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HomeMy WebLinkAboutItem 3b - Resolution No. 7074 - Appropriation Limit for FY 2015-16674010 DATE: TO: FROM STAFF REPORT Administrative Services Department June 16, 2015 Honorable Mayor and City Council Hue C. Quach, Administrative Services Director Shannon Huang, Financial Services Manager /Treasurer SUBJECT: RESOLUTION NO. 7074 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2015 -16 PURSUANT TO ARTICLE XIII -B OF THE CALIFORNIA CONSTITUTION 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. As calculated, the City's expenditures subject to the limit are $43,332,600 versus a limit of $76,557,483, meaning that the City of Arcadia is under the Gann Limit by $33.2 million. It is recommended that the City Council adopt Resolution No. 7074 establishing the annual adjustment factors and the resultant Limit for Fiscal Year 2015 -16. DISCUSSION 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 that can be spent by any city government. Each government was allocated a base year Limit, which is adjusted annually for inflation and population growth. The law also requires an annual review of the Limit calculation. Certain revenues do not count toward the annual Gann Limit. For instance, the expenditure of tax proceeds on voter - approved debt and the costs of complying with Court orders and Federal mandates are not accounted as they are restricted for certain purposes. Similarly, if the State specifies that funds transmitted to cities are restricted in their use (e.g., State Gas Tax), they are excluded in the calculation of the City's Gann Limit. To measure inflation, each City may 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 Resolution No. 7074 Establishing an Appropriation Limit for Fiscal Year 2015 -16 June 16, 2015 Page 2 of 2 County Assessor. Thus, the change of California Per Capita Income at 3.82% has been used as the inflationary adjustment factor in the calculation of the City's Fiscal Year 2015 -16 Appropriation Limit. The second factor for calculating the Limit is the change in population. Cities may choose the greater of the population growth within the county or the City. In the County of Los Angeles, population growth was 0.82 %; the City's population growth was 0.41% in 2014. As a result, the City has chosen to use the County's growth factor for FY15- 16's GANN Limit calculation. The attached Exhibits "A ", "A-11", "B ", "C ", "C-11", and "D ", demonstrate the City's compliance with Article XIII -B of the State Constitution for the Fiscal Year ending June 30, 2016. As calculated, the City's Proceeds of Taxes Before Exclusions is established at $43,726,900 (Exhibit "C "), and the FY2015 -16 Appropriation Limit is $76,557,483 (Exhibit "A "). Exhibit "B" shows that the City of Arcadia is under the Appropriation Limit by $33,224,883. FISCAL IMPACT The Gann Limit for the City of Arcadia in FY 2015 -16 is established at $76,557,483. The appropriations subjected to the limit in the annual budget are $43.332.600, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2015 -16 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended the City Council adopt Resolution No. 7074 establishing an Appropriation Limit for Fiscal Year 2015 -16 pursuant to Article III -B of the California Constitution. Approved: Dominic Lazzar t City Manager Attachments: Exhibit "A" - Appropriation Limit for Fiscal Year 2015 -16 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 Resolution No. 7074 I_1 C EXHIBIT "A" CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2015 -16 Last Year's Limit (2014 -15) Adjustment Factors County of Los Angeles Population Growth Per Capita Cost of Living converted to a ratio Total Adjustment 1.0082 1.0382 1.0467 Annual Adjustment (73,141,763 x 1.0467 — 73,141,763) AMOUNT $73,141,763 3,415,720 D. FY2015 -16 Limit $76,557,483 EXHIBIT "A -1" CITY OF ARCADIA POPULATION /INFLATIONARY ADJUSTMENT FISCAL YEAR 2015 -16 Percentage Change in Per Capita Personal Income 3.82% Population Growth — County of Los Angeles 0.82% Source: Department of Finance, State of California EXHIBIT "B" CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2015 -16 A. Proceeds of Taxes Grand Total B. Exclusions (Medicare Tax) C. Appropriations Subject to Limitation D. 2015 -16 Year Limit E. Over (Under) Limit AMOUNT SOURCE $ 43,726,900 Exhibit "C" ( 394,300) Exhibit "D" 43,332,600 76,557,483 Exhibit "A" ($ 33,224,883) REVENUE EXHIBIT "C" CITY OF ARCADIA CALCULATION OF PROCEEDS FISCAL YEAR 2015 -16 PROCEEDS OF TAXES NON PROCEEDS OF TAXES TOTAL Property Tax $ 12,291,000 - $ 12,291,000 Public Safety Augmentation 504,100 - 504,100 Sales & Use Tax 11,969,000 - 11,969,000 Transient Occupancy Tax 3,399,000 - 3,399,000 Property Transfer Tax 544,100 - 544,100 Utility Users Tax 7,023,000 - 7,023,000 Business License Tax 1,250,000 50,000 1,300,000 TOTAL TAXES $ 36,980,200 $ 50,000 $ 37,030,200 FROM STATE Motor Vehicle In Lieu $ 5,839,000 - $ 5,839,000 Gasoline Tax - $ 1,549,000 1,549,000 Homeowner's