PREPARED BY: Heather Rowden DATE OF MEETING: 06/10/2024
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO ESTABLISHING THE ANNUAL APPROPRIATIONS (GANN) LIMIT FOR FISCAL YEAR 2024-25
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Continue Fiscal Resilience, Fiscal Excellence and Fiscal Transparency is an adopted City Council Priority contained in the adopted Fiscal Year 2023-2025 City Council Priority Workplan, effective May 1, 2023.
BACKGROUND
On November 6, 1979, California voters approved the Gann Spending Limitation Initiative (Proposition 4) establishing Article XIIIB of the State Constitution. Subsequently, on June 5, 1990, California voters approved the Traffic Congestion Relief and Spending Limitation Act (Proposition 111), which made various amendments to Article XIIIB of the State Constitution. Article XIIIB sets limits on the amount of tax revenues that the State and most local governments can appropriate within a given fiscal year.
The Appropriation Limit is based on actual appropriations during the 1978-79 fiscal year, as increased each year using specified population and inflationary growth factors. The original legislation implementing the provisions of Article XIIIB became effective January 1, 1981. In accordance with that legislation, the governing body of each government jurisdiction must, by resolution, establish its annual Appropriation Limit for the coming year (prior to July 1) at a regularly scheduled meeting or noticed special meeting. Based on Article XIIIB, the City of San Pablo can use the larger of two measurements of population growth, (county or city population growth), and price factor (percentage change in per capita personal income statewide, or the percentage change in the local assessment rolls due to nonresidential new construction) in the Appropriations Limit calculation.
Each May, the California Department of Finance publishes a Price Factor and Population Information memorandum to assist municipalities in calculating their appropriations limits. The memorandum, attached to this report, provides three of the four amounts the City may use to calculate the limit. The last number, the percentage change in the local assessment rolls, is provided by HdL Coren & Cone (HdL), the company contracted to do property tax analysis for the City.
Population Factor
For Fiscal Year 2024-25 the Department of Finance lists the change for the City and County as follows:
San Pablo -0.24%
Contra Costa County 0.12%
As the change in the County population is more beneficial, Finance has selected this factor for consideration.
Price Factor
For Fiscal Year 2024-25 the Department of Finance lists the change in State Per Capita Income at 3.62%. HdL has calculated the percentage change in assessed value for nonresidential new construction at 10.59%. As the assessed value change is higher, Finance has selected this factor for consideration.
The Appropriations Limit applies only to those revenues defined as “proceeds of taxes.” Certain expenditures of tax proceeds do not count as Appropriations Subject to Limit including those for voter approved debt, qualified capital outlay and the costs of complying with court orders and federal mandates, contractual payments including revenues received under section 7.1 of the Municipal Services Agreement with the Lytton Band of Pomo Indians, and certain types of leases.
Section 7910 of the California Government Code requires a governing body to annually adopt by resolution, an Appropriations (Gann) Limit for the upcoming fiscal year when the budget is adopted. The Appropriations Limit is adjusted annually based on population and per capita income changes. This updated information is received from the California Department of Finance in May and is included within the final Appropriations Limit calculation.
Due to budget operational deadlines and preparation of the Two-Year Biennial General Fund Operational & Capital Improvement Program Budget process during May 2024, the City Manager was not able to schedule a preview of the Proposed FY2024-25 Gann Appropriations Limit Report with the Budget, Fiscal & Legislative Standing Committee; and therefore, the subject report is being fully prepared for full review by the City Council for subsequent approval and adoption before June 30, 2024.
FISCAL IMPACT
Finance staff has calculated the FY2024-25 Gann limit to be $62,173,149. The City’s tax proceeds subject to the FY 2024-25 Gann Limit are estimated at $18,130,734. Therefore, the City is deemed to be under the Gann limitation by $44,042,415, and in compliance with State law.
|
Description |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
2024-25 |
|
Appropriations Limit |
47,481,435 |
50,377,825 |
53,959,210 |
56,152,121 |
62,173,149 |
|
Proceeds of Taxes |
10,299,047 |
15,317,883 |
14,884,689 |
16,881,322 |
18,130,734 |
|
Difference |
37,182,388 |
35,059,942 |
39,074,521 |
39,270,799 |
44,042,415 |
|
% of Limit |
21.7% |
30.4% |
27.6% |
30.1% |
29.2% |
ATTACHMENTS:
Att A - Resolution 2024-199
Att A - Exhibit A - FY 2024-25 Gann Appropriations Limit Calculation
Att A - Exhibit B - Historical Gann Appropriations Limit Table
Att B - Price and Population 2024