 915 L STREET ■ SACRAMENTO CA 11'951314-3706 m WWW.00F.CA.GOV
•
•
•
May 2012
Dear Fiscal Officer:
Subject: Price and Population Information
•
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 inpopulationfactor for January 1, 2012, in conjunction with a change in
the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2012-2013. 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 2012-2013 appropriations limit. Enclosure II
provides city and unincorporated county population percentage changes, and Enclosure IIA provides county
and incorporated areas' summed population'percentage change. 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 art annual appropriations limit. Consult the Revenue and Taxation
Code, Section 2228 for further information regarding the appropriations limit. You can access the Code
from the following website "http://www:leginfo.ca:gov/calawhtml" 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 XIII B, Section 9(C), of the State
Constitution exempts certain special districts from the appropriations limit calculation mandate. Consult-the
following website: "http://www:deginfo:ca:gov/.const/.article 13B"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 anypopulationestimate 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, 2012.
.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.
ANAJ. MATOSANTOS
Director
By.
MICHAEL COHEN
Chief Deputy Director
Enclosures
7
Fiscal Year 2012-2013
May 2012
Enclosure I
A. Price Factor: Article XIII B specifies that local jurisdictions select their cost-of-living
factor to compute their appropriation limit by vote of their governing body. The
cost-of-living.factorprovidedhere 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 2012-2013 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2012-2013 3.77
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2012-2013
appropriation limit.
2012-2013:
Per Capita Cost of Living Change = 3.77 percent
Population Change = 0.68 percent
Per Capita Cost of Living converted to a ratio: 3.77 + 100 = 1.0377
100
Population converted to a ratio: 0.68 + 100 = 1.0068
100
Calculation of factor for FY 2012-2013:
1.0377 x 1.0068 = 1.0448
Fiscal.Year 20122013
Enclosure'll
Annual Percent Change i&Population Minus.Ezclusions
January 1, 2.011 to January 1;2012tand Total Population,January 1, 2012
Total
County Percent Change — Population Minus Exclusions --- Population
City 201.1-2012 1-1-11 1-1-12 1-1-2012
Sonoma
Cloverdale 0.07 8,623 8,629 8,629
Cotati 0.07 7,271 7,276 7,276
Healdsburg 0.19 11.420 11,442 - 11,442
Petaluma 0.23 58,033 58,165 58,165
Rohnert Park 0.07 40,818 40,846 40,846
Santa Rosa 0.48 168.034 168,841 168,841
Sebastopol 0.24 7,387 7,405 7,405
Sonoma 0.07 10,658' 10,665 10,665
Windsor 0.75 26',803 27,008 27,003
Unincorporated 0.52 144,617 145,365 146,739
County Total 0.41 483,664 485,637 487,011
(')Exclusions include residents on federal military installations and group quarters residents in state mental institutions,state'and federal
correctional institutions and veteran homes.
Page 1
q