HomeMy WebLinkAboutItem 10b - Establishing Appropriation Limits for FY 2023-24DATE: June 6, 2023 TO: Mayor and City Council FROM: Hue C. Quach, Administrative Services Director Henry Chen, Financial Services Manager/Treasurer SUBJECT: RESOLUTION NO. 7499 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2023-24 PURSUANT TO ARTICLE XIII-B OF THE CALIFORNIA CONSTITUTION CEQA: Not a Project 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 $68,791,100 versus a limit of $111,983,542, meaning that the City is under the GANN Limit by $43,192,442. It is recommended that the City Council adopt Resolution No. 7499 establishing the annual adjustment factors and the resultant Limit for the Fiscal Year 2023-24. 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 counted 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. 7499 Establishing an Appropriation Limit for Fiscal Year 2023-24 June 6, 2023 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 4.44% 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 -0.75%; the City’s population growth rate was -0.74% in 2023. As a result, the City has chosen to use the City’s growth factor for FY 2023-24’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, 2024. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $69,310,800 (Exhibit “C”), and the FY2023-2024 Appropriation Limit is $111,983,542 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $43,192,442. 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 2023-24 is established at $111,982,542. The appropriations subjected to the limit in the annual budget are $68,791,100, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2023-24 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended that the City Council find this action is exempt from the requirements of the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7499 establishing an appropriation limit for Fiscal Year 2023-24 pursuant to Article XIII-B of the California Constitution. Resolution No. 7499 Establishing an Appropriation Limit for Fiscal Year 2023-24 June 6, 2023 Page 3 of 3 Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2023-24 Exhibit “A-1” - Population/Inflationary Adjustment Exhibit “B” - Appropriations Subject to Limitation Exhibit “C” - Calculation of Proceeds Exhibit “C-1” - Interest Earnings produced by Taxes Exhibit “D” - Exclusions Resolution No. 7499 EXHIBIT "A" AMOUNT A. LAST YEAR'S LIMIT (2022‐2023)108,019,236$   B. ADJUSTMENT FACTORS: CITY OF ARCADIA POPULATION GROWTH 0.9926 PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0444 TOTAL ADJUSTMENT 1.0367 C. ANNUAL ADJUSTMENT 3,964,306          D. FISCAL 2023‐2024 LIMIT 111,983,542$   CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2023‐2024 EXHIBIT "A‐1" AMOUNT PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 4.44% POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.75% POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.74% SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA CITY OF ARCADIA POPULATION/COST OF LIVING ADJUSTMENT FISCAL YEAR 2023‐2024 EXHIBIT "B" AMOUNT SOURCE A. PROCEEDS OF TAXES GRAND TOTAL 69,310,800$  EXHIBIT C B. EXCLUSIONS (MEDICARE TAX)(519,700)          EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 68,791,100$   D. FISCAL 2023‐2024 LIMIT 111,983,542  EXHIBIT A E. OVER/(UNDER) LIMIT (43,192,442)$  CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2023‐2024 EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL   Property Tax 19,524,300$ ‐$ 19,524,300$    Public Safety Augmentation 702,800           ‐ 702,800               Sales  & Use  Tax 24,422,900    ‐ 24,422,900       Transient  Occupancy Tax 4,461,700       ‐ 4,461,700          Property Transfer  Tax 618,500           ‐ 618,500               Utility Users  Tax 8,423,000       ‐ 8,423,000          Business License Tax 1,364,200       50,000                 1,414,200        TOTAL  TAXES 59,517,400$ 50,000$              59,567,400$  FROM STATE   Motor  Vehicle  In Lieu 8,856,000$    ‐$ 8,856,000$       Gasoline Tax ‐1,609,500         1,609,500          Road Maint./Rehabilitation (SB1)‐1,406,400         1,406,400          Homeowner's  Exemption 69,800              ‐ 69,800                  POST ‐10,000                 10,000                  SB 90 Reimbursements ‐ ‐ ‐  TOTAL  FROM STATE 8,925,800$    3,025,900$      11,951,700$  OTHER GOVERNMENTS   Community Development (CDBG)‐$ ‐$ ‐$    Citizens  Options  for  Public Safety ‐ 