HomeMy WebLinkAboutItem 2i: Resolution 6775 Establishing an Appropriation Limit for FY 2011-2012 40:1t • 4. i y A
° ATTO'° STAFF REPORT
Administrative Services Department
DATE: June 7, 2011
TO: Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager/Treasurer 5+1.--
SUBJECT: RESOLUTION NO. 6775 ESTABLISHING AN APPROPRIATION LIMIT
FOR FISCAL 2011 -2012
Recommendation: Adopt
SUMMARY
Article XIII -B of the State Constitution imposes a limit ( "the Gann Limit ") on tax proceeds
that can be appropriated for expenditures in any given fiscal year. Section 7910
requires the City to establish the limit by resolution. It is recommended that the City
Council approve a resolution establishing the annual adjustment factors and the
resultant Limit for fiscal year 2011 -2012.
BACKGROUND
In November 1979, the voters of the State of California approved Proposition 4,
commonly known as the Gann initiative. This proposition created Article XIII -B of the
State Constitution placing limits on the amount of revenue, which can be spent by City
Government. Proposition 4 became effective for the 1980 -81 fiscal year, but the
formula for calculating the Limit was based on the 1978 -79 "base year" revenues.
In June 1990, the voters of California approved Proposition 111, which, among other
things, provides new adjustment formulas that make the Appropriation Limit more
responsive to local growth issues. Proposition 111 also implemented a requirement for
an annual review of the Limit calculation.
DISCUSSION
The Appropriation Limitation imposed by Propositions 4 and 111 creates a restriction on
the amount of revenue, which can be appropriated in any fiscal year. The Limit is based
on actual City appropriations during the 1978 -79 fiscal year, and is increased each year
using the growth of population and inflation.
Proceeds of taxes are allowed to be spent on several types of appropriations, which do
not count against the Limit. The law allows a City to spend tax proceeds on voter -
approved debt and the costs of complying with Court orders and Federal mandates,
with certain restrictions. Proposition 111 expanded these exempt categories to include
expenditures for "qualified capital outlay" beginning in 1990 -91. Appropriations for
these excludable categories also do not count against the Limit.
In order to ensure that taxes are counted in the Appropriations Limit of only one agency
of government, Article XIII -B and Government Code Section 7903 require that if the
State provides funds to a local government with no strings attached, they will be
counted as "State Subventions" and will be included in the Appropriation Limit of the
City (i.e., Motor Vehicle In -Lieu Revenue). On the other hand, if the State specifies that
funds are restricted in their use then they are to be counted in the State's Limit (i.e.,
State Gas Tax).
Beginning with the 1990 -91 Fiscal Year, and as a result of the passage of Proposition
111, the annual adjustment factor in computing the limit has changed. Instead of using
the change in the California Per Capita Income or U.S. Consumer Price Index to
measure inflation, each City may now choose, the greater, of the growth in the
California Per Capita Income or the growth in the non - residential assessed valuation
due to new construction within the City.
At the present time, the data necessary to calculate the increase in the non - residential
assessed valuation is not available from the Los Angeles County Assessor. In the
absence of final information on this important factor, it is recommended that the City
adopt the 2011 -2012 Appropriation Limit on a provisional basis using the alternative
factor of per capita income for the inflationary adjustment. The second factor and an
important change authorized by the passage of Proposition 111 is, instead of using only
the population growth of the City, the City may choose to use the population within the
County of Los Angeles.
Factors used for the 2011 -2012 fiscal year GANN Limit are the population growth of the
City of Arcadia at 0.25% and the California per capita personal income factor of 2.51%.
The attached exhibits A, B, C and D, demonstrate the City's compliance with Article XIII-
B of the State Constitution for the fiscal year ending June 30, 2012. As calculated, the
City's Proceeds of Taxes before exclusions is established at $33,962,460
(Exhibit C). The 2011 -2012 Appropriation Limit is $65,977,512 (Exhibit A). Exhibit B
shows that the City of Arcadia is under the appropriation limit by $32,391,972.
RECOMMENDATION
Adopt Resolution No. 6775, a Resolution of the City Council of the City of
Arcadia, California, establishing an appropriations limit for the fiscal year
2011 -2012 pursuant to Article III -B of the California Constitution.
