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Home My Public Portal About04) 5A - Appropriations Limit 2021 - Staff ReportADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE: June 29, 2020 TO: The Honorable City Council FROM: Bryan Cook, City Manager By: Susan Paragas, Administrative Services Director SUBJECT: PUBLIC HEARING - ADOPTION OF RESOLUTION NO. 20-5480 ADOPTING THE ANNUAL APPROPRIATIONS LIMIT FOR FISCAL YEAR (FY) 2020-21 RECOMMENDATION: The City Council is requested to: 1.Receive presentation from staff; 2.Open the public hearing; 3.Receive public input; 4.Close the public hearing; and 5.Adopt Resolution No. 20-5480 (Attachment “A”) adopting the annual Appropriations Limit (Limit) for FY 2020-21. BACKGROUND: 1.In November 1979, Proposition 4 was approved by the voters adding Article XIIIB, also known as the Gann Limitation, to the State Constitution to insure that limits were placed on all state and local government appropriations. These appropriations calculations must be approved by the City Council on an annual basis. 2. In 1980, the State Legislature added Section 9710 of the Government Code stating that the governing body of each City must establish, by resolution, an appropriations limit for the following year. 3. In June 1990, the voters of California approved Proposition 111 which revised the annual adjustment factors applied to the 1986-87 Limit and each year thereafter. AGENDA ITEM 5.A. City Council June 29, 2020 Page 2 of 2 4. On June 18, 2020, Notice of the Public Hearing to establish the Limit subject to the California Constitution was published in the Temple City Tribune. ANALYSIS: Article XIII-B provides limits to the amount of tax proceeds state and local governments can spend each year. The limit for any fiscal year is equal to the previous year’s limit, adjusted for population changes and the change in the U.S. Consumer Price Index or California per capital personal income, whichever is less. Staff has complied with all the provisions of Article XIIIB in determining the Limit for FY 2020-21, and the City Council is required to confirm all factors used for calculating the Limit by adoption of a resolution. For FY 2020-21, the California Per Capita Income and the population growth of the County were applied to the FY 2019-20 Limit. The City of Temple City’s Limit for FY 2020-21 is $22,767,883, with appropriations subject to the Limit of $7,351,555, or $15,416,328 below the Limit. CITY STRATEGIC GOALS: In order to be in compliance with California State law, adoption of Resolution No. 20- 5480 by the City Council will promote or further the City’s Strategic Goal of Good Governance. FISCAL IMPACT : Adoption of this Resolution does not have an impact on the FY 2020-21 City Budget. ATTACHMENTS: A. Resolution 20-5480 B. Presentation Slides ATTACHMENT A RESOLUTION NO. 20-5480 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY, CALIFORNIA ADOPTING THE ANNUAL APPROPRIATIONS LIMIT FOR THE FISCAL YEAR (FY) 2020-2021 WHEREAS, the voters of California in November, 1979 added Article XIIIB (Proposition 4) to the State Constitution placing various limitations on the appropriations of the State and local governments; and WHEREAS, the voters of California in June, 1990 modified Article XIIIB by approving Proposition 111 and SB 88 (Chapter 60/90) which revised the annual adjustment factors to be applied to the 1986-87 Limit and each year thereafter; and WHEREAS, the City of Temple City has calculated the Appropriations Limit by adjusting the 1986-87 Limit for annual changes in the cost of living and population growth; and WHEREAS, the City of Temple City has complied with all the provisions of Article XIIIB in determining the Appropriations Limit for FY 2020-21 as provided in the worksheets attached hereto as Exhibit 1. NOW, THEREFORE, the City Council of the City of Temple City does resolve, determine and order as follows: SECTION 1. That the Appropriations Limit for FY 2020-21 shall be $22,767,883, with