No preview available
HomeMy WebLinkAboutItem 2d - Establishing an Appropriations Limit for Fiscal Year 2017-18 DATE: June 6, 2017 TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Shannon Huang, Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7173 ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2017-18 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 $45,656,400 versus a limit of $84,863,694, meaning that the City of Arcadia is under the Gann Limit by $39.2 million. It is recommended that the City Council adopt Resolution No. 7173 establishing the annual adjustment factors and the resultant Limit for Fiscal Year 2017-18. 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, including the expenditure of tax proceeds on voter-approved debt and the costs of complying with Court orders and Federal mandates. 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. 7135 Establishing an Appropriations Limit for Fiscal Year 2017-18 June 6, 2017 Page 2 of 2 County Assessor. Thus, the change of California Per Capita Income at 3.69% has been used as the inflationary adjustment factor in the calculation of the 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 0.57%; the City’s population growth was 0.31% in 2016. As a result, the City has chosen to use the County’s growth factor for FY17- 18’s GANN Limit calculation. The attached Exhibits “A”, “A-1”, “B”, “C”, “C-1”, and “D”, demonstrate the City’s compliance with Article XIII-B of the State Constitution for the Fiscal Year ending June 30, 2018. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $46,133,400 (Exhibit “C”), and the FY2017-18 Appropriation Limit is $84,863,694 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $39,207,294. FISCAL IMPACT The Gann Limit for the City of Arcadia in FY 2017-18 is established at $84,863,694. The appropriations subjected to the limit in the annual budget are $45,656,400, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2017-18 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended the City Council adopt Resolution No. 7173 establishing an Appropriations Limit for Fiscal Year 2017-18 pursuant to Article XIII-B of the California Constitution. Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2017-18 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. 7173 EXHIBIT “A” CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2017-18 AMOUNT A. Last Year’s Limit (2016-17) $81,380,604 B. Adjustment Factors Los Angeles County Population Growth 1.0057 Per Capita Cost of Living converted to a ratio 1.0369 Total Adjustment 1.0428 C. Annual Adjustment (81,380,604 x 1.0428 – 81,380,604) 3,483,090 D. FY2017-18 Limit $84,863,694 EXHIBIT “A-1” CITY OF ARCADIA POPULATION/INFLATIONARY ADJUSTMENT FISCAL YEAR 2017-18 Percentage Change in Per Capita Personal Income 3.69% Population Growth – Los Angeles County 0.57% Source: Department of Finance, State of California EXHIBIT “B” CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2017-18 AMOUNT SOURCE A. Proceeds of Taxes Grand Total $ 46,133,400 Exhibit “C” B. Exclusions (Medicare Tax) ( 477,000) Exhibit “D” C. Appropriations Subject to Limitation 45,656,400 D. 2017-18 Year Limit 84,863,694 Exhibit “A” E. Over (Under) Limit ($ 39,207,294) CITY OF ARCADIA CALCULATION OF PROCEEDS FISCAL YEAR 2017-18 NON PROCEEDS REVENUE TOTAL PROCEEDS OF TAXES OF TAXES Property Tax$ 14,409,800 - $ 14,409,800 Public Safety Augmentation 501,900 - 501,900 Sales & Use Tax 11,398,600 - 11,398,600 EXHIBIT “C” Transient Occupancy Tax 3,874,000 - 3,874,000 Property Transfer Tax 519,900 - 519,900 Utility Users Tax 6,858,000 - 6,858,000 Business License Tax 950,000 50,000 1,000,000 TOTAL TAXES$ 38,512,200$ 