HomeMy Public PortalAbout14) 7K GANN LimitationDATE: June 4, 2013
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
TO: The Honorable City Council
FROM: Jose E. Pulido, City Manager
By: Tracey L. Hause, Administrative Services Director
AGENDA
ITEM 7. K.
SUBJECT: ADOPTION OF RESOLUTION NO. 13-4914 CONFIRMING THE
FACTORS USED FOR CALCULATING THE ANNUAL
APPROPRIATIONS LIMIT FOR THE FISCAL YEAR (FY) 2013-14
RECOMMENDATION:
It is recommended that the City Council adopt Resolution No. 13-4914 (Attachment "A"), a
Resolution confirming the factors used for calculating the annual Appropriations Limit
(Limit) for FY 2013-14.
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.
3. On May 23 and May 29, 2013, 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
City Council
June 4, 2013
Page 2 of 2
California Per Capital Personal Income, whichever is less. Staff has complied with all
the provisions of Article XIIIB in determining the Limit for FY 2013-14, and the City
Council is required to confirm all factors used for calculating the Limit by adoption of a
resolution. For FY 2013-14, the California Per Capita Personal Income and the
population growth of the County were applied to the FY 2012-13 Limit. A Resolution
(Attachment "A") confirming the factors used for calculating the annual Limit and the
calculations (Attachment "B") determining of the Limit are included in this report. The
City of Temple City's Limit for FY 2013-14 is $17,296,206. The appropriations subject to
the Limit per the Proposed FY 2013-14 City Budget is $2,909,985. The City of Temple
City is $14,386,221 below the Limit.
CONCLUSION:
In order to be in compliance with State law, City Council adoption of Resolution 13-4914
is necessary at this time.
FISCAL IMPACT:
Adoption of this Resolution does not have an impact on the FY 2013-14 City Budget,
ATTACHMENTS:
A. Resolution 13-2914
ATTACHMENT A
RESOLUTION NO. 12-4914
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE
CITY, CALIFORNIA CONFIRMING THE FACTORS USED FOR
CALCULATING THE ANNUAL APPROPRIATIONS LIMIT FOR THE
FISCAL YEAR (FY) 2013-2014
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 decision as to which of the factors: a) either the California Per Capita Income or
the percentage change in the local assessment roll from the preceding year due to the addition of local non-
residential construction in the city; and b) either the city's own population growth or the entire county; must
be done by a recorded vote of the City Council; and
WHEREAS, the City of Temple City has complied with all the provisions of Article XIIIB in
determining the Appropriations Limit for FY 2013-14.
NOW, THEREFORE, the City Council of the City of Temple City does resolve, determine and order
as follows:
SECTION 1. The adjustment factors (the California Per Capita Income and the population growth
of the County) are to be applied to the FY 2012-13 Limit.
SECTION 2. The accumulated growth in the calculation of these new factors are to be applied to
the Appropriations Limit in FY 2012-13.
SECTION 3. The Appropriations Limit for FY 2013-14 shall be $17,296,206 for the City of Temple
City as determined by Exhibit 1, attached hereto.
SECTION 4. The City Clerk shall certify to the adoption of this resolution.
APPROVED AND ADOPTED this 4th day of June, 2013
MAYOR
ATTEST: APPROVED AS TO FORM:
City Clerk City Attorney
EXHIBIT 1
ARTICLE XIII -B OF THE CALIFORNIA CONSTITUTION (GANN INITIATIVE)
Effective July 1, 1980, Proposition 4 (Gann) put a limit on the City's expenditures from tax revenues
based on 1978-79 appropriations that is adjusted each succeeding year by 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 their 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 2013-2014 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
2013-2014 APPROPRIATIONS LIMIT
2012-13 limit (1)
Per Capita Income and County population change
factor applied to 2012-13 appropriations limit
2013-2014 appropriations limit
APPROPRIATIONS SUBJECT TO LIMIT AND APPROPRIATIONS MARGIN
Proceeds of Taxes
Less Exclusions:
Qualified Capital Outlay
Appropriations Subject to Limit
Appropriations Margin
$16,340,299
1.0585
$17,296,206
$8,973,950
6,063,965
$2,909,985
$14,386,221
(1) Recalcuted 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.
ATTACHMENT B
ARTICLE XIII -B OF THE CALIFORNIA CONSTITUTION (GANN INITIATIVEI
Effective July 1, 1980, Proposition 4 (Gann) put a limit on the City's expenditures from tax revenues
based on 1978-79 appropriations that is adjusted each succeeding year by 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 their 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 2013-2014 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
2013-2014 APPROPRIATIONS LIMIT
2012-13 limit (1)
Per Capita Income and County population change
factor applied to 2012-13 appropriations limit
2013-2014 appropriations limit
APPROPRIATIONS SUBJECT TO LIMIT AND APPROPRIATIONS MARGIN
Proceeds of Taxes
Less Exclusions:
Qualified Capital Outlay
Appropriations Subject to Limit
Appropriations Margin
$16,340,299
1.0585
$17,296,206
$8,973,950
6,063,965
$2,909,985
$14,386,221
(1) Recalcuted 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.