appropriations subject to the limit of $7,351,555, or $15,416,328 less than the limit. SECTION 2. The City Clerk shall certify to the adoption of this resolution. APPROVED AND ADOPTED this 29th day of June, 2020. Tom Chavez, Mayor ATTEST: APPROVED AS TO FORM: Peggy Kuo, City Clerk Greg Murphy, City Attorney Resolution No. 13-4914 Page 2 of 2 I hereby certify that the foregoing resolution, Resolution No 20-5481, was duly passed, approved and adopted by the City Council of the City of Temple City at a regular meeting held on the 29th day of June, 2020, by the following vote: AYES: Councilmember- NOES: Councilmember- ABSENT: Councilmember- ABSTAIN: Councilmember- Peggy Kuo, City Clerk EXHIBIT 1, Page 1 ARTICLE XIII-B OF THE CALIFORNIA CONSTITUTION (GANN INITIATIVE) Effective July 1, 1980, Proposition 4 (Gann) established a limit on the City's expenditures from tax revenues based on 1978-79 appropriations. This limit is adjusted annually by the Consumer Price Index and population changes. Non-Proceeds of Taxes (Fines and Forfeitures and User Fees) were not subject to this limit. In 1989-90 Proposition 111 was passed, which changed the base year to 1986-87 and allows cities to adjust the limit annually by either the change in the California per capita income or the percentage change in growth in total assessed valuation due to non residential construction. For population changes, cities now have the option of using either the percentage increase of the City or the percentage increase of the entire county. The law also allows for the exclusion from the limit of "qualified capital outlay" which includes any appropriation for fixed assets costing over $100,000. The 2020-2021 budget expenditures are well within the statutory limit. It should be noted that future revenues exceeding the limitation require a return of the excess to the taxpayers or a substantial portion of such excess will be forfeited for State uses. COMPUTATION OF APPROPRIATIONS LIMIT 2020-2021 APPROPRIATIONS LIMIT 2019-20 limit (1) $21,917,485 Per Capita Income and City population change factor applied to 2019-20 appropriations limit 1.0388 2020-2021 appropriations limit $22,767,883 APPROPRIATIONS SUBJECT TO LIMIT Proceeds of Taxes $13,046,555 Less Exclusions: Qualified Capital Outlay 5,695,000 Appropriations Subject to Limit $7,351,555 Appropriations Margin $15,416,328 (1) Recalculated as a result of Proposition 111 and in accordance with guidelines of the League of California Cities. Formal adoption for the FY 1991-92 recalculated appropriations limit was approved by the City Council on July 2, 1991. Exhibit 1, Page 2 CALCULATION OF PROCEEDS OF TAXES Worksheet #1 Page 1 of 2 CITY:TEMPLE CITY Funds Included:ALL FY:2020-21 PROCEEDS NON-PROCEEDS REVENUE OF TAXES OF TAXES TOTAL TAXES: Property Tax 3,609,705 3,609,705 Sales & Use Tax / In Lieu Sales Tax 1,823,420 1,823,420 Business License Tax Revenue 179,590 179,590 Transient Occupancy Tax 48,000 48,000 Other Taxes: Real Estate 130,000 130,000 Prop. A / Prop. C 1,141,905 1,141,905 Subtotal 6,753,030 179,590 6,932,620 FROM STATE: Motor Vehicle In Lieu / In Lieu VLF 5,018,620 5,018,620 State Cops Grant 140,000 140,000 Gasoline Tax 664,620 664,620 Used Oil 10,000 10,000 SB1 424,390 424,390 SB2 160,000 160,000 State Parks Grant 2,900,000 2,900,000 Subtotal 5,018,620 4,299,010 9,317,630 OTHER GOVERNMENTS Community Development (CDBG)186,000 186,000 Park Bond 1992 & 1996 14,500 14,500 SB821 Aid to Cities 44,000 44,000 Air Quality Improvement 47,000 47,000 Measure M 440,080 440,080 Measure R 388,350 388,350 Measure W 391,000 391,000 Subtotal 1,219,430 291,500 1,510,930 LOCAL Special benefit assessments 1,532,510 1,532,510 Franchise fees 530,000 530,000 Development fees -Sewer/Park/Public Arts 65,000 65,000 Fines, forfeitures, penalties/Traffic Safety 400,000 400,000 Recyclable Revenue 10,000 10,000 AB939 Reimbursement 15,000 15,000 Subtotal 0 2,552,510 2,552,510 USER FEES Building Permits 792,830 792,830 Parking Permits 