50,000$ 38,562,200 FROM STATE Motor Vehicle In Lieu$ 6,796,500 - $ 6,796,500 Gasoline Tax -$ 1,595,207 1,595,207 Homeowner's Exemption 84,700 - 84,700 POST - 15,000 15,000 SB 90 Reimbursements 40,000 - 40,000 TOTAL FROM STATE$ 6,921,200$ 1,610,207$ 8,531,407 OTHER GOVERNMENTS Community Development (CDBG) - 627,900 627,900 Citizens Options for Public Safety (COPS) - 142,200 142,200 Other (PROP A&C) Taxes - 1,941,169 1,941,169 Prop A Park Maint. & Services - 60,000 60,000 Measure R - 660,100 660,100 Measure M - 710,693 710,693 Used Oil Grant - 16,300 16,300 Beverage Container Recycling Grant - 15,300 15,300 AQMD (AB2766) - 72,400 72,400 TOTAL OTHER GOVERNMENTS -$ 4,246,062$ 4,246,062 LOCALLY RAISED LICENSES AND PERMITS Franchise Fee -$ 1,056,800$ 1,056,800 Parking Permits - 355,000 355,000 Plan Check Fees - 800,000 800,000 NON PROCEEDS REVENUE PROCEEDS TOTAL OF TAXES OF TAXES Building Permits - 800,000 800,000 Mechanical, Electrial & Plumbing - 300,000 300,000 Permits Home Occupantion Permits - 10,000 10,000 Miscellaneous Permits - 15,000 15,000 Planning Applications - 215,000 215,000 Fire Plan Check - 260,000 260,000 Engineering Permit Fees - 100,000 100,000 Fire Code Permits - 130,000 130,000 Fire Permit Inspections - 60,000 60,000 Off-site Improvement - 20,000 20,000 Water Efficient Landscape 135,000 135,000 Storm Water Plan Check Fees - 10,000 10,000 SB1473 building Permit - 500 500 Transportation Impact fees - 300,000 300,000 Solid Waste Assessments 380,200 380,200 PEG 85,000 85,000 Charges for Current Service - 3,057,700 3,057,700 Recreation Activities - 1,233,100 1,233,100 Library Charges - 155,200 155,200 Rent & Royalty - 1,413,900 1,413,900 Park/Dwelling Unit Fees - 900,000 900,000 TOTAL LICENSES & PERMITS -$ 11,792,400$ 11,792,400 FINES & PENALTIES Miscellaneous Fines -$ 65,000$ 65,000 Parking Citations - 500,000 500,000 Code Enforcement - 10,000 10,000 Fire Citations - 500 500 TOTAL FINES & PENALTIES -$ 575,500 $ 575,500 OTHER REVENUE Parimutual Receipts$ 700,000 - $ 700,000 Admin. O/H Transit -$ 103,700 103,700 Admin. O/H Water - 1,315,100 1,315,100 Admin. O/H Sewer - 254,100 254,100 Admin. O/H Lighting District - 102,000 102,000 Admin. O/H Redevelopment 30,500 30,500 Miscellaneous Receipts - 50,000 50,000 Court Appearances - 5,000 5,000 Waste Management Admin. Fees - 112,000 112,000 TOTAL OTHER REVENUE$ 700,000$ 1,972,400$ 2,672,400 NON PROCEEDS OF REVENUE PROCEEDS OF TOTAL TAXES TAXES Total Estimated Revenues Before Revenue from Use of Money $ 46,133,400 $ 20,246,569 $ 66,379,969 Revenue Earned from Use of Money Earned on Non-Proceeds - 116,400 116,400 of Taxes: Funds 107, 104, 112, 114, 118 142, 151, 153,,155, 156, 157, &161 Proceeds of Taxes: Fund 302 76,500 - 76,500 General Fund 111,200 48,800 160,000 TOTAL REVENUE EARNED FROM USE OF MONEY $ 187,700 $ 165,200 $ 352,900 GRAND TOTAL $ 46,321,100 $ 20,411,769 $ 66,732,869 EXHIBIT “C-1” CITY OF ARCADIA INTEREST EARNINGS PRODUCED BY TAXES FISCAL YEAR 2017-18 Proceeds of Taxes (Excluding Interest) $46,133,400 Total Revenue (Excluding Interest) $66,379,969 Percent applicable to Proceeds of Taxes (69.5%) Total interests budgeted for General Fund $ 160,000 Interest applicable to Proceeds of Taxes (69.5%) $ 111,200 Interest applicable to Non-Proceeds of Taxes (30.5%) $ 48,800 Interest directly identified to Funds which revenues are identified as Non Proceeds of Taxes – Funds 107,104,112,114,118, 142, 151, 155, 156, 157,153, 161 $ 116,400 Interest directly identified to Funds which revenues are identified as Proceeds of Taxes – Fund 302 $ 76,500 EXHIBIT “D” CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2017-18 FEDERAL MANDATED COSTS: Medicare Tax $477,000