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HomeMy WebLinkAboutItem 12g - Establishing an Appropriation Limit for FY2022-23DATE: June 7, 2022 TO: Honorable Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Henry Chen, Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7450 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2022-2023 PURSUANT TO ARTICLE XIII-B OF THE CALIFORNIA CONSTITUTION Recommendation: Adopt SUMMARY Article XIII-B of the California 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 proposed expenditures subject to the limit are $61,418,270 versus a limit of $108,019,236, meaning that the City is under the GANN Limit by $46,600,966. It is recommended that the City Council adopt Resolution No. 7450 establishing the annual adjustment factors and the resultant Limit for Fiscal Year 2022-23. 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 funds restricted for certain purposes – such as State Gas Tax, the costs of complying with Court orders, and Federal mandates – 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. 7450 Establishing an Appropriation Limit for Fiscal Year 2022-2023 June 7, 2022 Page 2 of 3 County Assessor. Thus, the change of California Per Capita Income at 7.55% 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 -0.71%; the City’s population growth rate was -0.54% in 2022. As a result, the City has chosen to use the City’s growth factor for FY2022-23’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, 2023. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $61,961,670 (Exhibit “C”), and the FY2022-23 Appropriation Limit is $108,019,236 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $46,600,966. ENVIRONMENTAL ANALYSIS This 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 2022-23 is established at $108,019,236. The appropriations subjected to the limit in the annual budget are $61,418,270, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2022-23 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended that the City Council determine that this action does not constitute a project and is therefore, exempt under, the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7450 establishing an Appropriation Limit of $108,019,236 for Fiscal Year 2022-23 pursuant to Article III-B of the California Constitution. Resolution No. 7450 Establishing an Appropriation Limit for Fiscal Year 2022-2023 June 7, 2022 Page 3 of 3 Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2022-2023 Exhibit “A-1” - Population/Inflationary Adjustment Exhibit “B” - Appropriations Subject to Limitation Exhibit “C” - Calculation of Proceeds Exhibit “C-1” - Interest Earnings produced by Taxes Exhibit “D” - Exclusions Resolution No. 7450 EXHIBIT "A" AMOUNT A. LAST YEAR'S LIMIT (2021‐2022)100,980,870$   B. ADJUSTMENT FACTORS: CITY OF ARCADIA POPULATION GROWTH 0.9946 PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0755 TOTAL ADJUSTMENT 1.0697 C. ANNUAL ADJUSTMENT 7,038,367          D. FISCAL 2022‐2023 LIMIT 108,019,236$   CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2022‐2023 AMOUNT PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 7.55% POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.71% POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.54% SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA EXHIBIT "A‐1" CITY OF ARCADIA POPULATION/COST OF LIVING ADJUSTMENT FISCAL YEAR 2022‐2023 EXHIBIT "B" AMOUNT SOURCE A. PROCEEDS OF TAXES GRAND TOTAL 61,961,670$  EXHIBIT C B. EXCLUSIONS (MEDICARE TAX)(543,400)          EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 61,418,270$   D. FISCAL 2022‐2023 LIMIT 108,019,236  EXHIBIT A E. OVER/(UNDER) LIMIT (46,600,966)$  CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2022‐2023 EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL   Property Tax 18,694,800$ ‐$ 18,694,800$    Public Safety Augmentation 564,400           ‐ 564,400               Sales  & Use  Tax 20,268,900    ‐ 20,268,900       Transient  Occupancy Tax 3,899,400       ‐ 3,899,400          Property Transfer  Tax 638,400           ‐ 638,400               Utility Users  Tax 7,538,500       ‐ 7,538,500          Business License Tax 1,180,000       50,000                 1,230,000        TOTAL  TAXES 52,784,400$ 50,000$              52,834,400$  FROM STATE   Motor  Vehicle  In Lieu 8,607,700$    ‐$ 8,607,700$       Gasoline Tax ‐1,667,400         1,667,400          Road Maint./Rehabilitation (SB1)‐1,314,300         1,314,300          Homeowner's  Exemption 76,100              ‐ 76,100                  POST ‐10,000                 10,000                  SB 90 Reimbursements ‐ ‐ ‐  TOTAL  FROM STATE 8,683,800$    2,991,700$      11,675,500$  OTHER GOVERNMENTS   Community Development (CDBG)‐$ ‐$ ‐$    Citizens  Options  for  Public Safety ‐ 170,000              170,000               Homeland Security ‐ ‐ ‐    OTS Grant ‐ 96,500                 96,500                  Other  (PROP  A&C) Taxes ‐ 2,572,800         2,572,800          Prop A Park Maint. & Services ‐ ‐ ‐    Measure  R ‐ 875,000              875,000               Measure  M ‐ 991,800              991,800               Used Oil  Grant ‐ 15,500                 15,500                  Beverage  Container Recycling Grant ‐ 14,500                 