226,560 226,560 Encroachment Permits 164,460 164,460 Animal License 41,000 41,000 Vehicle Impound 11,000 11,000 Code Enforcement 56,900 56,900 Shared Maint./Facility Rental 58,500 58,500 Zoning & Plan Check 824,490 824,490 Recreation 505,000 505,000 PW Engineering 32,145 32,145 Subtotal 0 2,712,885 2,712,885 OTHER MISCELLANEOUS Bus Pass Sales 37,545 37,545 Misc Sundry/Other Reimb 103,500 103,500 Rental Income 32,600 32,600 CRA and L/LD Admin Reimb 24,300 24,300 Subtotal 0 197,945 197,945 Exhibit 1, Page 3 CALCULATION OF PROCEEDS OF TAXES Worksheet #1 Page 2 of 2 CITY:TEMPLE CITY Funds Included:ALL FY:2020-21 PROCEEDS NON-PROCEEDS REVENUE OF TAXES OF TAXES TOTAL SUB TOTAL (For Worksheet #3)12,991,080 10,233,440 23,224,520 INTEREST EARNINGS 55,475 123,475 178,950 (From Worksheet #3) TOTAL (Use For Worksheet #4)13,046,555 10,356,915 23,403,470 Exhibit 1, Page 4 INTEREST EARNINGS PRODUCED BY TAXES Worksheet #2 Page 1 of 1 CITY:TEMPLE CITY FY:2020-21 AMOUNT SOURCE A. Non-Interest Tax Proceeds 12,991,080 (Worksheet #2) B. Minus Exclusions 5,695,000 GF Capital Project C.Net Invested Taxes 7,296,080 (A - B) D.Total Non-Interest 23,224,520 (Worksheet #2) E. Tax Proceeds as Percent of Budget 31% (C / D) F. Interest Earnings 178,950 (Budget or Actual) G.Amount of Interest Earned from Taxes 55,475 (E * F) H.Amount of Interest Earned from Non-Taxes 123,475 (F-G) plus any CRA Int, Restricted CIP) I. Take results of Steps #G and #H copy to worksheet #2 Exhibit 1, Page 5 APPROPRIATIONS SUBJECT TO LIMITATION Worksheet #3 Page 1 of 1 CITY:TEMPLE CITY FY:2020-21 Amount Source A. Proceeds of Taxes 13,046,555 (Worksheet #2) B. Exclusions 5,695,000 GF Capital Project C.Appropriations subject to Limitation 7,351,555 (A - B) D.Current Year Limit 22,767,883 (Worksheet #6) E. Over/(Under) Limit (15,416,328) (C - D) PROCEEDS NON-PROCEEDS CAPITAL PROJECTS OF TAXES OF TAXES SB1 1,345,000 CDBG 25,000 Prop C 2,900,000 SB821 71,000 Measure A 425,000 Measure M 1,136,000 Measure R 1,244,000 Measure W 76,000 L/LD 1,075,000 State Parks Grant 2,900,000 Park Acq 15,000 5,781,000 5,431,000 *PROJECTS UNDER $100,000 (86,000) (GENERAL FUND)5,695,000 Exhibit 1, Page 6 County Percent Population Percent 2019-20: 1-1-19 10,175,203 1-1-20 0.14%10,163,868 -0.11% Amount Source A. LAST YEAR'S LIMIT $21,917,485 B. ADJUSTMENT FACTORS: 1. Population % (greater of City or County factor) 1.0014 (Worksheet #5) 2. Inflation % (from State Finance or Assessor)1.0373 C. ANNUAL ADTotal Adjustment Factor 1.0388 (C1 * C2) D. OTHER ADJUSTMENTS: 850,398 (A * B) Lost Responsibility (-) Transfer to private (-) Transfer to fees (-) Assumed Responsibility (+) E. TOTAL ADJUSTMENTS Sub-total 0 F. THIS YEAR'S LIMIT 850,398 (C + D) $22,767,883 (A + E) 36,150 APPROPRIATIONS LIMIT CALCULATION Worksheet #4 Page 1 of 1 City Population 36,098 May 2020 Dear Fiscal Officer: Subject: Price Factor and Population Information Appropriations Limit California Revenue and Taxation Code section 2227 requires the Department of Finance to transmit an estimate of the percentage change in population to local governments. Each local jurisdiction must use their percentage change in population factor for January 1, 2020, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2020-21. Attachment A provides the change in California’s per capita personal income and an example for utilizing the price factor and population percentage change factor to calculate the 2020-21 appropriations limit. Attachment B provides the city and unincorporated county population percentage change. Attachment C provides the population percentage change for counties and their summed incorporated areas. The population percentage change data excludes federal and state institutionalized populations and military populations. Population Percent Change for Special Districts Some special districts must establish an annual appropriations limit. California Revenue and Taxation Code section 2228 provides additional information regarding the appropriations