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HomeMy WebLinkAboutItem 12e - Appropriation Limit for Fiscal Year 2024-25 DATE: June 4, 2024 TO: Honorable Mayor and City Council FROM: Henry Chen, Interim Administrative Services Director SUBJECT: RESOLUTION NO. 7575 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2024-25 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 $71,496,400 versus a limit of $116,093,338, meaning that the City is under the GANN Limit by $44,596,938. It is recommended that the City Council adopt Resolution No. 7575 establishing the annual adjustment factors and the resulting Appropriation Limit for the Fiscal Year 2024-25. 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. 7575 Establishing an Appropriation Limit for Fiscal Year 2024-25 June 4, 2024 Page 2 of 3 To measure inflation, each City may choose the greater of the two: 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 3.62% 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 their jurisdictional boundaries. In Los Angeles County, the estimated population growth rate was 0.05%, Arcadia’s estimated population growth rate was -0.13% in 2024. As a result, the City has chosen to use the County’s growth factor for calculating the FY 2024-25 GANN Limit. 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, 2025. As calculated, the City’s Proceeds of Taxes Before Exclusions is established at $72,084,500 (Exhibit “C”), and the FY2024-2025 Appropriation Limit is $116,093,338 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the Appropriation Limit by $44,596,938. 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. FISCAL IMPACT The GANN Limit for the City of Arcadia in FY 2024-25 is established at $116,093,338. The appropriations subjected to the limit in the annual budget are $71,496,400, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 2024-25 Budget and has room for additional appropriations during the year as necessary. RECOMMENDATION It is recommended that the City Council find this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7575 establishing an appropriation limit for Fiscal Year 2024-25 pursuant to Article XIII-B of the California Constitution. Resolution No. 7575 Establishing an Appropriation Limit for Fiscal Year 2024-25 June 4, 2024 Page 3 of 3 Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2024-25 Exhibit “A-1” - Population/Inflationary Adjustment Exhibit “B” - Appropriations Subject to Limitation Exhibit “C” - Calculation of Proceeds Exhibit “C-1” - Interest Earnings produced by Taxes Exhibit “D” - Exclusions Resolution No. 7575 EXHIBIT "A" AMOUNT A. LAST YEAR'S LIMIT (2023‐2024)111,983,542$   B. ADJUSTMENT FACTORS: CITY OF ARCADIA POPULATION GROWTH 1.0005 PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0362 TOTAL ADJUSTMENT 1.0367 C. ANNUAL ADJUSTMENT 4,109,796          D. FISCAL 2024‐2025 LIMIT 116,093,338$   CITY OF ARCADIA APPROPRIATIONS LIMIT FISCAL YEAR 2024‐2025 EXHIBIT "A‐1" AMOUNT PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 3.62% POPULATION GROWTH ‐ LOS ANGELES COUNTY 0.05% POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.13% SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA CITY OF ARCADIA POPULATION/COST OF LIVING ADJUSTMENT FISCAL YEAR 2024‐2025 EXHIBIT "B" AMOUNT SOURCE A. PROCEEDS OF TAXES GRAND TOTAL 72,084,500$  EXHIBIT C B. EXCLUSIONS (MEDICARE TAX)(588,100)          EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 71,496,400$   D. FISCAL 2024‐2025 LIMIT 116,093,338  EXHIBIT A E. OVER/(UNDER) LIMIT (44,596,938)$  CITY OF ARCADIA APPROPRIATIONS SUBJECT TO LIMITATION FISCAL YEAR 2024‐2025 EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL   Property Tax 19,851,100$ ‐$ 19,851,100$    Public Safety Augmentation 671,400           ‐ 671,400               Sales  & Use  Tax 24,228,700    ‐ 24,228,700       Transient  Occupancy Tax 5,894,400       ‐ 5,894,400          Property Transfer  Tax 551,200           ‐ 551,200               Utility Users  Tax 9,190,300       ‐ 9,190,300          Business License Tax 1,372,600       50,000                 1,422,600        TOTAL  TAXES 61,759,700$ 50,000$              61,809,700$  FROM STATE   Motor  Vehicle  In Lieu 9,232,800$    ‐$ 9,232,800$       Gasoline Tax ‐1,552,200         1,552,200          Road Maint./Rehabilitation (SB1)‐1,456,100         1,456,100          Homeowner's  Exemption 70,000              ‐ 70,000                  POST ‐5,000                    5,000                     SB 90 Reimbursements ‐ 10,000                 10,000                TOTAL  FROM STATE 9,302,800$    3,023,300$      12,326,100$  OTHER GOVERNMENTS   Community Development (CDBG)‐$ ‐$ ‐$    Citizens  