TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
Henry Mitzner, Controller
Libby Bretthauer, Financial Analyst
SUBJECT:Title
Conduct Public Hearing to Consider Resolution No. 16-0036 Establishing the Gann Appropriations Limit for the Fiscal Year 2016-2017 (Finance Director Moe).
CONDUCT PUBLIC HEARING; ADOPT RESOLUTION NO. 16-0036 AS PART OF THE OPERATING BUDGET
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. 16-0036 establishing the Gann appropriation limit for Fiscal Year 2016-2017.
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FISCAL IMPLICATIONS:
There are no fiscal implications associated with the recommended action.
BACKGROUND:
In 1980, California voters adopted Article XIIIB of the California State Constitution, commonly referred to as the Gann Initiative or Gann Appropriations Limit, placing limits on the amount of tax proceeds that State and local agencies can appropriate each year. The City’s limit is adjusted each year for inflation, population and other factors.
On June 5, 1990, Proposition 111 was voted into California law. Among other provisions, Proposition 111 provided for changes in the calculation of the Gann Appropriation Limit. The annual adjustments to the spending limit were liberalized by Proposition 111 to be more closely linked to the rate of economic growth in personal income or the percent increase in the local tax roll due to non-residential property construction. Additionally, cities can choose to use the rate of change in population either within the City or County, whichever is higher. The City utilized elements of these adjustment factors in calculating this year’s Gann Appropriation Limit. The Gann calculation is reviewed annually by the City’s external audit firm as part of the annual audit process.
DISCUSSION:
Staff has calculated the Gann limit to be $73,083,594. The City’s tax proceeds subject to the FY 2016-2017 Gann Limit equal $47,325,321. Therefore, the City is under the Gann limitation by $25,758,273 and in compliance with state law. This Gann limit calculation is attached (Attachment 2).
CONCLUSION:
Section 7910 of the State Government Code requires a governing body to annually adopt by resolution, an Appropriations Limit for the upcoming fiscal year when the budget is adopted. Therefore, staff recommends that the City Council adopt Resolution number 16-0036 (Attachment 1).
Attachments:
1. Resolution No. 16-0036 (Appropriation Limit)
2. Gann Limit Calculation