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Home My WebLink AboutItem 13e - Appropriation Limit for Fiscal Year 2018-19DATE: June 19, 2018 TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Shannon Huang, Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7222 ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2018-19 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 $47,489,800 versus a limit of $88,427,969, meaning that the City of Arcadia is under the Gann Limit by $40,938,169. It is recommended that the City Council adopt Resolution No. 7222 establishing the annual adjustment factors and the resultant Gann Limit for Fiscal Year 2018-19. 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 Gann Limit, which is adjusted annually for inflation and population growth. The law also requires an annual review of the Gann 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. Resolution No. 7222 Establishing an Appropriation Limit for Fiscal Year 2018-19 June 19, 2018 Page 2 of 3 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 County Assessor. Thus, the change of California Per Capita Income at 3.67% has been used as the inflationary adjustment factor in the calculation of the Appropriation Limit. The second factor for calculating the Gann 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 0.51%; the City’s population growth was 0.34% in 2017. As a result, the City has chosen to use the County’s growth factor for FY18- 19’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, 2019. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $47,975,000 (Exhibit “C”), and the FY2018-19 Appropriation Limit is $88,427,969 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $40,938,169. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. Thus, this matter is exempt under CEQA. FISCAL IMPACT The Gann Limit for the City of Arcadia in FY 2018-19 is established at $88,427,969. The appropriations subjected to the limit in the annual budget are $47,489,800, which are well within the Gann Limit. Therefore, the City may fully expend all funds appropriated in the FY 2018-19 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended the City Council adopt Resolution No. 7222 establishing an Appropriation Limit of $88,427,969 for Fiscal Year 2018-19 pursuant to Article III-B of the California Constitution. Resolution No. 7222 Establishing an Appropriation Limit for Fiscal Year 2018-19 June 19, 2018 Page 3 of 3 Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2018-19 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. 7222 EXHIBIT “A” CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2018-19 AMOUNT A. Last Year’s Limit (2018-19) $84,863,694 B. Adjustment Factors Los Angeles County Population Growth 1.0051 Per Capita Cost of Living converted to a ratio 1.0367 Total Adjustment 1.0420 C. Annual Adjustment (84,863,694 x 1.0420 – 84,863,694) 3,564,275 D. FY2018-19 Limit $88,427,969 EXHIBIT “A-1” CITY OF ARCADIA POPULATION/INFLATIONARY ADJUSTMENT FISCAL YEAR 2018-19 Percentage Change in Per Capita Personal Income 3.67% Population Growth – Los Angeles County 0.51% Source: Department of Finance, State of California EXHIBIT “B” CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2018-19 AMOUNT SOURCE A. Proceeds of Taxes Grand Total $ 47,975,000 Exhibit “C” B. Exclusions (Medicare Tax) ( 485,200) Exhibit “D” C. Appropriations Subject to Limitation $ 47,489,800 D. 2018-19 Year Limit 88,427,969 Exhibit “A” E. Over (Under) Limit ($ 40,938,169) REVENUE PROCEEDS OF TAXES NON PROCEEDS OF TAXES TOTAL Property Tax 15,706,600$ - 15,706,600$ Public Safety Augmentation 536,400 - 536,400 Sales & Use Tax 11,553,100 - 11,553,100 Transient Occupancy Tax 3,190,800 - 3,190,800 Property Transfer Tax 652,200 - 652,200 Utility Users Tax 6,998,800 - 6,998,800 