HomeMy WebLinkAboutItem 3b: Resolution 6835: Appropriation Limit for FY 2012-13 •
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OR�'ORAED�, STAFF REPORT
Administrative Services Department
DATE: June 19, 2012
TO: Mayor and City Council I'
FROM: Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager/Treasurer
SUBJECT: ADOPT RESOLUTION NO. 6835 ESTABLISHING AN APPROPRIATION
LIMIT FOR FISCAL YEAR 2012-13
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 2012-13.
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.
Appropriation Limit for FY 2012-13
June 19, 2012
Page 2 of 3
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 2012-13 Appropriation Limit 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 Fiscal Year 2012-13 GANN Limit are the population growth of the
City of Arcadia at 0.11% and the California per capita personal income factor of 3.77%.
Appropriation Limit for FY 2012-13
June 19, 2012
Page 3 of 3
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, 2013. As calculated, the
City's Proceeds of Taxes before exclusions is established at $34,800,770
(Exhibit C). The 2012-13 Appropriation Limit is $68,537,439 (Exhibit A). Exhibit B
shows that the City of Arcadia is under the appropriation limit by $34,142,709.
RECOMMENDATION
It is recommended the City council adopt Resolution No. 6835 establishing an
appropriations limit for the Fiscal Year 2012-13 pursuant to Article III-B of the California
Constitution.
Approved:
Dominic Lazzaretto
City Manager
Attachments: Exhibit A—Appropriation Limit for Fiscal Year 2012-13
Exhibit A-1 — Population/Inflationary Adjustment
Exhibit B —Appropriations Subject to Limitation
Exhibit C — Calculation of Proceeds
Exhibit C-1 — Interest Earnings produced by Taxes
Exhibit D — Exclusions
EXHIBIT "A"
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2012-13
AMOUNT
A. Last Year's Limit (2011-12) $65,977,512
B. Adjustment Factors
1. Population 1.0377
2. Per Capita 1.0011
Total Adjustment (1.0377 *1.0011) 1.0388
C. Annual Adjustment (65,977,512 x 1.0388 —65.977.512) 2,559,927
D. 2012-13 Limit (65,977,512+2,559,927) $68,537.439
EXHIBIT "A-1"
CITY OF ARCADIA
POPULATION/INFLATIONARY ADJUSTMENT
FISCAL YEAR 2012-13
PER CAPITA INFLATIONARY ADJUSTMENT 3.77%
POPULATION GROWTH - CITY OF ARCADIA 1.0011
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
EXHIBIT "B"
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2012-13
AMOUNT SOURCE
A. Proceeds of Taxes $ 34,800,770 Exhibit "C"
B. Exclusions ( 406,040) Exhibit "D"
C. Appropriations Subject to Limitation 34,394,730
D. 2012-13 Year Limit 68,537,439 Exhibit "A"
E. Over (Under) Limit ($ 34,142,709)
EXHIBIT"C"
CITY OF ARCADIA
CALCULATION OF PROCEEDS
FISCAL YEAR 2012-13
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Property Tax $ 9,542,090 - $ 9,542,090
Public Safety Augmentation 405,600 - 405,600
Sales & Use Tax 9,600,000 - 9,600,000
Transient Occupancy Tax 2,710,800 - 2,710,800
Property Transfer Tax 376,880 - 376,880
Utility Users Tax 5,128,000 - 5,128,000
Business License Tax 1,150,000 50,000' 1,200,000
TOTAL TAXES $ 28,913,370 $ 50,000 $ 28,963,370
FROM STATE
Motor Vehicle In Lieu $ 4,885,800 - $ 4,885,800
Gasoline Tax - $ 1,478,920 r 1,478,920
Homeowner's Exemption 70,000 - 70,000
POST - 20,000 20,000
SB 90 Reimbursements - 30,000 30,000
TOTAL FROM STATE $ 4,955,800 $ 1,528,920 $ 6,484,720
OTHER GOVERNMENTS
Community Development(CDBG) - 287,770 287,770
Other(PROP A&C) Taxes - 1,485,370 1,485,370
Prop A Park Maint. & Services - 40,000 40,000
Measure R 505,100 505,100
AQMD (AB2766) 64,700 64,700
TOTAL OTHER GOVERNMENTS - $ 2,382,940 $ 2,382,940
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee - $ 1,010,000 $ 1,010,000