14,500                  AQMD   (AB2766)‐ 74,500                 74,500                TOTAL  OTHER GOVERNMENTS ‐$ 4,810,600$      4,810,600$     CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2022‐2023 EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2022‐2023 LOCALLY RAISED   LICENSES AND  PERMITS   Franchise  Fee ‐$                          1,007,300$      1,007,300$       Parking Permits ‐                             598,400              598,400               Plan Check Fees ‐                             1,050,000         1,050,000          Building Permits ‐                             1,200,000         1,200,000        Mechanical, Electrical  & Plumbing ‐                             300,000              300,000               Home  Occupation Permits ‐                             8,300                    8,300                     Miscellaneous Permits ‐                             7,000                    7,000                     Planning Applications ‐                             348,000              348,000               Fire  Plan Check ‐                             200,000              200,000               Engineering Permit Fees ‐                             140,000              140,000               Fire  Code Permits ‐                             60,000                 60,000                  Fire  Permit Inspections ‐                             140,000              140,000               Off‐site Improvement ‐                             10,000                 10,000                  Water Efficient  Landscape ‐                             90,000                 90,000                Technology Fee ‐                             130,000              130,000             Unoccupied Residences ‐                              ‐                                 ‐                                 Storm Water Plan Check Fees ‐                             16,000                 16,000                  SB1473 building Permit ‐                             300                        300                         PEG ‐                             80,000                 80,000                  Charges  for  Current Service ‐                             3,471,400         3,471,400          Recreation Activities ‐                             1,325,100         1,325,100          Library Charges ‐                             84,700                 84,700                  Rent & Royalty ‐                             1,359,200         1,359,200          Transportation Impact fees ‐                             300,000              300,000               Solid Waste Assessments ‐                             570,000              570,000               Park/Dwelling Unit  Fees ‐                             1,400,000         1,400,000        TOTAL  LICENSES & PERMITS ‐$                          13,895,700$   13,895,700$  EXHIBIT C  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF PROCEEDS FISCAL YEAR 2022‐2023 FINES & PENALTIES   Miscellaneous Fines ‐$                          15,000$              15,000$               Parking Citations ‐                             370,000              370,000               Code  Violations ‐                             18,000                 18,000                  Fire  Citations ‐                             500                        500                       TOTAL  FINES & PENALTIES ‐$                          403,500$           403,500$          OTHER REVENUE   Parimutual Receipts 400,000$         ‐$                             400,000$            Admin. O/H  Transit ‐                             129,400              129,400               Admin. O/H  Water ‐                             1,396,500         1,396,500          Admin. O/H  Sewer ‐                             264,000              264,000               Admin. O/H  Lighting District ‐                             112,700              112,700               Admin. O/H  Redevelopment ‐                              ‐                                 ‐                                 Court Appearances ‐                             5,000                    5,000                     Waste Management Admin. Fees ‐                             130,000              130,000             TOTAL  OTHER REVENUE 400,000$        2,037,600$      2,437,600$     Total  Estimated Revenues   Before  Revenue from  Use  of Money  61,868,200$ 24,189,100$   86,057,300$  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 93,470              36,530                 130,000             TOTAL  REVENUE EARNED    FROM USE OF MONEY 93,470$           212,530$           306,000$          GRAND TOTAL 61,961,670$ 24,401,630$   86,363,300$  EXHIBIT "C‐1" AMOUNT PROCEEDS OF TAXES (EXCLUDING INTEREST)61,868,200$     TOTAL REVENUE (EXCLUDING INTEREST)86,057,300$     PERCENT APPLICABLE TO PROCEEDS OF TAXES 71.90% TOTAL INTEREST BUDGETED FOR GENERAL FUND 130,000$            INTEREST APPLICABLE TO PROCEEDS OF TAXES 71.90%93,470$              INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 28.10%36,530$              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 2022‐2023 EXHIBIT "D" FEDERAL MANDATED COSTS: MEDICARE TAX 543,400$            CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2022‐2023