HomeMy WebLinkAboutItem 3g: Resolution 6728 Establishing Appropriation Limits for FY 2010-2011DATE: June 15, 2010
TO: Mayor and City Council
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STAFF REPORT
Administrative Services Department:
FROM: Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager/Tre urer
SUBJECT: Resolution No. 6728 establishing an Appropriation Limit for fiscal
year 2010 -2011
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 2010 -2011.
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 2010 -2011 Appropriation Limit on a provisional basis using the alternative
factor of per capita income for the inflationary adjustment. Once the City receives the
assessment data, the City may adjust the prior year's Limit accordingly.
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 2010 -2011 fiscal year GANN Limit are the population growth of the
City of Arcadia at 0.68% and the California per capita personal income factor of - 2.54 %.
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, 2011. As calculated, the
City's Proceeds of Taxes before exclusions is established at $33,222,324 (Exhibit C).
The 2010 -2011 Appropriation Limit is $64,199,194 (Exhibit A). Exhibit B shows that the
City of Arcadia is under the appropriation limit by $ 31,316,310.
RECOMMENDATION
Adopt Resolution No. 6728, a Resolution of the City Council of the City of
Arcadia, California, establishing an appropriations limit for the fiscal year 2010-
2011 pursuant to Article III -B of the California Constitution.
Approved:
Donald Penman, City Manager
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A. Last Year's Limit (2009 -2010)
B. Adjustment Factors
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2010 -2011
1. Population 1.0068
2. Per Capita 0.9746
Total Adjustment (1.0068 x 0.9746) 0.9812
C. Annual Adjustment (64,595,976 x 0.9812 — 64,595,976) - 1.230,070
D. 2010 -2011 Limit (65,429,264 — 1,230,070) $64,199.194
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EXHIBIT "A"
AMOUNT
$65,429,264
CITY OF ARCADIA
POPULATION /INFLATIONARY ADJUSTMENT
FISCAL YEAR 2010 -11
PER CAPITA INFLATIONARY ADJUSTMENT
POPULATION GROWTH - CITY OF ARCADIA
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
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EXHIBIT "A -1"
-2.54%
1.0068
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2010 -2011
A. Proceeds of Taxes $ 33,222,324
B. Exclusions ( 339,440)
C. Appropriations Subject to Limitation 32,882,884
D. 2010 -2011 Year Limit 64,199,194
E. Over (Under) Limit ($ 31,316,310)
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AMOUNT SOURCE
Exhibit "C"
Exhibit "D"
Exhibit "A"
EXHIBIT "B"
FROM STATE
REVENUE
CITY OF ARCADIA
CALCULATION OF PROCEEDS
FISCAL YEAR 2010 -2011
PROCEEDS
OF TAXES
EXHIBIT "C"
NON
PROCEEDS TOTAL
OF TAXES
Property Tax $ 9,300,000 $ 9,300,000
Public Safety Augmentation 310,000 310,000
Sales & Use Tax 8,700,000 - 8,700,000
Transient Occupancy Tax 2,225,000 2,225,000
Property Transfer Tax 335,000 335,000
Utility Users Tax 5,400,000 5,400,000
Business License Tax 1,081,300 50,000 1,131,300
TOTAL TAXES $ 27,351,300 $ 50,000 $ 27,401,300
Motor Vehicle In Lieu $ 4,576,100 $ 4,576,100
Gasoline Tax - $ 1,450,395 1,450,395
Homeowner's Exemption 50,000 - 50,000
POST 20,000 20,000
SB 90 Reimbursements 5,000 5,000
TOTAL FROM STATE $ 4,626,100 $ 1,475,395 $ 6,101,495
OTHER GOVERNMENTS
Charges to ARA - $ 239,060 $ 239,060
Community Development (CDBG) 444,478 444,478
Other (PROP A &C) Taxes 1,394,000 1,394,000
PROP A Park Maint. & Services 40,000 40,000
AQMD (AB2766) 50,000 50,000
TOTAL OTHER GOVERNMENTS $ 2,167,538 $ 2,167,538