Parking Permits - 280,000 280,000
Plan Check Fees - 800,000 800,000
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Building Permits - 1,000,000 1,000,000
Mechanical, Electrial& Plumbing
Permits - 225,000 225,000
Home Occupantion Permits - 15,000 15,000
Miscellaneous Permits - 13,000 13,000
Planning Applications - 250,000 250,000
Fire Plan Check - 145,000 145,000
Engineering Permit Fees - 65,000 65,000
Fire Code Permits - 95,000 95,000
Fire Permit Inspections - 50,000 50,000
Off-site Improvement - 18,000 18,000
Water Efficient Landscape 100,000 100,000
Storm Water Plan Check Fees - 700 700
Transpaction Impact fees - 240,000 240,000
Solid Waste Assessments 400,000 400,000
Charges for Current Service - 2,383,000 2,383,000
Recreation Activities - 908,280 908,280
Library Charges - 91,300 91,300
Rent& Royalty - 1,248,880 1,248,880
Park/Dwelling Unit Fees - 1,200,000 1,200,000
TOTAL LICENSES & PERMITS - $ 10,538,160 $ 10,538,160
FINES & PENALTIES
Miscellaneous Fines - $ 322,500 $ 322,500
Parking Citations - 550,000 550,000
Code Enforcement - 9,000 9,000
Fire Citations - 1,500 1,500
TOTAL FINES & PENALTIES - $ 883,000 $ 883,000
OTHER REVENUE
Parimutual Receipts $ 800,000 - $ 800,000
Admin. 0/H Transit - $ 170,000 170,000
Admin. 0/H Water - 1,349,730 1,349,730
Admin. 0/H Sewer - 97,040 97,040
Admin. 0/H Parking District - 3,950 3,950
Admin. 0/H Redevelopment 41,000 41,000
Miscellaneous Receipts - 30,000 30,000
Court Appearances - 1,500 1,500
Sale of Property - 20,000 20,000
Waste Management Admin. Fees - 103,490 103,490
TOTAL OTHER REVENUE $ 800,000 $ 1,816,710 $ 2,616,710
PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Total Estimated Revenues
Before Revenue from Use of Money $ 34,669,170 $ 17,199,730 $ 51,868,900
Revenue Earned from Use of Money
Earned on Non-Proceeds - 73,060 73,060
of Taxes: Funds 107, 118
142, 151, 155, 157 & 521,153,161
Proceeds of Taxes: Fund 302 14,700 - 14,700
General Fund 116,900 58,100 175,000
TOTAL REVENUE EARNED
FROM USE OF MONEY $ 131,600 $ 131,160 $ 262,760
GRAND TOTAL $ 34,800,770 $ 17,330,890 $ 52,131,660
Exhibit "C-1"
CITY OF ARCADIA
INTEREST EARNINGS PRODUCED BY TAXES
FISCAL YEAR 2012-13
PROCEEDS OF TAXES (EXCLUDING INTEREST) $34,669,170
TOTAL REVENUE (EXCLUDING INTEREST) $51,868,900
PERCENT APPLICABLE TO PROCEEDS OF TAXES (66.8%)
TOTAL INTEREST GENERAL FUND $ 175,000
INTEREST APPLICABLE TO PROCEEDS OF TAXES (66.8%) $ 116,900
INTEREST APPLICABLE TO NON-PROCEEDS OF TAXES (33.2%) $ 58,100
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
ARE IDENTIFIED AS NON PROCEEDS OF TAXES — FUNDS 107,
118, 142, 151, 155, 157, 521,153, 161 $ 73,060
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
IDENTIFIED AS PROCEEDS OF TAXES — FUND 302 $ 14,700
EXHIBIT "D"
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2012-13
FEDERAL MANDATED COSTS:
MEDICARE $406,040
RESOLUTION NO. 6835
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ARCADIA, CALIFORNIA, ESTABLISHING
AN APPROPRIATIONS LIMIT FOR FISCAL YEAR
2012-2013 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 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,
the date 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 date 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, pursuant to Article XIII-B of the California Constitution, the
City is required to set its appropriation limit for each fiscal year, and 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 2012-13 for the
City of Arcadia shall be and is hereby set in the amount of$68,537,439.
SECTION 2. The City Clerk shall certify to the adoption of this
Resolution.
Passed, approved and adopted this 19th day of June, 2012.
Mayor of the City of Arcadia
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney