HomeMy WebLinkAboutE-15 Staff Report - FY2324 Gann LimitCONSENT ITEM
E-15
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: JUNE 19, 2023
SUBJECT: ADOPTION OF GANN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2023-24
BACKGROUND:
Pursuant to State Law, each local government must adopt an Annual Appropriation Limit. The proposed
action will approve Resolution No. 2023-C32 adopting the City’s Annual Appropriation Limit as required
by law.
RECOMMENDATION:
Staff recommends that the City Council take the following action:
1)Adopt Resolution No. 2023-C32, approving and adopting the Annual Appropriations Limit for
the Fiscal Year 2023-24 in the Amount of $422,441,461.
ANALYSIS:
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. Beyond local inflation and population factors, the provisions allow a city to use the higher of the
percentage 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
Approved
City Council
June 19, 2023
Gann Appropriations Limit FY 2023-24
June 19, 2023
Page 2
the city or county, whichever is higher. The City utilized elements of these adjustment factors in
calculating the annual Gann Appropriation Limit.
Pursuant to subdivision (b) of Government Code section 7903, commencing with the fiscal year 2021-22,
city governments are required to include specified state subventions within their appropriations limits.
The new policy is the result of a 2022 legislative maneuver. To avoid exceeding the Gann Limit, the 2022-
23 state budget excluded certain local subventions from the state limit. These additional expenditures are
counted by local governments towards their local appropriation limits when capacity exists at that level
of government.
Staff was able to confirm with the State Department of Finance on the amount of assigned State
subventions, and the City of Azusa did not receive any subventions from the State and was not impacted
by Government Code section 7903.
Based on calculations attached to the Resolution, the City is under the cap for Fiscal Year 2023-24 by
$371,840,797.
FISCAL IMPACT:
There is no fiscal impact associated with the recommended action.
Prepared by: Reviewed by:
Richard Lam Talika M. Johnson
Budget & Revenue Manager Director of Administrative Services
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Resolution No. 2023-C32
2) Exhibit A – FY 2023-24 Annual Appropriations Calculation
3) Exhibit B – FY 2023-24 Appropriations Subject to Annual Limit
RESOLUTION NO. 2023-C32
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA,
CALIFORNIA, APPROVING AND ADOPTING THE ANNUAL
APPROPRIATIONS LIMIT FOR THE FISCAL YEAR 2023-24 IN THE
AMOUNT OF $422,441,461
WHEREAS, in June of 1990, the voters of the State of California enacted Proposition 111,
"The Traffic Congestion Relief and Spending Limitation Act of 1990"; and
WHEREAS, this Act amended Article XIIIB of the Constitution of the State of California
regarding spending limitations of cities; and
WHEREAS, Article XIIIB of the California Constitution provides that the total annual
appropriations subject to limitation of each governmental entity, including this City, shall not exceed
the appropriation limit of such entity of government for the prior year, adjusted for changes in the
cost of living or personal income and population, except as otherwise provided for in said Article
XIIIB and implementing State Statutes; and
WHEREAS, pursuant to said Article XIIIB of said California Constitution, and Section 7900
et seq. of the California Government Code, the City is required to set its appropriation limit for each
fiscal year; and
WHEREAS, the Director of Administrative Services of the City of Azusa has caused a
technical review to be made of the documentation for the City's said appropriation limitation, and
has caused the numbers upon which the City's appropriation limit is based to be researched and said
limit to be calculated; and
WHEREAS, based on such calculations, as described in the attached documentation as
Exhibit A and B, the Director of Administrative Services has determined the said appropriation limit
and, pursuant to Section 7910 of the said California Government Code, has made available to the
public the documentation used in the determination of said appropriation limit; and
WHEREAS, the City Council elects to utilize said calculations, which are attached for
reference.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Azusa,
California, that said appropriation limit for Fiscal Year 2023-24 shall be adopted in the amount of
$422,441,461 for said Fiscal Year.
PASSED, APPROVED and ADOPTED this 19th day of June, 2023.
___________________________
Robert Gonzales
Mayor
Attachment 1
ATTEST:
_________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2023-C32 was duly adopted by the
City Council of the City of Azusa at a regular meeting thereof, held on the 19th day of
June, 2023, by the following vote of the Council:
AYES:
NOES:
ABSENT:
__________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
____________________________________
Best Best & Krieger
City Attorney
EXHIBIT A
ANNUAL APPROPRIATIONS LIMIT CALCULATION
FOR FISCAL YEAR 2023-24
Inflation Factor (selected higher of the following):
Growth in the 4.44% State of California 1.0444 Factor Selected for
California per Department of Calculation
capita personal Finance
income
Growth in the 1.15% Hdl Coren &1.0115 Factor
non-residential Cone
assessed
valuation due to
new
construction
within the City
Population Factor (selected higher of the following):
City of Azusa 0.06% State of California 1.0006 Factor Selected for
Department of Calculation
Finance
LA County -0.75% State of California 0.9925 Factor
Department of
Finance
Annual Limits Calculation:
Appropriations Limit for Fiscal Year 2022-23:404,239,897$ (A)
Adjustment factors for Fiscal Year 2023-24:
Inflation Factor (B)Population Factor (C)
1.0444 1.0006
Combined Factor (B times C)
1.04502664 0.04502664 (D)
Adjustment for inflation and population (A times D): 18,201,564
Appropriations Limit for Fiscal Year 2023-24:422,441,461$
EXHIBIT B
APPROPRIATIONS SUBJECT TO THE ANNUAL LIMIT
FOR FISCAL YEAR 2023-24
A. PROCEEDS OF TAXES
Property Tax 15,325,616$
Non-Property Tax 31,364,763
Licenses and Permits 3,104,285
Intergovernmental Revenues 0
TOTAL PROCEEDS OF TAXES 49,794,664
B. EXCLUSION 0
C. NET INVESTED PROCEEDS OF TAXES 49,794,664
D. INTEREST ALLOCATION 806,000
E. APPROPRIATIONS SUBJECT TO LIMIT 50,600,664
F. APPROPRIATIONS LIMIT FOR FY 2023-24 (EXHIBIT A) 422,441,461
G. FY 2023-24 APPROPRIATIONS OVER/(UNDER) LIMIT (371,840,797)$