Approved: ��►^ -*�-��
Donald Penman, City Manager
EXHIBIT "A"
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2011 -2012
AMOUNT
A. Last Year's Limit (2010 -2011) $64,199,194
B. Adjustment Factors
1. Population 1.0025
2. Per Capita 1.0251
Total Adjustment (1.0025 *1.0251) 1.0277
C. Annual Adjustment (64,199,194 x 1.0277 — 64,199,194) 1,778, 318
D. 2011 -2012 Limit (64,199,194 — 1,778,318) $65,977,512
EXHIBIT "A -1"
CITY OF ARCADIA
POPULATION /INFLATIONARY ADJUSTMENT
FISCAL YEAR 2011 -12
PER CAPITA INFLATIONARY ADJUSTMENT 2.51%
POPULATION GROWTH - CITY OF ARCADIA 1.0025
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
EXHIBIT "B"
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2011 -2012
AMOUNT SOURCE
A. Proceeds of Taxes $ 33,962,460 Exhibit "C"
B. Exclusions ( 376,920) Exhibit "D"
C. Appropriations Subject to Limitation 33,585,540
D. 2011 -2012 Year Limit 65,977,512 Exhibit "A"
E. Over (Under) Limit ($ 32,391,972)
EXHIBIT "C"
CITY OF ARCADIA
CALCULATION OF PROCEEDS
FISCAL YEAR 2011 -2012
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Property Tax $ 9,438,200 - $ 9,438,200
Public Safety Augmentation 390,000 - 390,000
Sales & Use Tax 9,095,600 - 9,095,600
Transient Occupancy Tax 2,340,300 - 2,340,300
Property Transfer Tax 370,000 - 370,000
Utility Users Tax 5,373,700 - 5,373,700
Business License Tax 1,072,000 50,000 ' 1,122,000
TOTAL TAXES $ 28,079,800 $ 50,000 • $ 28,129,800
FROM STATE
Motor Vehicle In Lieu $ 4,790,000 - $ 4,790,000
Gasoline Tax - $ 1,513,576 ` 1,513,576
Homeowner's Exemption 60,000 - 60,000
POST - 20,000 20,000
SB 90 Reimbursements - 30,000 30,000
,
TOTAL FROM STATE $ 4,850,000 $ 1,563,576 $ 6,413,576
OTHER GOVERNMENTS
Charges to ARA - $ 247,400 $ 247,400
Community Development (CDBG) - 509,972 509,972
Other (PROP A &C) Taxes - 1,392,131 1,392,131
Prop A Park Maint. & Services - 40,000 40,000
Measure R 473,000 473,000
AQMD (AB2766) - 64,300 64,300
TOTAL OTHER GOVERNMENTS - $ 2,726,803 $ 2,726,803
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee - $ 1,000,000 $ 1,000,000
Parking Permits - 260,000 260,000
Plan Check Fees - 615,000 615,000
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Building Permits - 775,200 775,200
Mechanical, Electrial & Plumbing
- 205,000 205,000
Permits
Home Occupantion Permits - 13,000 13,000
Miscellaneous Permits - 9,000 9,000
Planning Applications - 250,000 250,000
Fire Plan Check - 135,000 135,000
Engineering Permit Fees - 50,000 50,000
Fire Code Permits - 95,000 95,000
Fire Permit Inspections - 35,000 35,000
Off -site Improvement - 10,000 10,000
Water Efficient Landscape - 75,000 75,000
Storm Water Plan Check Fees - 1,000 1,000
Transpaction Impact fees - 185,000 185,000
Solid Waste Assessments 400,000 400,000
Charges for Current Service - 2,345,500 2,345,500
Recreation Activities - 928,385 928,385
Library Charges - 91,300 91,300
Rent & Royalty - 1,085,250 1,085,250
Park /Dwelling Unit Fees - 840,000 840,000
TOTAL LICENSES & PERMITS - $ 9,403,635 $ 9,403,635
FINES & PENALTIES
Miscellaneous Fines - $ 200,000 $ 200,000
Parking Citations - 680,000 680,000
Code Enforcement - 6,000 6,000
Fire Citations - 500 500
TOTAL FINES & PENALTIES - $ 886,500 $ 886,500
OTHER REVENUE
Parimutual Receipts $ 800,000 $ 800,000
Admin. O/H Transit - $ 163,470 163,470
Admin. O/H Water - 1,164,220 1,164,220
Admin. O/H Sewer - 83,700 83,700
Admin. O/H Parking District - 3,410 3,410
Miscellaneous Receipts - 10,000 10,000
Court Appearances - 1,500 1,500
