REPORT TO THE CITY COUNCIL
June 23, 2016
FROM: JANE SUMPTER, Budget Manager
Budget and Management Studies
BY: PEDRO RIVERA, Senior Budget Analyst
Budget and Management Studies
SUBJECT
Title
FY 2017 Gann Appropriation Limit Resolution
Body
RECOMMENDATION
It is recommended that the Council adopt the attached resolution which selects Per Capita Personal Income and County population as the factors to be used in calculating the FY 2017 appropriations limit (Method B). This method appears to give the City the most flexibility in terms of an adjusted spending limit.
EXECUTIVE SUMMARY
State law requires the City to adopt an annual appropriations limit, otherwise known as the Gann Limit, in conjunction with the adoption of the budget. The new limit amount is calculated by applying the growth rates in population and per capita personal income to the previous fiscal years limit amount. Staff has prepared two Gann Limit levels which both meet the legal standards for calculation. Staff is recommending that Council adopt the level which will give the City the greatest difference between FY 2017 enacted appropriations and the calculated FY 2017 Gann Limit.
BACKGROUND
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the Gann Initiative. The proposition created Article XIIIB of the State Constitution, placing limits on the amount of revenue that can be spent by all entities of government. Proposition 4 became effective for the 1980-81 fiscal year, but the formula for calculating the limits was based on the 1978-79 "base year" revenues.
Appropriations backed by tax revenues collected by all funds within the City are subject to measurement against the City's calculated Gann Limit. Since the General Fund is the primary recipient of tax revenue, a rough estimate of the appropriations subject to that limit can be calculated by summing all tax revenue (property tax, sales tax, etc.) that the General Fu...
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