PREPARED BY: ARTURO CASTILLO DATE OF MEETING: 06/15/2026
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN PABLO APPROVING THE ANNUAL APPROPRIATIONS (GANN) LIMIT FOR FISCAL YEAR 2026-27
CEQA: This proposed action is not a project as defined by CEQA.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Continue Best Management Practices, Fiscal Excellence, and Fiscal Transparency is an adopted City Council Priority contained in the adopted Fiscal Year 2025-2027 City Council Priority Workplan, effective April 7, 2025.
CEQA Compliance Statement
This proposed action is not a project as defined by CEQA.
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 Jan 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 memo to assist municipalities in calculating their appropriations limits. The California Department of Finance Price Factor and Population memo (Attachment B), 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, per its 2025-2026 Preliminary Property Tax Report prepared 10/20/25 (Attachment C).
The prior-year base used in this calculation is the corrected FY 2025-26 Appropriations Limit of $67,480,647. The FY 2025-26 limit was originally adopted at $68,692,874 (Resolution 2025-074) and was corrected following the City’s April 2026 audit by Maze and Associates to restate the population adjustment factor from 2.00% to the correct 0.20% reported by the California Department of Finance; that correction is being adopted concurrently with this item. The correction was a reporting-accuracy matter and did not result in any exceedance of the Appropriations Limit, and the corrected $67,480,647 is the prior-year base for the FY 2026-27 calculation below.
Population Factor
For Fiscal Year 2026-27 the Department of Finance lists the changes for the City and County as follows:
San Pablo -0.62%
Contra Costa County -0.31%
As the change in the County population is the more beneficial (i.e., less negative) of the two measures, this factor has been selected for consideration (Attachment B).
Price Factor
For Fiscal Year 2026-27 the Department of Finance lists the change in State Per Capita Income at 4.95%. HdL has calculated the percentage change in assessed value for nonresidential new construction at 0.55%. As the State Per Capita Income change is higher, this factor has been selected for consideration (Attachment C).
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.
California Government Code Section 7910 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.
Budget, Fiscal & Legislative Standing Committee (BFLSC) Review
On June 10, 2026, the BFLSC (Mayor Pabon-Alvarado and Council Member Ponce) reviewed the FY 2026-27 Gann limit to be formally considered and approved by the City Council on June 15, 2026.
FISCAL IMPACT
Finance staff has calculated the FY 2026-27 Gann limit to be $70,601,394. The City’s tax proceeds subject to the FY 2026-27 Gann Limit are estimated at $19,578,166. Therefore, the City is deemed to be under the Gann limitation by $51,023,228, and in compliance with State law (Attachment 1; Exhibit A).
|
Description |
2022-23 |
2023-24 |
2024-25 |
2025-26 |
2026-27 |
|
Appropriations Limit |
53,959,210 |
56,152,121 |
62,173,149 |
67,480,647 |
70,601,394 |
|
Proceeds of Taxes |
14,884,689 |
16,881,322 |
18,130,734 |
18,203,122 |
19,578,166 |
|
Difference |
39,074,521 |
39,270,799 |
44,042,415 |
49,277,525 |
51,023,228 |
|
% of Limit |
27.6% |
30.1% |
29.2% |
27.0% |
27.7% |
Note: The fiscal year 2025-26 figures reflect the corrected Appropriations Limit of $67,480,647 (originally adopted at $68,692,874).
ATTACHMENTS:
Att A. Resolution 2026-### Annual Appropriations GANN Limit FY 2026-27
Exh 1. to ATT A - FY 2026-27 Gann Appropriations Limit Calculation
Att B. Price and Population Memo 2026
Att C. HdL Property Tax Report dated 10/20/25
Att D. Historical Gann Appropriations Limit Table