Sale of Property - 20,000 20,000
Waste Management Admin. Fees - 102,384 102,384
TOTAL OTHER REVENUE $ 800,000 $ 1,548,684 $ 2,348,684
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Total Estimated Revenues
Before Revenue from Use of Money $ 33,729,800 $ 16,179,198 $ 49,908,998
Revenue Earned from Use of Money
Earned on Non - Proceeds - 160,000 160,000
of Taxes: Funds 107, 118
142, 151, 155, 157 & 521,153,161
Proceeds of Taxes: Fund 302 40,000 - 40,000
General Fund 192,660 92,340 285,000
TOTAL REVENUE EARNED
FROM USE OF MONEY $ 232,660 $ 252,340 $ 485,000
GRAND TOTAL $ 33,962,460 $ 16,431,538 $ 50,393,998
Exhibit "C -1"
CITY OF ARCADIA
INTEREST EARNINGS PRODUCED BY TAXES
FISCAL YEAR 2011 -2012
PROCEEDS OF TAXES (EXCLUDING INTEREST) $33,729,800
TOTAL REVENUE (EXCLUDING INTEREST) $49,908,998
PERCENT APPLICABLE TO PROCEEDS OF TAXES (67.6 %)
TOTAL INTEREST GENERAL FUND $ 285,000
INTEREST APPLICABLE TO PROCEEDS OF TAXES (67.6 %) $ 192,660
INTEREST APPLICABLE TO NON - PROCEEDS OF TAXES (32.4 %) $ 92,340
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
ARE IDENTIFIED AS NON PROCEEDS OF TAXES — FUNDS 107,
118, 142, 151, 155, 157, 521,153, 161 $ 160,000
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
IDENTIFIED AS PROCEEDS OF TAXES — FUND 302 $ 40,000
EXHIBIT "D"
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2011 -2012
FEDERAL MANDATED COSTS:
MEDICARE $376,920
RESOLUTION NO. 6775
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, ESTABLISHING AN
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2011 -2012
PURSUANT TO ARTICLE XIII -B OF THE CALIFORNIA
CONSTITUTION
WHEREAS, Article XIII -B of the Constitution of the State of California imposes
upon the City of Arcadia, as well as all cities, the obligation to limit each fiscal year's
appropriations as those in fiscal year 1978 -79 as adjusted for subsequent inflation and
population changes; and
WHEREAS, the City of Arcadia has opted to use, as the inflation adjustment
factor, the percentage change in California per capita personal income in lieu of the
growth in the non - residential assessed valuation; and
WHEREAS, at the time the appropriations limit calculations were prepared for
purposes of this Resolution, the data necessary to calculate the increase in the non-
residential assessed valuation was generally not available from the County Assessor;
and
WHEREAS, there exists a possible need to adjust the appropriations limit once
the assessment data is available, and consequently this Resolution is being adopted on
a provisional basis; and
WHEREAS, the City of Arcadia has opted to use, as the population adjustment
factor, the growth in the population of the City of Arcadia in lieu of the growth in the
population of the County of Los Angeles; and
WHEREAS, for purposes of setting its appropriation limit for the next fiscal year,
the City has made available to the public the documentation used in the determination
of said appropriation limit.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
SECTION 1. The appropriation limit for fiscal year 2011 -2012 for the City of
Arcadia shall be and is hereby set in the amount of $65,977,512.
SECTION 2. The City Clerk shall certify to the adoption of this Resolution.
Passed, approved and adopted this 7th day of June, 2011.
Mayor of the City of Arcadia
ATTEST:
City Clerk
APPROVED AS TO FORM:
S '6y=k,, u , i •
Stephen P. Deitsch
City Attorney
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