limit. Article XIII B, section 9(C) of the California Constitution exempts certain special districts from the appropriations limit calculation mandate. The code section and the California Constitution can be accessed at the following website: http://leginfo.legislature.ca.gov/faces/codes.xhtml. Special districts required by law to calculate their appropriations limit must present the calculation as part of their annual audit. Any questions special districts have on this requirement should be directed to their county, district legal counsel, or the law itself. No state agency reviews the local appropriations limits. Population Certification The population certification program applies only to cities and counties. California Revenue and Taxation Code section 11005.6 mandates Finance to automatically certify any population estimate that exceeds the current certified population with the State Controller’s Office. Finance will certify the higher estimate to the State Controller by June 1, 2020. Please Note: The prior year’s city population estimates may be revised. The per capita personal income change is based on historical data. Given the stay-at-home orders due to COVID-19, growth in the coming years may be substantially lower than recent trends. If you have any questions regarding this data, please contact the Demographic Research Unit at (916) 323-4086. /s/ Keely Martin Bosler KEELY MARTIN BOSLER Director Attachment EXHIBIT 1, Page 7 Attachment A A.Price Factor: Article XIII B specifies that local jurisdictions select their cost of living factor to compute their appropriation limit by a vote of their governing body. The cost of living factor provided here is per capita personal income. If the percentage change in per capita personal income is selected, the percentage change to be used in setting the fiscal year 2020-21 appropriation limit is: Per Capita Personal Income Fiscal Year Percentage change (FY) over prior year 2020-21 3.73 B.Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2020-21 appropriation limit. 2020-21: Per Capita Cost of Living Change = 3.73 percent Population Change = 0.22 percent Per Capita Cost of Living converted to a ratio: 3.73 + 100 = 1.0373 100 Population converted to a ratio: 0.22 + 100 = 1.0022 100 Calculation of factor for FY 2020-21: 1.0373 x 1.0022 = 1.0396 EXHIBIT 1, Page 8 Fiscal Year 2020-21 Total County Percent Change ---Population Minus Exclusions ---Population City 2019-2020 1-1-19 1-1-20 1-1-2020 Los Angeles Agoura Hills -0.27 20,622 20,566 20,566 Alhambra 0.00 86,793 86,792 86,792 Arcadia -0.09 57,262 57,212 57,212 Artesia -0.27 16,448 16,404 16,490 Avalon -0.25 3,939 3,929 3,929 Azusa 0.24 49,537 49,658 49,658 Baldwin Park -0.08 76,311 76,252 76,252 Bell 0.06 36,510 36,531 36,531 Bellflower -0.16 78,239 78,110 78,110 Bell Gardens -0.31 42,579 42,449 42,449 Beverly Hills -0.45 33,926 33,775 33,775 Bradbury -0.38 1,056 1,052 1,052 Burbank 0.35 105,496 105,861 105,861 Calabasas 0.03 24,185 24,193 24,193 Carson -0.05 93,153 93,108 93,108 Cerritos 0.00 49,995 49,994 49,994 Claremont -0.18 35,872 35,807 35,807 Commerce -0.47 12,929 12,868 12,868 Compton -0.18 98,206 98,032 98,032 Covina 0.33 48,683 48,846 48,846 Cudahy -0.23 24,227 24,172 24,172 Culver City 0.54 39,493 39,705 39,705 Diamond Bar -0.23 57,308 57,177 57,177 Downey -0.29 113,863 113,529 113,529 Duarte -0.04 21,681 21,673 21,673 El Monte 0.10 116,563 116,675 116,675 El Segundo -0.21 16,812 16,777 16,777 Gardena 0.07 60,892 60,937 60,937 Glendale 0.22 204,883 205,331 205,331 Glendora 0.44 51,840 52,067 52,067 Hawaiian Gardens -0.25 14,685 14,649 14,649 Hawthorne -0.19 87,071 86,903 86,903 Hermosa Beach -0.14 19,641 19,614 19,614 Hidden Hills 0.32 1,862 1,868 1,868 Huntington Park -0.21 59,642 59,515 59,515 Industry 0.00 427 427 427 Inglewood -0.33 112,345 111,971 111,971 Irwindale -0.62 1,443 1,434 1,434 EXHIBIT 1, Page 9 Fiscal Year 2020-21 Total County Percent Change ---Population Minus Exclusions ---Population City 