170,000              170,000               Homeland Security ‐ ‐ ‐    OTS Grant ‐ 97,600                 97,600                  Other  (PROP  A&C) Taxes ‐ 2,957,300         2,957,300          Prop A Park Maint. & Services ‐ ‐ ‐    Measure  R ‐ 1,005,600         1,005,600          Measure  M ‐ 1,139,700         1,139,700          Used Oil  Grant ‐ 9,000                    9,000                     Beverage  Container Recycling Grant ‐ 14,500                 14,500                  AQMD   (AB2766)‐ 74,300                 74,300                TOTAL  OTHER  GOVERNMENTS ‐$ 5,468,000$      5,468,000$     CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2023‐2024 EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2023‐2024 LOCALLY RAISED   LICENSES AND  PERMITS   Franchise  Fee ‐$ 1,091,700$      1,091,700$       Parking Permits ‐ 598,400              598,400               Plan Check Fees ‐ 955,000              955,000               Building Permits ‐ 1,000,000         1,000,000        Mechanical, Electrical  & Plumbing ‐ 390,000              390,000               Home  Occupation Permits ‐ 9,500                    9,500                     Miscellaneous Permits ‐ 9,500                    9,500                     Planning Applications ‐ 361,000              361,000               Fire  Plan Check ‐ 180,000              180,000               Engineering Permit Fees ‐ 150,000              150,000               Fire  Code  Permit Fees ‐ 150,000              150,000               Fire  Code  Inspections ‐ 70,000                 70,000                  Off‐site Improvement ‐ 12,000                 12,000                  Water Landscape Review ‐ 80,000                 80,000                Technology Fee ‐ 190,000              190,000             Unoccupied Residences ‐ ‐ ‐    Storm Water Plan Check Fees ‐ 15,000                 15,000                  SB1473 building Permit ‐ 300 300    PEG ‐ 80,000                 80,000                  Charges  for  Current Service ‐ 4,336,500         4,336,500          Recreation Activities ‐ 1,558,300         1,558,300          Library Charges ‐ 82,500                 82,500                  Rent  & Royalty ‐ 1,299,100         1,299,100          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 ‐$ 14,888,800$   14,888,800$  EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2023‐2024 FINES & PENALTIES   Miscellaneous Fines ‐$ 13,700$              13,700$               Parking Citations ‐ 470,000              470,000               Code  Violations ‐ 18,000                 18,000                  Fire  Citations ‐ 500 500  TOTAL  FINES & PENALTIES ‐$ 502,200$           502,200$          OTHER REVENUE   Parimutual Receipts 432,000$        ‐$ 432,000$            Admin. O/H  Transit ‐134,600              134,600               Admin. O/H  Water ‐ 1,452,400         1,452,400          Admin. O/H  Sewer ‐ 274,600              274,600               Admin. O/H  Lighting District ‐ 117,200              117,200               Admin. O/H  Redevelopment ‐ ‐ ‐    Court Appearances ‐ 4,000                    4,000                     Waste Management Admin. Fees ‐ 130,000              130,000             TOTAL  OTHER REVENUE 432,000$        2,112,800$      2,544,800$     Total  Estimated Revenues   Before  Revenue  from  Use  of Money 68,875,200$ 26,047,700$   94,922,900$  Revenue Earned  from  Use  of Money Earned  on Non‐Proceeds ‐$ 470,400$           470,400$          of Taxes: Funds  104, 107, 112, 114, 118 142, 151, 153, 155, 156, 157, 161, 165 Proceeds of Taxes: Fund 302 ‐ 267,400              ‐  General  Fund 435,600           164,400              600,000             TOTAL  REVENUE EARNED    FROM USE OF MONEY 435,600$        902,200$           1,070,400$     GRAND TOTAL 69,310,800$ 26,949,900$   95,993,300$  EXHIBIT "C‐1" AMOUNT PROCEEDS OF TAXES (EXCLUDING INTEREST)68,875,200$     TOTAL REVENUE (EXCLUDING INTEREST)94,922,900$     PERCENT APPLICABLE TO PROCEEDS OF TAXES 72.60% TOTAL INTEREST BUDGETED FOR GENERAL FUND 600,000$            INTEREST APPLICABLE TO PROCEEDS OF TAXES 72.60%435,600$            INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 27.40%164,400$            470,400 INTEREST DIRECTLY 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    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 2023‐2024 $ EXHIBIT "D" FEDERAL MANDATED COSTS: MEDICARE TAX 519,700$            CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2023‐2024