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Home My Public Portal About13) 8B_Appropriations Limit_Staff ReportADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE: June 15, 2021 TO: The Honorable City Council FROM: Bryan Cook, City Manager By: Susan Paragas, Administrative Services Director SUBJECT: PUBLIC HEARING - ADOPTION OF RESOLUTION NO. 21-5534 ADOPTING THE ANNUAL APPROPRIATIONS LIMIT FOR FISCAL YEAR (FY) 2021-2022 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. 21-5534 adopting the annual Appropriations Limit (Limit) for FY 2021-2022. 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 ensure 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 8.B. City Council June 15, 2021 Page 2 of 2 4. On June 3, 2021, 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 2021-2022, and the City Council is required to confirm all factors used for calculating the Limit by adoption of a resolution. For FY 2021-2022, the California Per Capita Income and the population growth of the County were applied to the FY 2020-2021 Limit. The City of Temple City’s Limit for FY 2021-2022 is $23,883,509, with appropriations subject to the Limit of $9,371,707, or $14,511,802 below the Limit. CITY STRATEGIC GOALS: In order to be in compliance with California State law, adoption of Resolution No. 21-5534 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 2021-2022 City Budget. ATTACHMENTS: A. Resolution 21-5534 B. Presentation Slides ATTACHMENT A RESOLUTION NO. 21-5534 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY, CALIFORNIA ADOPTING THE ANNUAL APPROPRIATIONS LIMIT FOR THE FISCAL YEAR (FY) 2021-2022 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 2021-2022 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 2021-22 shall be $23,883,509, with appropriations subject to the limit of $9,371,707, or $14,511,802 less than the limit. SECTION 2. The City Clerk shall certify to the adoption of this resolution. APPROVED AND ADOPTED this 15th day of June, 2021. Vincent Yu, Mayor ATTEST: APPROVED AS TO FORM: Peggy Kuo, City Clerk Greg Murphy, City Attorney Resolution No. 21-5534 Page 2 of 2 I hereby certify that the foregoing resolution, Resolution No. 21-5534, was duly passed, approved and adopted by the City Council of the City of Temple City at a regular meeting held on the 15th day of June 2021, 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 2021-2022 APPROPRIATIONS LIMIT 2020-21 limit (1)$22,767,883 Per Capita Income and City population change factor applied to 2020-21 appropriations limit 1.0490 2021-2022 Appropriations Limit $23,883,509 APPROPRIATIONS SUBJECT TO LIMIT Proceeds of Taxes $13,605,707 Less Exclusions: Qualified Capital Outlay 4,234,000 Appropriations Subject to Limit $9,371,707 Appropriations Margin $14,511,802 (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:2021-22 PROCEEDS NON-PROCEEDS REVENUE OF TAXES OF TAXES TOTAL TAXES: Property Tax 3,824,955 3,824,955 Sales & Use Tax / In Lieu Sales Tax 1,842,305 1,842,305 Business License Tax Revenue 141,655 141,655 Transient Occupancy Tax 42,000 42,000 Other Taxes: Real Estate 130,000 130,000 Prop. A / Prop. C 1,085,080 1,085,080 Subtotal 6,924,340 141,655 7,065,995 FROM STATE: Motor Vehicle In Lieu / In Lieu VLF 5,319,160 5,319,160 State Cops Grant 140,000 140,000 Gasoline Tax 564,930 564,930 Used