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HomeMy WebLinkAboutItem 13d - Establishing an Appropriation Limit for FY 2021-22DATE: June 15, 2021 TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Henry Chen, Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7371 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2021-22 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 $57,140,160 versus a limit of $100,980,870, meaning that the City is under the GANN Limit by $43,840,710. It is recommended that the City Council adopt Resolution No. 7371 establishing the annual adjustment factors and the resultant GANN Limit for Fiscal Year 2021-22. 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. 7371 Establishing an Appropriation Limit for Fiscal Year 2021-22 June 15, 2021 Page 2 of 3 County Assessor. Thus, the change of California Per Capita Income at 5.73% 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 (County) or the City. In the County, the population growth rate was -0.89%; the City’s population growth rate was -0.28% in 2021. As a result, the City has chosen to use the City’s growth factor for the Fiscal Year 2021-22 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, 2022. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $57,640,260 (Exhibit “C”), and the Fiscal Year 2021-22 Appropriation Limit is $100,980,870 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $43,840,710. 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 Fiscal Year 2021-22 is established at $100,980,870. The appropriations subjected to the limit in the annual budget are $57,140,160, which are well within the GANN Limit. Therefore, the City may fully expend all funds appropriated in the Fiscal Year 2021-22 Operating Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended that the City Council determine that this project is exempt under the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7371 establishing an Appropriation Limit of $100,980,870 for Fiscal Year 2021-22 pursuant to Article III-B of the California Constitution. Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2021-22 Exhibit “A-1” - Population/Inflationary Adjustment Resolution No. 7371 Establishing an Appropriation Limit for Fiscal Year 2021-22 June 15, 2021 Page 3 of 3 Exhibit “B” - Appropriations Subject to Limitation Exhibit “C” - Calculation of Proceeds Exhibit “C-1” - Interest Earnings produced by Taxes Exhibit “D” - Exclusions Resolution No. 7371 EXHIBIT A AMOUNT A.  LAST YEAR'S LIMIT (2020‐2021) 95,780,015$     B.  ADJUSTMENT FACTORS: CITY OF ARCADIA POPULATION GROWTH 0.9972 PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0573 TOTAL ADJUSTMENT 1.0543 C.  ANNUAL ADJUSTMENT 5,200,855          D.  FISCAL 2021‐2022 LIMIT 100,980,870$   CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2021‐2022 EXHIBIT A‐1 AMOUNT PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 5.73% POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.89% POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.28% SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA CITY OF ARCADIA POPULATION/COST OF LIVING ADJUSTMENT FISCAL YEAR 2021‐2022 EXHIBIT B AMOUNT SOURCE A.  PROCEEDS OF TAXES GRAND TOTAL 57,640,260$  EXHIBIT C B.  EXCLUSIONS (MEDICARE TAX) (500,100)          EXHIBIT D C.  APPROPRIATIONS SUBJECT TO LIMITATION 57,140,160$   D.  FISCAL 2020‐21 LIMIT 100,980,870  EXHIBIT A E.  OVER/(UNDER) LIMIT (43,840,710)$  CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2021‐2022 EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL   Property Tax 17,896,500$ ‐$                             17,896,500$    Public Safety Augmentation 505,500            ‐                                505,500               Sales  & Use  Tax 18,796,700     ‐                                18,796,700       Transient  Occupancy Tax 2,857,700        ‐                                2,857,700          Property Transfer  Tax 408,100            ‐                                408,100               Utility Users  Tax 7,251,100        ‐                                7,251,100          Business License Tax 1,180,000       50,000                 1,230,000        TOTAL  TAXES 48,895,600$ 50,000$              48,945,600$  FROM STATE   Motor  Vehicle  In Lieu 8,246,700$     ‐$                             8,246,700$       Gasoline Tax ‐                             1,459,300         1,459,300          Road Maint./Rehabilitation (SB1)‐                             1,151,000         1,151,000          Homeowner's  Exemption 79,100               ‐                                79,100                  POST ‐                             10,000                 10,000                  SB 90 Reimbursements 10,000               ‐                                10,000                TOTAL  FROM STATE 8,335,800$    2,620,300$      10,956,100$  OTHER GOVERNMENTS   Community Development (CDBG)‐$                          301,500$           301,500$            Citizens  Options  for  Public Safety ‐                             150,000              150,000               Homeland Security ‐                              ‐                                 ‐                                 OTS Grant ‐                             96,500                 96,500                  Other  (PROP  A&C) Taxes ‐                             2,113,700         2,113,700          Prop A Park Maint. & Services ‐                              ‐                                 ‐                                 Measure  R ‐                             718,800              718,800               Measure  M ‐                             814,600              814,600               Used Oil  Grant ‐                             15,500                 15,500                  Beverage  Container Recycling Grant ‐                             14,500                 14,500                  AQMD   (AB2766)‐                             74,000                 74,000                TOTAL  OTHER GOVERNMENTS ‐$                          4,299,100$      4,299,100$     CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2021‐2022 EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2021‐2022 LOCALLY RAISED   LICENSES AND  PERMITS   Franchise  Fee ‐$                          965,800$           965,800$            Parking Permits ‐                             598,400              598,400               Plan Check Fees ‐                             830,000              830,000               Building Permits ‐                             1,100,000         1,100,000       Mechanical, Electrical  & Plumbing  Permits ‐                             375,000              375,000               Home  Occupation Permits ‐                             8,300                    8,300                     Miscellaneous Permits ‐                             5,500                    5,500                     Planning Applications ‐                             200,000              200,000               Fire  Plan Check ‐                             150,000              150,000               Engineering Permit Fees ‐                             130,000              130,000               Fire  Code Permits ‐                             130,000              130,000               Fire  Permit Inspections ‐                             60,000                 60,000                  Off‐site Improvement ‐                             15,000                 15,000                  Water Efficient  Landscape ‐                             90,000                 90,000                Technology Fee ‐                             90,000                 90,000                Unoccupied Residences ‐                             130,000              130,000               Storm Water Plan Check Fees ‐                             18,000                 18,000                  SB1473 building Permit ‐                             300                        300                         PEG ‐                             80,000                 80,000                  Charges  for  Current Service ‐                             3,371,400         3,371,400          Recreation Activities ‐                             1,088,800         1,088,800          Library Charges ‐                             87,500                 87,500                  Rent & Royalty ‐                             1,224,600         1,224,600          Transportation Impact fees ‐                             300,000              300,000               Solid Waste Assessments ‐                             550,000              550,000               Park/Dwelling Unit  Fees ‐                             1,200,000         1,200,000        TOTAL  LICENSES & PERMITS ‐$                          12,798,600$   12,798,600$  EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2021‐2022 FINES & PENALTIES   Miscellaneous Fines ‐$                          25,000$              25,000$               Parking Citations ‐                             360,000              360,000               Code  Violations ‐                             30,000                 30,000                  Fire  Citations ‐                             500                        500                       TOTAL  FINES & PENALTIES ‐$                          415,500$           415,500$          OTHER REVENUE   Parimutual Receipts 315,000$         ‐$                             315,000$            Admin. O/H  Transit ‐                             125,600              125,600               Admin. O/H  Water ‐                             1,355,800         1,355,800          Admin. O/H  Sewer ‐                             256,300              256,300               Admin. O/H  Lighting District ‐                             109,400              109,400               Admin. O/H  Redevelopment ‐                             4,200                    4,200                     Court Appearances ‐                             5,000                    5,000                     Waste Management Admin. Fees ‐                             127,000              127,000             TOTAL  OTHER REVENUE 315,000$        1,983,300$      2,298,300$     Total  Estimated Revenues   Before  Revenue from  Use  of Money  57,546,400$ 22,166,800$   79,713,200$  Revenue Earned  from  Use  of Money Earned  on Non ‐Proceeds ‐$                          176,000$           176,000$          of Taxes: Funds  104, 107, 112, 114, 118 142, 151, 153, 155, 156, 157, 161, 165 Proceeds of Taxes: Fund 302 ‐                              ‐                                 ‐                               General  Fund 93,860              36,140                 130,000             TOTAL  REVENUE EARNED    FROM USE OF MONEY 93,860$           212,140$           306,000$          GRAND TOTAL 57,640,260$ 22,378,940$   80,019,200$  EXHIBIT C‐1 AMOUNT PROCEEDS OF TAXES (EXCLUDING INTEREST) 57,546,400$     TOTAL REVENUE (EXCLUDING INTEREST) 79,713,200$     PERCENT APPLICABLE TO PROCEEDS OF TAXES 72.20% TOTAL INTEREST BUDGETED FOR GENERAL FUND 130,000$            INTEREST APPLICABLE TO PROCEEDS OF TAXES 72.20% 93,860$              INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 27.80% 36,140$              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, 165 176,000$            INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES ARE IDENTIFIED AS PROCEEDS OF TAXES ‐ FUND 302 ‐$                           CITY OF ARCADIA INTEREST EARNINGS PRODUCED BY TAXES FISCAL YEAR 2021‐2022 EXHIBIT D FEDERAL MANDATED COSTS: MEDICARE TAX 500,100$            CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2021‐2022