2019-2020 1-1-19 1-1-20 1-1-2020 La Canada Flintridge -0.18 20,497 20,461 20,461 La Habra Heights -0.16 5,470 5,461 5,461 Lakewood -0.31 80,168 79,919 79,919 La Mirada -0.27 49,007 48,877 48,877 Lancaster 0.10 157,174 157,338 161,699 La Puente 0.09 40,532 40,568 40,568 La Verne 0.03 33,289 33,300 33,300 Lawndale -0.24 32,879 32,799 32,799 Lomita -0.32 20,614 20,549 20,549 Long Beach -0.12 472,730 472,140 472,217 Los Angeles -0.06 4,010,280 4,007,960 4,010,684 Lynwood -0.39 71,549 71,269 71,269 Malibu -0.54 11,784 11,720 11,720 Manhattan Beach -0.48 35,419 35,250 35,250 Maywood -0.30 27,988 27,904 27,904 Monrovia -0.06 37,956 37,935 37,935 Montebello -0.31 63,742 63,544 63,544 Monterey Park -0.34 60,943 60,734 60,734 Norwalk -0.21 105,087 104,862 105,717 Palmdale -0.24 157,117 156,737 156,737 Palos Verdes Estates -0.30 13,230 13,190 13,190 Paramount -0.19 55,569 55,461 55,461 Pasadena 0.11 144,686 144,842 144,842 Pico Rivera -0.03 63,390 63,374 63,374 Pomona 0.09 154,675 154,817 154,817 Rancho Palos Verdes -0.26 41,821 41,714 41,731 Redondo Beach -0.24 67,154 66,994 66,994 Rolling Hills -0.32 1,880 1,874 1,874 Rolling Hills Estates 0.39 8,035 8,066 8,066 Rosemead 0.30 54,198 54,363 54,363 San Dimas -0.28 34,042 33,945 33,945 San Fernando 1.65 24,798 25,207 25,207 San Gabriel -0.22 40,194 40,104 40,104 San Marino -0.14 13,106 13,087 13,087 Santa Clarita 0.10 221,703 221,932 221,932 Santa Fe Springs -0.29 18,303 18,250 18,295 Santa Monica -0.13 92,480 92,357 92,357 Sierra Madre -0.25 10,843 10,816 10,816 Signal Hill -0.27 11,744 11,712 11,712 South El Monte 1.98 20,792 21,204 21,204 EXHIBIT 1, Page 10 Fiscal Year 2020-21 County Percent Change City 2019-2020 South Gate -0.21 South Pasadena -0.26 Temple City 0.14 Torrance -0.26 Vernon -0.34 Walnut -0.16 West Covina -0.30 West Hollywood -0.36 Westlake Village -0.18 Whittier -0.31 Unincorporated -0.50 County Total -0.11 --- Population Minus Exclusions --- 1-1-19 97,211 25,524 36,098 145,922 298 29,977 106,313 36,335 8,227 87,073 1,038,938 10,175,203 1-1-20 97,003 25,458 36,150 145,546 297 29,929 105,999 36,203 8,212 86,801 1,033,771 10,163,868 Total Population 1-1-2020 97,003 25,458 36,150 145,546 29,929 105,999 36,203 8,212 86,801 1,034,689 10,172,951 EXHIBIT 1, Page 11 Fiscal Year 2020-21 Attachment C Annual Percent Change in Population Minus Exclusions* January 1, 2019 to January 1, 2020 County Percent Change ---Population Minus Exclusions --- 2019-20 1-1-19 1-1-20 Los Angeles Incorporated -0.07 9,136,265 9,130,097 County Total -0.11 10,175,203 10,163,868 Madera Incorporated 0.34 77,618 77,881 County Total 0.17 152,164 152,417 Marin Incorporated -0.60 193,050 191,884 County Total -0.60 257,901 256,353 Mariposa Incorporated 0.00 0 0 County Total 0.04 17,979 17,986 Mendocino Incorporated -0.16 29,058 29,011 County Total -0.49 88,218 87,785 Merced Incorporated 1.64 184,863 187,894 County Total 1.04 279,499 282,405 Modoc Incorporated -0.81 2,849 2,826 County Total -0.54 9,556 9,504 Mono Incorporated -0.36 7,887 7,859 County Total -0.40 13,385 13,332 Monterey Incorporated -0.36 319,258 318,115 County Total -0.31 425,654 424,349 *Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state and federal correctional institutions and veteran homes. EXHIBIT 1, Page 12 ADOPTION OF RESOLUTION NO. 20-5480FISCAL YEAR 2020-21ANNUAL APPROPRIATIONS (GANN LIMIT)June 29, 2020ATTACHMEN B ANNUAL APPROPRIATIONS LIMITPublic Hearing - Required By Proposition 4 (Gann Limit)•Restricts amount of tax proceeds that can be appropriated.•Requires City Council adoption of appropriations limit.2 ANNUAL APPROPRIATIONS LIMIT (continued)•FY 2020-21 Appropriations Limit:$22,767,883•Appropriations Subject to Limit:$ 7,351,555*•Appropriations Margin:$15,316,328*32.3% of Appropriations Limit3 ANNUAL APPROPRIATIONS LIMIT (continued)IT IS RECOMMENDED THE CITY COUNCIL:•Open the Public Hearing;•Receive Input;•Close the Public Hearing; and•Adopt Resolution No. 20-5480, Adopting the AnnualAppropriations Limit For FY 2020-214