Oil 10,000 10,000 SB1 643,500 643,500 Other Grants 150,000 150,000 Subtotal 5,319,160 1,508,430 6,827,590 OTHER GOVERNMENTS Community Development (CDBG)186,000 186,000 SB821 Aid to Cities 44,000 44,000 Air Quality Improvement 47,000 47,000 Measure M 484,090 484,090 Measure R 330,100 330,100 Measure W 450,000 450,000 Subtotal 1,264,190 277,000 1,541,190 LOCAL Special benefit assessments 1,605,835 1,605,835 Franchise fees 560,000 560,000 Franchise fees-In-lieu 300,000 300,000 Development fees -Sewer/Park/Public Arts 52,000 52,000 Fines, forfeitures, penalties/Traffic Safety 432,800 432,800 AB939 Revenues 56,800 56,800 AB939 Reimbursement 7,100 7,100 Subtotal 0 3,014,535 3,014,535 USER FEES Building Permits 462,395 462,395 Parking Permits 157,500 157,500 Encroachment Permits 152,090 152,090 Animal License 23,250 23,250 Vehicle Impound 10,690 10,690 Code Enforcement 22,750 22,750 Shared Maint./Facility Rental 17,755 17,755 Zoning & Plan Check 610,750 610,750 Recreation 250,000 250,000 PW Engineering 39,520 39,520 Subtotal 0 1,746,700 1,746,700 OTHER MISCELLANEOUS Bus Pass Sales 8,775 8,775 Misc Sundry/Other Reimb 100,000 100,000 Rental Income 37,300 37,300 CRA and L/LD Admin Reimb 24,300 24,300 Subtotal 0 170,375 170,375 EXHIBIT 1, Page 3 CALCULATION OF PROCEEDS OF TAXES Worksheet #1 Page 2 of 2 CITY:TEMPLE CITY Funds Included:ALL FY:2021-22 PROCEEDS NON-PROCEEDS REVENUE OF TAXES OF TAXES TOTAL SUB TOTAL (For Worksheet #3)13,507,690 6,858,695 20,366,385 INTEREST EARNINGS 98,017 115,063 213,080 (From Worksheet #3) TOTAL (Use For Worksheet #4)13,605,707 6,973,758 20,579,465 EXHIBIT 1, Page 4 INTEREST EARNINGS PRODUCED BY TAXES Worksheet #2 Page 1 of 1 CITY:TEMPLE CITY FY:2021-22 AMOUNT SOURCE A. Non-Interest Tax Proceeds 13,507,690 (Worksheet #2) B. Minus Exclusions 4,234,000 GF Capital Project C. Net Invested Taxes 9,273,690 (A - B) D. Total Non-Interest 20,366,385 (Worksheet #2) E. Tax Proceeds as Percent of Budget 46%(C / D) F. Interest Earnings 213,080 (Budget or Actual) G. Amount of Interest Earned from Taxes 98,017 (E * F) H. Amount of Interest Earned from Non-Taxes 115,063 (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:2021-22 Amount Source A. Proceeds of Taxes 13,605,707 (Worksheet #2) B. Exclusions 4,234,000 GF Capital Project C. Appropriations subject to Limitation 9,371,707 (A - B) D. Current Year Limit 16,171,728 (Worksheet #6) E. Over/(Under) Limit (6,800,021)(C - D) PROCEEDS NON-PROCEEDS CAPITAL PROJECTS OF TAXES OF TAXES General Fund (MOE)210,000 TDA Gas Tax SB1 1,345,000 AQMD 53,000 CDBG 0 Prop C 1,783,000 SB821 71,000 Measure A 0 Measure M 1,136,000 Measure R 1,244,000 Measure W 76,000 L/LD 711,825 State Parks Grant 2,853,150 Park Acq 15,000 4,449,000 5,048,975 *PROJECTS UNDER $100,000 (215,000) 4,234,000 EXHIBIT 1, Page 6 County Percent Population Percent 2020-21: 1-1-20 10,127,550 1-1-21 -0.32%10,037,774 -0.89% Amount Source A. LAST YEAR'S LIMIT $15,416,328 B. ADJUSTMENT FACTORS: 1. Population % (greater of City or County factor)0.9968 (Worksheet #5) 2. Inflation % (from State Finance or Assessor)1.0524 C. ANNUAL ADJUSTMENTS $Total Adjustment Factor 1.0490 (C1 * C2) D. OTHER ADJUSTMENTS: 755,400 (A * B) Lost Responsibility (-) Transfer to private (-) Transfer to fees (-) Assumed Responsibility (+) E. TOTAL ADJUSTMENTS Sub-total 0 F. THIS YEAR'S LIMIT 755,400 (C + D) $16,171,728 (A + E) 36,225 APPROPRIATIONS LIMIT CALCULATION Worksheet #4 Page 1 of 1 City Population 36,343 May 2021 Dear Fiscal Officer: Subject: Price Factor and Population Information Appropriations Limit California Revenue and Taxation Code section 2227 requires the Department of Finance (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, 2021, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2021-22. 