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Home My Public Portal About16) Item 8C Public Hearing Adoption of Reso 16-5177 Confirming the factors used for calculation the annual propriations limit FY 2016-17AGENDA ITEM 8.C. ADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE: June 21, 2016 TO: The Honorable City Council FROM: Bryan Cook, City Manager By: Tracey L. Hause, Administrative Services Director SUBJECT: PUBLIC HEARING -ADOPTION OF RESOLUTION NO. 16-5177 CONFIRMING THE FACTORS USED FOR CALCULATING THE ANNUAL APPROPRIATIONS LIMIT FOR THE FISCAL YEAR (FY) 2016-1 7 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. 16-5177 (Attachment "A"), confirming the factors used for calcu lating the annual Appropriations Limit (Limit) for FY 2016-17. 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 govern ment 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 wh ich revised the annual adjustment factors applied to the 1986-87 Limit and each year thereafter. City Council June 21 , 2016 Page 2 of 2 4. On June 2 and June 9, 2016, 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 XI liB in determining the Limit for FY 2016-17, and the City Council is required to confirm all factors used for calculating the Limit by adoption of a resolution. For FY 2016-17, the California Per Capita Income and the population growth of the County were applied to the FY 2015-16 Limit. A Resolution confirming the factors used for calculating the annual Lim it and the calcu lations (Exhibit "1" of the Resolution) determining of the Limit are included in this report. The City of Temple City's Lim it for FY 2016-17 is $19,352,151 The appropriations subject to the Limit per the Proposed FY 2016-17 City Budget is $9 ,057 ,310. The City of Temple City is $10,294,841 below the Limit. CITY STRATEGIC GOALS: In order to be in compliance with California State law, adoption of Resolution No. 16-5177 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 2016-17 City Budget. ATTACHMENT: A. Resolution 16-5177 ATTACHMENT A RESOLUTION NO. 16-5177 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) 2016-2017 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 XII IS 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 ofTemple City has complied with all the provisions of Article XII IS in determining the Appropriations Limit for FY 2016-17. 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 2015-16 Limit. SECTION 2. The accumulated growth in the calculation of these new factors are to be applied to the Appropriations Limit in FY 2015-16. SECTION 3. The Appropriations Limit for FY 2016-17 shall be $19,352,1 52 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 21st day of June, 2016. Vincent Yu, Mayor ATTEST: APPROVED AS TO FORM: Peggy Kuo, City Clerk Eric Vail, City Attorney EXHIBIT 1 ARTICLE Xlll-8 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 2016-2017 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 2016-2017 APPROPRIATIONS LIMIT 2015-16 limit (1) Per Capita Income and City population change factor applied to 2015-16 appropriations limit 2016-2017 appropriations limit APPROPRIATIONS SUBJECT TO LIMIT AND APPROPRIATIONS MARGIN Proceeds of Taxes Less Exclusions: Qualified Capital Outlay Appropriations Subject to Limit Appropriations Margin $18,203,510 1.0631 $19,352,151 $10,712,100 1 654 790 $9,057,310 $10,294,841 (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 Lim it for Fiscal Year 2016-17 a) Revised Appropriation Limit Calculation Increase Annual Base City or County In California Adjustment Appropriations Fiscal Year Population Growth Per Capita Income Factor Limit 1986-87 $5,097,811 1987-88 101.91% County 103.47% 105.45% 5,097,811 X 1.0545 5,375,642 1988-89 101.62% County 104.66% 106.36% 5,375,642 X 1.0636 5 717 533 1989-90 101.14% County 