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HomeMy WebLinkAboutItem 3b: Resolution 6835: Appropriation Limit for FY 2012-13 • U • � afi • AR D T °°� 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