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 2021-22 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, 2021. 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. KEELY MARTIN BOSLER Director By: /s/ Erika Li Erika Li Chief Deputy Director Attachment EXHIBIT 1, Page 7 May 2021 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 2021-22 appropriation limit is: Per Capita Personal Income Fiscal Year Percentage change (FY) over prior year 2021-22 5.73 B. Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2021-22 appropriation limit. 2021-22: Per Capita Cost of Living Change = 5.73 percent Population Change = -0.46 percent Per Capita Cost of Living converted to a ratio: 5.73 + 100 = 1.0573 100 Population converted to a ratio: -0.46 + 100 = 0.9954 100 Calculation of factor for FY 2021-22: 1.0573 x 0.9954 = 1.0524 EXHIBIT 1, Page 8 Fiscal Year 2021-22 Total County Percent Change ---Population Minus Exclusions ---Population City 2020-2021 1-1-20 1-1-21 1-1-2021 Los Angeles Agoura Hills -0.69 20,599 20,457 20,457 Alhambra -0.38 86,588 86,258 86,258 Arcadia -0.28 57,820 57,660 57,660 Artesia -0.70 16,514 16,398 16,484 Avalon -0.80 4,005 3,973 3,973 Azusa -0.44 49,805 49,587 49,587 Baldwin Park -0.59 76,388 75,935 75,935 Bell -0.43 36,475 36,319 36,319 Bellflower -0.58 77,909 77,458 77,458 Bell Gardens -0.67 42,518 42,233 42,233 Beverly Hills -0.78 33,660 33,399 33,399 Bradbury -1.04 1,056 1,045 1,045 Burbank -0.54 104,535 103,969 103,969 Calabasas 0.76 24,157 24,341 24,341 Carson -0.49 92,121 91,668 91,668 Cerritos -0.43 50,262 50,048 50,048 Claremont -0.47 35,877 35,707 35,707 Commerce -0.74 12,888 12,792 12,792 Compton -0.68 98,447 97,775 97,775 Covina -0.13 48,899 48,833 48,833 Cudahy -0.78 23,937 23,750 23,750 Culver City 0.05 39,785 39,805 39,805 Diamond Bar -0.65 57,088 56,717 56,717 Downey -0.68 112,186 111,425 111,425 Duarte -0.34 21,531 21,457 21,457 El Monte -0.35 116,876 116,465 116,465 El Segundo -0.53 16,749 16,660 16,660 Gardena -0.64 60,732 60,344 60,344 Glendale -0.27 204,392 203,834 203,834 Glendora -0.65 51,879 51,540 51,540 Hawaiian Gardens -0.71 14,571 14,467 14,467 Hawthorne -0.65 87,571 86,999 86,999 Hermosa Beach -0.77 19,601 19,451 19,451 Hidden Hills 0.63 1,901 1,913 1,913 Huntington Park -0.67 59,337 58,937 58,937 Industry -0.23 428 427 427 Inglewood -0.69 110,925 110,159 110,159 Irwindale -0.07 1,442 1,441 1,441 EXHIBIT 1, Page 9 Fiscal Year 2021-22 Total County Percent Change ---Population Minus Exclusions ---Population City 2020-2021 1-1-20 1-1-21 1-1-2021 La Canada Flintridge -0.78 20,352 20,194 20,194 La Habra Heights -0.33 5,469 5,451 5,451 Lakewood -0.67 80,757 80,218 80,218 La Mirada -0.65 48,947 48,631 48,631 Lancaster -0.12 157,696 157,504 161,372 La Puente -0.67 40,358 40,087 40,087 La Verne -0.69 33,313 33,084 33,084 Lawndale -0.50 32,873 32,710 32,710 Lomita -0.73 20,582 20,431 20,431 Long Beach -0.91 471,975 467,684 467,730 