HomeMy WebLinkAbout101-Gann Limit Report & Resolution.pdf
SARATOGA CITY COUNCIL
MEETING DATE: June 1, 2011 AGENDA ITEM:
DEPARTMENT: Finance & Admin Services CITY MANAGER: Dave Anderson
PREPARED BY: Mary Furey DIRECTOR: Mary Furey
SUBJECT: Fiscal Year 2011/12 Gann Appropriation Limit
RECOMMENDED ACTION
Review report and adopt resolution approving the Gann Appropriations Limit for FY 2011/12.
REPORT DISCUSSION
Background On November 6, 1979, California voters approved Proposition 4, commonly known as the Gann Spending
Limitation Initiative, establishing Article XIIIB of the California State Constitution. This proposition, which became effective in fiscal year 1980/81, mandated an appropriations (spending) limit on the
amount of tax revenues that the State and most local government jurisdictions may appropriate within a
fiscal year. This limit grows annually by a population and cost-of-living factor.
The State Appropriation Limit was since modified by two subsequent initiatives - Proposition 98 in 1988 and Proposition 111 in 1990. Proposition 98 established the return of tax revenues exceeding appropriation limit levels to citizens through a process of refunds, rebates, or other means. Proposition
111 allowed more flexibility in the appropriation calculation factors.
Only tax proceeds are subject to this limit. Charges for services, fees, grants, loans, donations and other
non-tax proceeds are excluded. Exemptions are also made for voter-approved debt which existed prior to January 1, 1979, and for the cost of compliance with court or Federal government mandates.
The City Council adopts an annual resolution establishing an appropriations limit for the following fiscal year using population and per capita personal income data provided by the State of California’s
Department of Finance. Each year’s limit is based on the amount of tax proceeds that were authorized to be spent in fiscal year 1978/79, with inflationary adjustments made annually to reflect increases in population and the cost of living.
Calculation The California Department of Finance issues a letter with the annual percentage change in California’s
per capita personal income and the percentage change in population in both the City and the County to jurisdictions on May 1st each year. Either the City or County’s population factor may be used in the appropriation calculation together with the California per capita Personal Income change factor. Using
the larger population factor increases the limit to a higher dollar amount, however due to the significant variance between tax revenue and the appropriation limit, and the minimal difference between the two factors, the County population factor is used for consistency regardless of which factor is larger.
The County’s percentage increase in population change is combined with the State’s change in per capita
income to determine the City’s appropriation factor. The current year’s appropriation limit is then
increased by this appropriation factor to calculate the Gann Appropriation Limit for the following fiscal year. The calculation for the FY 2011/12 limit is as follows:
Summary: The Gann Appropriation Limit establishes the maximum amount of tax revenue proceeds the City may
appropriate in the following fiscal year. The City’s proposed budget for FY 2011/12 anticipates
$9,728,000 in Gann designated tax revenues, which is $22,179,666 less than the appropriation limit of $31,907,666.
Conclusion: It is recommended that the Council adopt the resolution approving the FY 2011/12 Gann Appropriation
Limit of $31,907,666.
CONSEQUENCES OF NOT FOLLOWING RECOMMENDED ACTION The City would not be in compliance with Article XIIIB of the State of California Constitution.
ALTERNATIVE ACTION N/A
FOLLOW UP ACTION
N/A
ADVERTISING, NOTICING AND PUBLIC CONTACT Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda item and
included in the packet made available on the City’s website in advance of the meeting. A copy of the agenda packet is also made available at the Saratoga Branch Library each Monday in advance of the Council meeting.
ATTACHMENTS
A - Gann Appropriation Limit Factors and Calculation B – Resolution
% Increase in California 2010/11 2011/12
County Per Capita Appropriation Appropriation Appropriation
Population Income Δ Factor Limit Limit
1.0089 X 1.0251 =1.0342 X 30,851,813$ =31,907,666$
FY 2011/12 Calculation
Attachment A
For Beginning County City California Ending %
YE Population Population Per Capita Limit
Limit Factor Factor Income Δ Limit Increase
2002 20,977,606 1.0147 1.0055 1.0782 22,950,540 9.40%
2003 22,950,540 1.0125 1.0191 0.9873 23,092,833 0.62%
2004 23,092,833 1.0079 1.0029 1.0231 23,694,794 2.61%
2005 23,694,794 1.0072 1.0000 1.0328 24,471,983 3.28%
2006 24,471,983 1.0112 1.0124 1.0526 26,078,624 6.57%
2007 26,078,624 1.0118 1.0034 1.0396 27,203,516 4.31%
2008 27,203,516 1.0152 1.0138 1.0442 28,837,681 6.01%
2009 28,837,681 1.0172 1.0077 1.0429 30,592,104 6.08%
2010 30,592,104 1.0156 1.0070 1.0062 31,261,971 2.19%
2011 31,261,971 1.0126 1.0100 0.9746 30,851,813 -1.31%
2012 30,851,813 1.0089 1.0091 1.0251 31,907,666 3.42%
% Increase in California 2010/11 2011/12
County Per Capita Appropriation Appropriation Appropriation
Population Income Δ Factor Limit Limit
1.0089 X 1.0251 =1.0342 X 30,851,813$ =31,907,666$
2011/12 2011/12 Percentage
Tax Appropriation of
Revenues Limit Limit
9,728,000 /31,907,666$ =30%
APPROPRIATION LIMIT FACTORS
AppropriationAppropriation
June 30
FY 2011/12 Calculation
Percentage of Appropriation
Attachment B
RESOLUTION NO._______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA ESTABLISHING THE FISCAL YEAR 2011/12 GANN LIMIT APPROPRIATION FOR THE CITY OF SARATOGA WHEREAS, the City of Saratoga has established its Base Year Appropriation Limit as
$5,961,747 in Fiscal Year 1978/79; and WHEREAS, the cumulative changes to population and to the California per capita personal
income since the Base Year established the revised Proposition 111 Fiscal Year 1996/97 Appropriation Limit as $16,153,314, and
WHEREAS, to the best of the City’s knowledge and belief, the State Department of Finance figures provided to the City in response to Proposition 111 passed by the voters in June 1990, reflects the
appropriate statistics relevant to the calculation of the Fiscal Year 2011/12 Appropriation Limit, which
includes:
• County population adjustments for the year ended December 31, 2010 equal to .89%, and
• City population adjustment for the year ended December 31, 2010 equal to .91%, and
• Change in California per capita cost of living for fiscal year 2011/12 equal to 1.0251%
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Saratoga hereby resolves that, based on the foregoing figures and the provisions of the Article XIIIB of the Constitution of the State of California, the following figure accurately represents the Fiscal Year 2011/12 Appropriation
Limit for the City of Saratoga at: $31,907,666
The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City
Council held on the 1st day of June 2011 by the following vote:
AYES: NOES:
ABSENT:
ABSTAIN:
Howard A. Miller, Mayor
ATTEST: _____________________________
Ann Sullivan, City Clerk