Exemption 70,000 - 70,000 POST - 5,000 5,000 SB 90 Reimbursements 40,000 - - TOTAL FROM STATE $ 5,949,000 $ 1,554,000 $ 7,463,000 OTHER GOVERNMENTS Community Development (CDBG) Citizens Options for Public Safety (COPS) Other (PROP A &C) Taxes Prop A Park Maint. & Services Measure R AQMD (AB2766) TOTAL OTHER GOVERNMENTS LOCALLY RAISED LICENSES AND PERMITS 405,400 100,000 1,894,540 50,000 644,223 70,000 405,400 100,000 1,894,540 50,000 644,223 70,000 $ 3,164,163 $ 3,164,163 Franchise Fee - $ 1,162,200 $ 1,162,200 Parking Permits - 312,000 312,000 Plan Check Fees - 1,200,000 1,200,000 REVENUE PROCEEDS OF TAXES NON PROCEEDS OF TAXES TOTAL Building Permits - 1,300,000 1,300,000 Mechanical, Electrial & Plumbing - 350,000 350,000 Permits - 1,027,200 1,027,200 Home Occupantion Permits - 15,000 15,000 Miscellaneous Permits - 20,000 20,000 Planning Applications - 350,000 350,000 Fire Plan Check - 180,000 180,000 Engineering Permit Fees - 80,000 80,000 Fire Code Permits - 125,000 125,000 Fire Permit Inspections - 55,000 55,000 Off -site Improvement - 25,000 25,000 Water Efficient Landscape 200,000 200,000 Storm Water Plan Check Fees - 20,000 20,000 SB1473 building Permit - 500 500 Transportation Impact fees - 330,000 330,000 Solid Waste Assessments 380,200 380,200 Charges for Current Service - 2,907,600 2,907,600 Recreation Activities - 1,062,100 1,062,100 Library Charges - 70,500 70,500 Rent & Royalty - 1,271,400 1,271,400 Park /Dwelling Unit Fees - 1,800,000 1,800,000 TOTAL LICENSES & PERMITS - $ 13,216,500 $ 13,216,500 FINES & PENALTIES Miscellaneous Fines - $ 65,000 $ 65,000 Parking Citations - 530,000 530,000 Code Enforcement - 10,000 10,000 Fire Citations - 500 500 TOTAL FINES & PENALTIES - $ 605,500 $ 605,500 OTHER REVENUE Parimutual Receipts $ 700,000 - $ 700,000 Admin.O /H Transit - $ 94,700 94,700 Admin. O/H Water - 1,027,200 1,027,200 Admin. O/H Sewer - 161,900 161,900 Admin. O/H Lighting District - 86,800 86,800 Admin. O/H Redevelopment 41,700 41,700 Miscellaneous Receipts - 80,000 80,000 Court Appearances - 5,000 5,000 Waste Management Admin. Fees - 111,700 111,700 TOTAL OTHER REVENUE $ 700,000 $ 1,609,000 $ 2,309,000 REVENUE PROCEEDS OF TAXES NON PROCEEDS OF TAXES Total Estimated Revenues Before Revenue from Use of Money $ 43,629,200 $ 20,199,163 $ Revenue Earned from Use of Money Earned on Non - Proceeds of Taxes: Funds 107, 118 142, 151, 153 „155, 156, 157, &161 Proceeds of Taxes: Fund 302 General Fund TOTAL REVENUE EARNED FROM USE OF MONEY GRAND TOTAL - 63,000 TOTAL 63,828,363 63,000 29,300 - 29,300 68,400 31,600 100,000 $ 97,700 $ 94,600 $ 192,300 $ 43,726,900 $ 20,293,763 $ 64,020,663 EXHIBIT "C -1" CITY OF ARCADIA INTEREST EARNINGS PRODUCED BY TAXES FISCAL YEAR 2015 -16 Proceeds of Taxes (Excluding Interest) $43,629,200 Total Revenue (Excluding Interest) $63,828,363 Percent applicable to Proceeds of Taxes (68.4 %) Total interests budgeted for General Fund $ 100,000 Interest applicable to Proceeds of Taxes (68.4 %) $ 68,400 Interest applicable to Non - Proceeds of Taxes (31.6 %) $ 31,600 Interest directly identified to Funds which revenues are identified as Non Proceeds of Taxes — Funds 107,118, 142, 151, 155, 156, 157,153, 161 $ 63,000 Interest directly identified to Funds which revenues are identified as Proceeds of Taxes — Fund 302 $ 29,300 EXHIBIT "D" CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2015 -16 FEDERAL MANDATED COSTS: Medicare Tax $394,300 RESOLUTION NO. 7074 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2015 -2016 PURSUANT TO ARTICLE XIII -B OF THE CALIFORNIA CONSTITUTION WHEREAS, Article XIII -B of the Constitution of the State of California imposes restriction upon California governmental agencies to limit their annual appropriations to the appropriations in fiscal year 1975 -79, adjusted for the subsequent inflation and population changes; and WHEREAS, effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIII -B, the annual calculation of the appropriations limit is subject to a limited review in connection with the annual audit; and WHEREAS, the City of Arcadia may use as its inflation factor either the annual percentage change in California per capital personal income or the percentage change in its local assessment roll from the preceding year due to the change of local nonresidential construction. 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, the City of Arcadia may use as its population factor either the annual percentage change of the City's own population or the annual percentage change in population of the Los Angeles County. The City of Arcadia has opted to use, as the population adjustment factor, the change in the population of the Los Angeles County, and 1 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 2015 -16 for the City of Arcadia shall be and is hereby set in the amount of $76,557,483. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this day of 2015. ATTEST: City Clerk APPROVED AS TO FORM: a Stephen P. Deitsch City Attorney Mayor of the City of Arcadia