105.19% 106.39% 5,717,533 X 1.0639 6,082,883 1990-91 101.36% County 104.21 % 105.63% 6,082,883 X 1.0563 6,425,349 1991 -92 101.73% County 104.14% 105.94% 6,425,349 X 1.0594 6,807,015 1992-93 101.49% County 99.36% 100.84% 6,807,015 X 1.0084 6 864 194 1993-94 101 .42% City 102.72% 104.18% 6,864,194 X 1.0418 7151117 1994-95 100.79% City 100.71 % 101 .51% 7,151,117 X 1.0151 7,259,099 1995-96 101 .22% City 104.72% 106.00% 7,259,099 X 1.0600 7 694 645 1996-97 100.63% City 104.67% 105.33% 7,694,645 X 1.0533 8 104 770 1997-98 101 .30% City 104.67% 106.03% 8,104,770 X 1.0603 8 593 488 1998-99 101 .39% County 104.15% 105.60% 8,593,488 X 1.0560 9 074 723 Page 3 of 6 Schedule of Calculations of Appropriations Limit for Fiscal Year 2016-17 a) Revised Appropriation Limit Calculation Increase Annual Base City or County In California Adjustment Appropriations Fiscal Year Population Growth Per Capita Income Factor Limit 1999-00 101 .78% County 104.53% 106.39% 9,074,723 X 1.0639 9,654,598 2000-01 101.75% County 104.91 % 106.75% 9,654,598 X 1.0675 10,306,283 2001-02 101.66% County 107.82% 109.61% 10,306,283 X 1.0961 11 296 717 2002-03 101.77% County 98.73% 100.48% 11 ,296,717 X 1.0048 11 ,350,941 2003-04 101.66% County 102.31% 104.01 % 11 ,350,941 X 1.0401 11806114 2004-05 101.52% County 103.28% 104.85% 11 ,806,114 X 1.0485 12,378,711 2005-06 101.50% County 105.26% 106.50% 12,378,711 X 1.0650 13,183,327 2006-07 100.78% County 103.96% 104.77% 13,183,327 X 1.0477 13,812,172 2007-08 100.72% County 104.42% 105.17% 13,812,172 X 1.0517 14,526,261 2008-09 100.86% County 104.29% 105.19% 14,526,261 x1.0519 15,280,174 2009-10 100.90% County 100.62% 101 .53% 15,280,174 x1.0153 15,513,961 2010-11 100.83% County 97.46% 98.27% 15,513,961 X 0.9827 15,245,569 Page 4 of 6 Schedule of Calculations of Appropriations Limit for Fiscal Year 2016-17 a) Revised Appropriation Limit Calculation Increase Annual Base City or County In California Adjustment Appropriations Fiscal Year Population Growth Per Capita Income Factor Limit 2011 -12 100.38% County 102.51 % 1.029% 15,245,569 X 1.0290 15,687,691 2012-13 100.38% County 103.77% 1.042% 15,687,691 X 1.0416 16,340,299 2013-14 100.69% County 105.12% 1.059% 16,340,299 X 1.0585 17,296,206 2014-15 100.78% County 99.77% 1.006% 17,296,206 X 1.0055 17 391 335 2015-16 100.82% County 103.82% 1.047% 17,391 ,335 X 1.0467 18,203,510 2016-17 100.89% City 105.37% 1.063% 18,203,510 X 1.0631 19,352,151 Schedule of Calculations of Appropriations Limit for Fiscal Year 2016-17 b) Past Appropriation Limit Calculation Fiscal Year 1986-87 1987-88 1988-89 1989-90 1990-91 City Population Growth 101.72% 100.55% 99.19% 100.34% Increase In Consumer Price Index 103.04% 103.93% 104.98% 103.82% (1) Annual Adjustment Factor 104.80% 104.50% 104.13% 104.68% (1) The increase in California Per Capita Income was used instead of the Consumer Price Index Page 5 of 6 Base Appropriations Limit $5,097,811 5,097,81 1 X 1.0480 5,342,506 5,342,506 X 1.0450 5,582,919 5,582,919 X 1.0413 5,813,493 5,813,493 X 1.0468 6,085,565 Page 6 of 6 POPULATION GROWTH Fiscal Year City County 1987-88 101 .72% 101 .91% 1988-89 100.55% 101 .62% 1989-90 99.19% 101 .14% 1990-91 100.45% 101 .36% 1991-92 100.93% 101 .73% 1992-93 100.93% 101.49% 1993-94 101.42% 100.96% 1994-95 100.79% 100.75% 1995-96 101.22% 100.33% 1996-97 100.63% 100.48% 1997-98 101.30% 101 .24% 1998-99 101.37% 101 .39% 1999-00 101.62% 101 .78% 2000-01 101.53% 101 .75% 2001-02 101.33% 101 .66% 2002-03 101.69% 101 .77% 2003-04 101.17% 101 .66% 2004-05 101.89% 101 .38% 2005-06 100.91 % 101 .18% 2006-07 100.09% 100.78% 2007-08 100.52% 100.72% 2008-09 100.50% 100.86% 2009-10 100.75% 100.90% 2010-11 100.78% 100.83% 2011-12 100.28% 100.38% 2012-13 100.32% 100.38% 2013-14 100.52% 100.69% 2014-15 100.44% 100.78% 2015-16 100.34% 100.82% 2016-17 100.89% 100.85%