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HomeMy WebLinkAboutItem 13c - Establishing an Appropriation Limit for FY 2019-20DATE: June 18, 2019 TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director By: Henry Chen, Acting Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7265 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2019-20 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 of Arcadia (City) to establish the Limit by resolution. As calculated, the City’s expenditures subject to the limit are $47,788,600 versus a limit of $92,416,070, meaning that the City is under the GANN Limit by $44,627,470. It is recommended that the City Council adopt Resolution No. 7265 establishing an appropriation limit for Fiscal Year 2019 -20 pursuant to Article XIII-B of the California Constitution. 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), then they are excluded in the calculation of the City’s GANN Limit. Resolution No. 7265 Establishing an Appropriation Limit for Fiscal Year 2019-20 June 18, 2019 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 3.85% 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 of Los Angeles (the “County”) or the City. In the County, the population growth rate was -0.01%; the City’s population growth rate was 0.64% in 2018. As a result, the City has chosen to use the City’s growth factor for FY19-20’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, 2020. As calculated, the City’s Proceeds of Taxes before Exclusions is established at $48,278,800 (Exhibit “C”), and the FY2019-20 Appropriation Limit is $92,416,070 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $44,627,470. FISCAL IMPACT The GANN Limit for the City of Arcadia in FY 2 019-20 is established at $92,416,070. The appropriations subjected to the Limit in the annual budget are $47,788,600, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2019-20 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended the City Council adopt Resolution No. 7265 establishing an Appropriation Limit for Fiscal Year 2019-20 pursuant to Article XIII-B of the California Constitution. Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2019-20 Exhibit “A-1” - Population/Inflationary Adjustment Resolution No. 7265 Establishing an Appropriation Limit for Fiscal Year 2019-20 June 18, 2019 Page 3 of 3 Exhibit “B” - Appropriations Subject to Limitation Exhibit “C” - Calculation of Proceeds Exhibit “C-1” - Interest Earnings produced by Taxes Exhibit “D” - Exclusions Resolution No. 7265 EXHIBIT A AMOUNT A.  LAST YEAR'S LIMIT (2018‐19) 88,427,969$  B.  ADJUSTMENT FACTORS: CITY OF ARCADIA POPULATION GROWTH 1.0064 PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0385 TOTAL ADJUSTMENT 1.0451 C.  ANNUAL ADJUSTMENT 3,988,101        D.  FISCAL 2019‐20 LIMIT 92,416,070$  CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2019‐20 EXHIBIT A‐1 AMOUNT PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 3.85% POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.10% POPULATION GROWTH ‐ CITY OF ARCADIA 0.64% SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA CITY OF ARCADIA POPULATION/COST OF LIVING ADJUSTMENT FISCAL YEAR 2019‐20 EXHIBIT B AMOUNT SOURCE A.  PROCEEDS OF TAXES GRAND TOTAL 48,278,800$     EXHIBIT C B.  EXCLUSIONS (MEDICARE TAX) (490,200)              EXHIBIT D C.  APPROPRIATIONS SUBJECT TO LIMITATION 47,788,600$     D.  FISCAL 2019‐20 LIMIT 92,416,070        EXHIBIT A E.  OVER/(UNDER) LIMIT (44,627,470)$    CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2019‐20 EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF  TAXES  TOTAL   Property Tax 15,862,000$    ‐$                     15,862,000$      Public Safety Augmentation  553,500           ‐                      553,500             Sales & Use Tax 11,476,500      ‐                       11,476,500        Transient Occupancy Tax 3,466,000        ‐                       3,466,000          Property Transfer Tax 530,400           ‐                      530,400             Utility Users Tax 6,783,000        ‐                       6,783,000          Business License Tax 1,170,000        50,000             1,220,000        TOTAL TAXES 39,841,400$    50,000$           39,891,400$    FROM STATE   Motor Vehicle In Lieu 7,492,800$      ‐$                     7,492,800$        Gasoline Tax ‐                       1,501,627        1,501,627          Road Maint./Rehabilitation (SB1) ‐                      955,100          955,100             Homeowner's Exemption 82,000             ‐                       82,000               POST ‐                       15,000             15,000               SB 90 Reimbursements 20,000             ‐                       20,000             TOTAL FROM STATE 7,594,800$      2,471,727$      10,066,527$    OTHER GOVERNMENTS   Community Development (CDBG) ‐$                    287,700$        287,700$           Citizens Options for Public Safety ‐                      160,200          160,200             Homeland Security ‐                       10,000             10,000               OTS Grant ‐                      106,200          106,200             Other (PROP A&C) Taxes ‐                       2,131,960        2,131,960          Prop A Park Maint. & Services ‐                       50,000             50,000               