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee $ 1,100,000 $ 1,100,000
Parking Permits 260,000 260,000
Plan Check Fees - 605,000 605,000
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PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Building Permits 767,000 767,000
Mechanical, Electrial & Plumbing 198,000 198,000
Permits
Home Occupantion Permits - 15,000 15,000
Miscellaneous Permits 7,000 7,000
Planning Applications - 251,000 251,000
Fire Plan Check 135,000 135,000
Engineering Permit Fees . 45,000 45,000
Fire Code Permits 95,000 95,000
Fire Permit Inspections 43,000 43,000
Storm Water Plan Check Fees 1,500 1,500
Transpaction Impact fees 185,000 185,000
Solid Waste Assessments 400,000 400,000
Charges for Current Service 2,186,800 2,186,800
Recreation Activities 897,835 897,835
Library Charges 73,000 73,000
Rent & Royalty 1,734,000 1,734,000
Park/Dwelling Unit Fees 750,000 750,000
TOTAL LICENSES & PERMITS $ 9,749,135 $ 9,749,135
FINES & PENALTIES
Miscellaneous Fines - $ 50,000 $ 50,000
Parking Citations 550,000 550,000
Code Enforcement 5,000 5,000
Fire Citations 5,000 5,000
TOTAL FINES & PENALTIES - $ 610,000 $ 610,000
OTHER REVENUE
Parimutual Receipts $ 900,000 - $ 900,000
Admin. O/H Transit - $ 157,960 157,960
Admin. O/H Water 1,124,960 1,124,960
Admin. O/H Solid Waste - 62,730 62,730
Admin. O/H Sewer 80,880 80,880
Admin. O/H Prop A 19,440 19,440
Admin. O/H Prop C 18,050 18,050
Admin. O/H Parking District - 3,290 3,290
Miscellaneous Receipts 19,200 19,200
Court Appearances 1,500 1,500
Sale of Property 20,000 20,000
Waste Management Admin. Fees 101,300 101,300
TOTAL OTHER REVENUE $ 900,000 $ 1,609,310 $ 2.509,310
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PROCEEDS NON
REVENUE OF TAXES PROCEEDS TOTAL
OF TAXES
Total Estimated Revenues
Before Revenue from Use of Money $ 32,877,400 $ 15,661,378 $ 48,538,778
Revenue Earned from Use of Money
Earned on Non - Proceeds 252,000 252,000
of Taxes: Funds 107, 118
142, 151, 155, 157 & 521,153
Proceeds of Taxes: Fund 302 66,000 66,000
General Fund 278,924
TOTAL REVENUE EARNED
FROM USE OF MONEY
$ 344,924 $ 385,076 $ 730,000
GRAND TOTAL $ 33,222,324 $ 16,046,454 $ 49,268,778
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133,076 412,000
CITY OF ARCADIA
INTEREST EARNINGS PRODUCED BY TAXES
FISCAL YEAR 2010 -2011
PROCEEDS OF TAXES (EXCLUDING INTEREST)
TOTAL REVENUE (EXCLUDING INTEREST)
PERCENT APPLICABLE TO PROCEEDS OF TAXES (67.7 %)
TOTAL INTEREST GENERAL FUND
INTEREST APPLICABLE TO PROCEEDS OF TAXES (67.7 %)
INTEREST APPLICABLE TO NON - PROCEEDS OF TAXES (32.3 %)
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
ARE IDENTIFIED AS NON PROCEEDS OF TAXES — FUNDS 107,
118,142, 151, 155, 157, 521,153,
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Exhibit "C -1"
$32,877,400
$48,538,778
$ 412,000
$ 278,924
$ 133,076
$ 252,000
INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES
IDENTIFIED AS PROCEEDS OF TAXES — FUND 302 $ 66,000
FEDERAL MANDATED COSTS:
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2010 -2011
MEDICARE $339,440
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EXHIBIT "D"
RESOLUTION NO. 6728
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, ESTABLISHING AN
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2010 -2011
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 2010 -2011 for the City of
Arcadia shall be and is hereby set in the amount of $64,199,194.
SECTION 2. The City Clerk shall certify to the adoption of this Resolution.
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Passed, approved and adopted this
2
day of , 2010.
Mayor of the City of Arcadia