Page 2 of 6
Schedule of Calculations of Appropriations
Limit
for Fiscal Year 2013-14
a) Revised Appropriation Limit Calculation
Annual
Increase
Adjustment
Base
City or County
In California
Factor
Appropriations
Fiscal Year
Population Growth
Per Capita Income
Limit
1986-87
-
-
$5,097,811
105.45%
1987-88
101.91% County
103.47%
5,097,811
x 1.0545
5,375,642
106.36%
1988-89
101.62% County
104.66%
5,375,642
x 1.0636
5,717,533
106.39%
1989-90
101.14% County
105.19%
5,717,533
x 1.0639
6,082,883
105.63%
1990-91
101.36% County
104.21%
6,082,883
x 1.0563
6,425,349
105.94%
1991-92
101.73% County
104.14%
6,425,349
x 1.0594
6,807,015
100.84%
1992-93
101.49% County
99.36%
6,807,015
x 1.0084
6,864,194
104.18%
1993-94
101.42% City
102.72%
6,864,194
x 1.0418
7,151,117
101.51%
1994-95
100.79% City
100.71%
7,151,117
x 1.0151
7,259,099
106.00%
1995-96
101.22% City
104.72%
7,259,099
x 1.0600
7,694,645
105.33%
1996-97
100.63% City
104.67%
7,694,645
x 1.0533
8,104,770
106.03%
1997-98
101.30% City
104.67%
8,104,770
x 1.0603
8,593,488
105.60%
1998-99
101.39% County
104.15%
8,593,488
x 1.0560
x 0.9827
15,245,569
Page 3 of 6
Schedule of Calculations of Appropriations Limit
for Fiscal Year 2013-14 (Con't)
a) Revised Appropriation Limit Calculation
Annual
Increase
Adjustment
Base
City or County
In California
Factor
Appropriations
Fiscal Year
Population Growth Per
Capita Income
Limit
106.39%
1999-00
101.78% County
104.53%
9,074,723
x 1.0639
9,654,598
106.75%
2000-01
101.75% County
104.91%
9,654,598
x 1.0675
10,306,283
109.61%
2001-02
101.66% County
107.82%
10,306,283
x 1.0961
11,296,717
100.48%
2002-03
101.77% County
98.73%
11,296,717
x 1.0048
11,350,941
104.01%
2003-04
101.66% County
102.31%
11,350,941
x 1.0401
11,806,114
104.85%
2004-05
101.52% County
103.28%
11,806,114
x 1.0485
12,378,711
106.50%
2005-06
101.50% County
105.26%
12,378,711
x 1.0650
13,183,327
104.77%
2006-07
100.78% County
103.96%
13,183,327
x 1.0477
13, 812,172
105.17%
2007-08
100.72% County
104.42%
13,812,172
x 1.0517
14,526,261
105.19%
2008-09
100.86% County
104.29%
14,526,261
x 1.0519
15,280,174
101.53%
2009-10
100.90% County
100.62%
15,280,174
x 1.0153
15,513,961
98.27%
2010-11
100.83% County
97.46%
15,513,961
x 0.9827
15,245,569
x 1.0565
17,296,206
Page 4 of 6
Schedule of Calculations of Appropriations
Limit
for Fiscal Year 2013-14 (Con't)
a) Revised Appropriation Limit Calculation
Annual
Increase
Adjustment
Base
City or County
In California
Factor
Appropriations
Fiscal Year
Population Growth Per
Capita Income
Limit
1.029%
2011-12
100.38% County
102.51%
15,245,569
x 1.0290
15,687,691
1.042%
2012-13
100.38% County
103.77%
15,687,691
x 1.0416
16,340,299
1.059%
2013-14
100.69% County
105.12%
16,340,299
x 1.0565
17,296,206
(1) The increase in California Per Capita Income was used instead of the Consumer
Price Index
Page 5 of 6
Schedule of Calculations
of Appropriations Limit
for Fiscal Year 2013-14 (Con't)
b) Past Appropriation Limit Calculation
Annual
City
Increase
Adjustment
Base
Population
In Consumer
Factor
Appropriations
Fiscal Year
Growth
Price Index
Limit
1986-87
-
-
$5,097,811
104.80%
1987-88
101.72%
103.04%
5,097,811
x 1.0480
5,342,506
104.50%
1988-89
100.55%
103.93%
5,342,506
x 1.0450
5,582,919
104.13%
1989-90
99.19%
104.98%
5,582,919
x 1.0413
5,813,493
(1)
104.68%
1990-91
100.45%
104.21%
5,813,493
x 1.0468
6,085,565
(1) The increase in California Per Capita Income was used instead of the Consumer
Price Index
Page 6 of 6
POPULATION
GROWTH
Countv
Fiscal Year
City
101.91%
1987-88
101.72%
101.62%
1988-89
100.55%
101.14%
1989-90
99.19%
101.36%
1990-91
100.45%
101.73%
1991-92
100.93%
101.49%
1992-93
100.93%
100.96%
1993-94
101.42%
100.75%
1994-95
100.79%
100.33%
1995-96
101.22%
100.48%
1996-97
100.63%
101.24%
1997-98
101.30%
101.39%
1998-99
101.37%
101.78%
1999-00
101.62%
101.75%
2000-01
101.53%
101.66%
2001-02
101.33%
101.77%
2002-03
101.69%
101.66%
2003-04
101.17%
101.38%
2004-05
101.89%
101.18%
2005-06
100.91%
100.78%
2006-07
100.09%
100.72%
2007-08
100.52%
100.86%
2008-09
100.50%
100.90%
2009-10
100.75%
100.83%
2010-11
100.78%
100.38%
2011-12
100.28%
100.38%
2012-13
100.32%
100.69%
2013-14
100.52%