Measure R ‐                      725,100          725,100             Measure M ‐                      821,640          821,640             Used Oil Grant ‐                       16,000             16,000               Beverage Container Recycling Grant ‐                       14,500             14,500               AQMD  (AB2766) ‐                       74,300             74,300             TOTAL OTHER GOVERNMENTS ‐$                     4,397,600$      4,397,600$      CITY OF ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2019‐20 EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF  TAXES  TOTAL CITY OF ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2019‐20 LOCALLY RAISED   LICENSES AND PERMITS   Franchise Fee ‐$                    965,000$        965,000$           Parking Permits ‐                      598,400          598,400             Plan Check Fees ‐                      750,000          750,000             Building Permits ‐                      700,000          700,000           Mechanical, Electrical & Plumbing Permits ‐                      300,000          300,000             Home Occupation Permits ‐                       10,000             10,000               Miscellaneous Permits ‐                       10,000             10,000               Planning Applications ‐                      250,000          250,000             Fire Plan Check ‐                      250,000          250,000             Engineering Permit Fees ‐                      122,000          122,000             Fire Code Permits ‐                      140,000          140,000             Fire Permit Inspections ‐                       80,000             80,000               Off‐site Improvement ‐                       10,000             10,000               Water Efficient Landscape ‐                      110,000          110,000             Commercial Storm Water Inspection ‐                       ‐                       ‐                         Storm Water Plan Check Fees ‐                       10,000             10,000               SB1473 building Permit ‐                       300                  300                    PEG ‐                       ‐                       ‐                         Charges for Current Service ‐                       3,097,200        3,097,200          Recreation Activities ‐                       1,236,100        1,236,100          Library Charges ‐                      109,400          109,400             Rent & Royalty ‐                       1,330,000        1,330,000          Transportation Impact fees ‐                      300,000          300,000             Solid Waste Assessments ‐                      550,000          550,000             Park/Dwelling Unit Fees ‐                      625,000          625,000           TOTAL LICENSES & PERMITS ‐$                     11,553,400$    11,553,400$    EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF  TAXES  TOTAL CITY OF ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2019‐20 FINES & PENALTIES   Miscellaneous Fines ‐$                     50,000$           50,000$             Parking Citations ‐                      450,000          450,000             Code Violations ‐                       25,000             25,000               Fire Citations ‐                       500                  500                  TOTAL FINES & PENALTIES ‐$                    525,500$        525,500$         OTHER REVENUE   Parimutual Receipts 630,500$         ‐$                    630,500$           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 ‐                       5,000               5,000                 Waste Management Admin. Fees ‐                      116,300          116,300           TOTAL OTHER REVENUE 630,500$         1,935,300$      2,565,800$      Total Estimated Revenues   Before Revenue from Use of Money  48,066,700$    20,933,527$    69,000,227$    Revenue Earned from Use of Money Earned on Non‐Proceeds ‐$                    363,600$        363,600$         of Taxes: Funds 104, 107, 112, 114, 118 142, 151, 153, 155, 156, 157, 161, 165 Proceeds of Taxes: Fund 302  72,700             ‐                       72,700             General Fund 139,400           60,600            200,000           TOTAL REVENUE EARNED    FROM USE OF MONEY 212,100$        424,200$        636,300$         GRAND TOTAL 48,278,800$    21,357,727$    69,636,527$    EXHIBIT C‐1 AMOUNT PROCEEDS OF TAXES (EXCLUDING INTEREST) 48,066,700$  TOTAL REVENUE (EXCLUDING INTEREST) 69,000,227$  PERCENT APPLICABLE TO PROCEEDS OF TAXES 69.70% TOTAL INTEREST BUDGETED FOR GENERAL FUND 200,000$          INTEREST APPLICABLE TO PROCEEDS OF TAXES 69.70% 139,400$          INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 30.30% 60,600$             INTEREST DRIECTLY IDENTIFIED TO THE FUNDS WHICH REVENUES ARE IDENTIFIED AS NON PROCEEDS OF TAXES ‐ FUND 104, 107, 112, 114, 118, 142, 151, 153, 155, 156, 157, 161, 165 363,600$          INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES ARE IDENTIFIED AS PROCEEDS OF TAXES ‐ FUND 302 72,700$             CITY OF ARCADIA INTEREST EARNINGS PRODUCED BY TAXES FISCAL YEAR 2019‐20 EXHIBIT D FEDERAL MANDATED COSTS: MEDICARE TAX 490,200$               CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2019‐20