Options  for  Public Safety ‐ 170,000              170,000               Homeland Security ‐ ‐ ‐    OTS Grant ‐ ‐ ‐    Other  (PROP  A&C) Taxes ‐ 2,856,400         2,856,400          Prop A Park Maint. & Services ‐ ‐ ‐    Measure  R ‐ 971,200              971,200               Measure  M ‐ 1,100,700         1,100,700          Used Oil  Grant ‐ 8,000                    8,000                     Beverage  Container Recycling Grant ‐ 14,200                 14,200                  AQMD   (AB2766)‐ 73,800                 73,800                TOTAL  OTHER GOVERNMENTS ‐$ 5,194,300$      5,194,300$     CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2024‐2025 EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2024‐2025 LOCALLY RAISED   LICENSES AND  PERMITS   Franchise  Fee ‐$ 1,132,000$      1,132,000$       Parking Permits ‐ 610,400              610,400               Plan Check Fees ‐ 1,200,000         1,200,000          Building Permits ‐ 1,090,000         1,090,000        Mechanical, Electrical  & Plumbing ‐ 400,000              400,000               Home  Occupation Permits ‐ 9,300                    9,300                     Miscellaneous Permits ‐ 8,200                    8,200                     Planning Applications ‐ 350,600              350,600               Fire  Plan Check ‐ 180,000              180,000               Engineering Permit Fees ‐ 160,000              160,000               Fire  Code  Permit Fees ‐ 160,000              160,000               Fire  Code  Inspections ‐ 80,000                 80,000                  Off‐site Improvement ‐ 24,000                 24,000                  Water Landscape Review ‐ 65,000                 65,000                Technology Fee ‐ 255,000              255,000             Unoccupied Residences ‐ ‐ ‐    Storm Water Plan Check Fees ‐ 4,300                    4,300                     SB1473 building Permit ‐ 500 500    PEG ‐ 70,000                 70,000                  Charges  for  Current Service ‐ 4,721,300         4,721,300          Recreation Activities ‐ 1,468,900         1,468,900          Library Charges ‐ 112,000              112,000               Rent & Royalty ‐ 1,380,000         1,380,000          Transportation Impact fees ‐ 300,000              300,000               Solid Waste Assessments ‐ 585,000              585,000               Park/Dwelling Unit Fees ‐ 875,000              875,000             TOTAL  LICENSES & PERMITS ‐$ 15,241,500$   15,241,500$  EXHIBIT "C"  REVENUE  PROCEEDS OF  TAXES   NON  PROCEEDS OF   TAXES  TOTAL CITY OF  ARCADIA CALCULATIONS OF  PROCEEDS FISCAL  YEAR 2024‐2025 FINES & PENALTIES   Miscellaneous Fines ‐$ 10,400$              10,400$               Parking Citations ‐ 470,000              470,000               Code  Violations ‐ 20,000                 20,000                  Fire  Citations ‐ 500 500  TOTAL  FINES & PENALTIES ‐$ 500,900$           500,900$          OTHER REVENUE   Parimutual Receipts 290,000$        ‐$ 290,000$            Admin. O/H  Transit ‐138,600              138,600               Admin. O/H  Water ‐ 1,496,000         1,496,000          Admin. O/H  Sewer ‐ 282,800              282,800               Admin. O/H  Lighting District ‐ 120,700              120,700               Admin. O/H  Redevelopment ‐ ‐ ‐    Court Appearances ‐ 5,000                    5,000                     Waste Management Admin. Fees ‐ 130,000              130,000             TOTAL  OTHER REVENUE 290,000$        2,173,100$      2,463,100$     Total  Estimated Revenues   Before  Revenue  from  Use  of Money 71,352,500$ 26,183,100$   97,535,600$  Revenue Earned  from  Use  of Money Earned  on Non‐Proceeds ‐$ 639,700$           639,700$          of Taxes: Funds  104, 107, 112, 114, 118 142, 151, 153, 155, 156, 157, 161, 165 Proceeds of Taxes: Fund 302 ‐ 416,600              ‐  General  Fund 732,000           268,000              1,000,000        TOTAL  REVENUE EARNED    FROM USE OF MONEY 732,000$        1,324,300$      1,639,700$     GRAND TOTAL 72,084,500$ 27,507,400$   99,175,300$  EXHIBIT "C‐1" AMOUNT PROCEEDS OF TAXES (EXCLUDING INTEREST)71,352,500$     TOTAL REVENUE (EXCLUDING INTEREST)97,535,600$     PERCENT APPLICABLE TO PROCEEDS OF TAXES 73.20% TOTAL INTEREST BUDGETED FOR GENERAL FUND 1,000,000$        INTEREST APPLICABLE TO PROCEEDS OF TAXES 73.20%732,000$            INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 26.80%268,000$            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, 165 639,700$            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 2024‐2025 EXHIBIT "D" FEDERAL MANDATED COSTS: MEDICARE TAX 588,100$            CITY OF ARCADIA EXCLUSIONS FISCAL YEAR 2024‐2025