Business License Tax 1,080,000 50,000 1,130,000 TOTAL TAXES 39,717,900$ 50,000$ 39,767,900$ FROM STATE Motor Vehicle In Lieu 7,182,300$ - 7,182,300$ Gasoline Tax - 1,448,985$ 1,448,985 Road Maint./Rehabilitation (SB1)- 952,755$ 952,755 Homeowner's Exemption 84,700 - 84,700 POST - 15,000 15,000 SB 90 Reimbursements 40,000 - 40,000 TOTAL FROM STATE 7,307,000$ 2,416,740$ 9,723,740$ OTHER GOVERNMENTS Community Development (CDBG)- 287,200 287,200 Citizens Options for Public Safety - 154,000 154,000 Homeland Security - 10,000 10,000 OTS Grant - 107,000 107,000 Other (PROP A&C) Taxes - 2,054,439 2,054,439 Prop A Park Maint. & Services - 50,000 50,000 Measure R - 696,618 696,618 Measure M - 791,751 791,751 Used Oil Grant - 16,000 16,000 Beverage Container Recycling Grant - 14,500 14,500 AQMD (AB2766)- 72,400 72,400 TOTAL OTHER GOVERNMENTS - 4,253,908$ 4,253,908$ LOCALLY RAISED LICENSES AND PERMITS Franchise Fee - 984,600$ 984,600$ Parking Permits - 380,000 380,000 Plan Check Fees - 1,000,000 1,000,000 CITY OF ARCADIA CALCULATION OF PROCEEDS FISCAL YEAR 2018-19 EXHIBIT “C” REVENUE PROCEEDS OF TAXES NON PROCEEDS OF TAXES TOTAL Building Permits - 1,450,000 1,450,000 Mechanical, Electrial & Plumbing Permits - 375,000 375,000 Home Occupantion Permits - 10,000 10,000 Miscellaneous Permits - 12,000 12,000 Planning Applications - 215,000 215,000 Fire Plan Check - 260,000 260,000 Engineering Permit Fees - 110,000 110,000 Fire Code Permits - 130,000 130,000 Fire Permit Inspections - 65,000 65,000 Off-site Improvement - 15,000 15,000 Water Efficient Landscape 130,000 130,000 Storm Water Plan Check Fees - 10,000 10,000 SB1473 building Permit - 500 500 Charges for Current Service - 3,097,200 3,097,200 Recreation Activities - 1,216,400 1,216,400 Library Charges - 187,100 187,100 Rent & Royalty - 1,279,300 1,279,300 Transportation Impact fees - 300,000 300,000 Solid Waste Assessments 450,000 450,000 Park/Dwelling Unit Fees - 1,600,000 1,600,000 TOTAL LICENSES & PERMITS - 13,277,100$ 13,277,100$ FINES & PENALTIES Miscellaneous Fines - 65,000$ 65,000$ Parking Citations - 500,000 500,000 Code Enforcement - 18,000 18,000 Fire Citations - 500 500 TOTAL FINES & PENALTIES - 583,500$ 583,500$ OTHER REVENUE Parimutual Receipts 700,000$ - 700,000$ Admin. O/H Transit - 113,300$ 113,300 Admin. O/H Water - 1,278,400 1,278,400 Admin. O/H Sewer - 242,300 242,300 Admin. O/H Lighting District - 98,100 98,100 Admin. O/H Redevelopment - 31,900 31,900 Miscellaneous Receipts - 50,000 50,000 Court Appearances - 21,000 21,000 Waste Management Admin. Fees - 114,000 114,000 TOTAL OTHER REVENUE 700,000$ 1,949,000$ 2,649,000$ REVENUE PROCEEDS OF TAXES NON PROCEEDS OF TAXES TOTAL Total Estimated Revenues Before Revenue from Use of Money 47,724,900$ 22,530,248$ 70,255,148$ Revenue Earned from Use of Money Earned on Non-Proceeds - 345,900 345,900 of Taxes: Funds 107, 104, 112, 114, 118 142, 151, 155, 156, 157, 161, 165 Proceeds of Taxes: Fund 302 114,300 - 114,300 General Fund 135,800 64,200 200,000 TOTAL REVENUE EARNED FROM USE OF MONEY 250,100$ 410,100$ 660,200$ GRAND TOTAL 47,975,000$ 22,940,348$ 70,915,348$ EXHIBIT “C-1” CITY OF ARCADIA INTEREST EARNINGS PRODUCED BY TAXES FISCAL YEAR 2018-19 Proceeds of Taxes (Excluding Interest) $47,724,900 Total Revenue (Excluding Interest) $70,255,148 Percent applicable to Proceeds of Taxes (67.9%) Total interests budgeted for General Fund $ 200,000 Interest applicable to Proceeds of Taxes (67.9%) $ 135,800 Interest applicable to Non-Proceeds of Taxes (32.1%) $ 64,200 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, 161,165 $ 345.900 Interest directly identified to Funds which revenues are identified as Proceeds of Taxes – Fund 302 $ 114,300 EXHIBIT “D” CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2018-19 FEDERAL MANDATED COSTS: Medicare Tax $485,200