Los Angeles -1.29 3,973,512 3,922,113 3,923,341 Lynwood -2.13 71,399 69,880 69,880 Malibu -0.61 11,608 11,537 11,537 Manhattan Beach -0.67 35,294 35,058 35,058 Maywood -0.60 27,837 27,670 27,670 Monrovia 1.36 37,964 38,479 38,479 Montebello -0.55 63,264 62,914 62,914 Monterey Park -0.70 60,808 60,380 60,380 Norwalk -0.62 105,207 104,554 105,393 Palmdale -0.53 156,910 156,074 156,074 Palos Verdes Estates -0.68 13,377 13,286 13,286 Paramount -0.66 55,566 55,200 55,200 Pasadena 0.17 145,061 145,306 145,306 Pico Rivera -0.59 63,530 63,157 63,157 Pomona -1.74 153,992 151,319 151,319 Rancho Palos Verdes -0.70 41,835 41,541 41,541 Redondo Beach -0.62 66,900 66,484 66,484 Rolling Hills -0.59 1,877 1,866 1,866 Rolling Hills Estates 0.15 8,086 8,098 8,098 Rosemead -0.44 54,471 54,229 54,229 San Dimas -0.65 34,226 34,003 34,003 San Fernando 0.05 24,742 24,754 24,754 San Gabriel -0.46 40,129 39,945 39,945 San Marino -0.36 13,008 12,961 12,961 Santa Clarita 0.21 221,106 221,572 221,572 Santa Fe Springs -0.74 18,219 18,084 18,129 Santa Monica -0.03 92,995 92,968 92,968 Sierra Madre -0.68 10,728 10,655 10,655 Signal Hill -0.67 11,695 11,617 11,617 South El Monte 0.21 21,252 21,296 21,296 EXHIBIT 1, Page 10 Fiscal Year 2021-22 County Percent Change City 2020-2021 South Gate 0.42 South Pasadena -0.72 Temple City -0.32 Torrance -0.65 Vernon -0.67 Walnut -0.60 West Covina -0.58 West Hollywood -0.60 Westlake Village -0.74 Whittier -0.34 Unincorporated -1.14 County Total -0.89 --- Population Minus Exclusions --- 1-1-20 96,147 25,853 36,343 145,783 297 30,015 106,209 36,344 8,241 86,487 1,035,457 10,127,550 1-1-21 96,553 25,668 36,225 144,832 295 29,835 105,593 36,125 8,180 86,196 1,023,632 10,037,774 Total Population 1-1-2021 96,553 25,668 36,225 144,832 29,835 105,593 36,125 8,180 86,196 1,024,204 10,044,458 EXHIBIT 1, Page 11 Fiscal Year 2021-22 Attachment C Annual Percent Change in Population Minus Exclusions* January 1, 2020 to January 1, 2021 County Percent Change ---Population Minus Exclusions --- 2020-21 1-1-20 1-1-21 Los Angeles Incorporated -0.86 9,092,093 9,014,142 County Total -0.89 10,127,550 10,037,774 Madera Incorporated 0.86 78,102 78,770 County Total 0.57 152,872 153,742 Marin Incorporated -0.42 191,682 190,877 County Total -0.43 256,217 255,106 Mariposa Incorporated 0.00 0 0 County Total -0.02 17,993 17,989 Mendocino Incorporated -1.71 28,905 28,410 County Total -1.02 87,547 86,655 Merced Incorporated 2.25 188,284 192,518 County Total 0.55 282,236 283,795 Modoc Incorporated -0.07 2,888 2,886 County Total -0.06 9,497 9,491 Mono Incorporated -0.33 7,853 7,827 County Total -1.16 13,317 13,163 Monterey Incorporated -0.57 323,210 321,366 County Total -0.48 429,874 427,819 *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. 21-5534 FISCAL YEAR 2021-2022 ANNUALAPPROPRIATIONS (GANN LIMIT) June 15, 2021 ATTACHMENT B ANNUAL APPROPRIATIONS LIMIT Public 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 2021-2022 Appropriations Limit: $23,883,509 Appropriations Subject to Limit: $ 9,371,707* Appropriations Margin: $14,511,802 *39.2% of Appropriations Limit 3 ANNUAL APPROPRIATIONS LIMIT (continued) It is recommended the City Council: Open the Public Hearing; Receive Input; Close the Public Hearing; and Adopt Resolution No. 21-5534, Adopting the Annual Appropriations Limit For FY 2021-2022 4