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CC 2018-06-12_09b FY 2018.19 Appropriation Limit MEMORANDUM TO: CITY COUNCIL FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVE SERVICES SUBJECT: CONSIDERATION OF FISCAL YEAR 2018-19 APPROPRIATION LIMIT DATE: JUNE 12, 2018 SUMMARY OF ACTION: Calculating the appropriation limit from tax proceeds is required annually by Propositions 4 and 111. The action will ensure compliance with these requirements. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: There are no significant fiscal or personnel impacts. RECOMMENDATION: It is recommended the City Council adopt a Resolution establishing the appropriation limit from tax proceeds for Fiscal Year 2018-19. BACKGROUND: Annually, the City is required to calculate the expenditure appropriation limit from tax proceeds to determine compliance with Propositions 4 (Gann Initiative) and 111 (Spending Limitation Act of 1990). This calculation is based on the previous year’s appropriation limit ($21,350,578) multiplied by the per capita personal income percentage increase (3.67%) and multiplied again by the population percentage change (0.21%). The State Department of Finance provides both the population change and the per capita personal income change for the previous fiscal year. ANALYSIS OF ISSUES: The City is responsible for dividing citywide revenues between tax and non-tax revenue and applying the formula to the cumulative appropriation limit. For Fiscal Year 2018-19, the appropriation limit has been calculated to be $22,180,626. This calculation means that the City cannot receive more than $22,180,626 in tax-based revenues in Fiscal Year 2018-19. The estimated tax-based revenues for the Fiscal Year have been calculated to be $15,975,475, approximately $6.2 million less than the appropriation limit. Therefore, the City is in compliance with Article XIIIB of the California Constitution. Item 9.b. - Page 1 CITY COUNCIL CONSIDERATION OF FISCAL YEAR 2018-19 APPROPRIATIONS LIMIT JUNE 12, 2018 PAGE 2 ALTERNATIVES: The following alternatives are provided for City Council consideration: 1. Adopt a Resolution establishing the appropriation limit for FY 2018-19; 2. Modify and adopt a Resolution establishing the appropriation limit for FY 2018-19; or 3. Provide further direction to staff. ADVANTAGES: Adoption of the Resolution establishing the appropriation limit for FY 2018-19 will ensure that the City is in compliance with Propositions 4 and 111. DISADVANTAGES: There are no disadvantages identified with the recommended action. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. Item 9.b. - Page 2 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ADOPTING A TAX PROCEEDS EXPENDITURE APPROPRIATION LIMIT FOR FISCAL YEAR 2018-19 WHEREAS, Sections 7900 et seq. of the Government Code provide for the effective and efficient implementation of Article XIIIB of the California Constitution; and WHEREAS, Government Code Sections 7901 through 7914 provide that each year, the governing body of each local jurisdiction shall, by resolution adopted at a regularly scheduled meeting, establish the annual adjustment factors to be used and the tax proceeds expenditure appropriation limit. NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Arroyo Grande as follows: 1. The California per capita income and the population of Arroyo Grande, California are recognized as the annual adjustment factors for Fiscal Year 2018-19. 2. The appropriation limit for Fiscal Year 2018-19 is hereby set at twenty two million, one hundred eighty thousand, and six hundred twenty six dollars ($22,180,626). 3. Documentation used in the determination of the tax proceeds expenditure appropriation limit is attached hereto as Exhibit A and incorporated herein by this reference. 4. This Resolution is effective on its date of adoption. On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of ,2018. Item 9.b. - Page 3 RESOLUTION NO. PAGE 2 ______________________________ JIM HILL, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: JAMES A. BERGMAN, CITY MANAGER APPROVED AS TO FORM: HEATHER WHITHAM, CITY ATTORNEY Item 9.b. - Page 4 EXHIBIT A CALCULATION OF APPROPRIATION LIMIT FROM TAX PROCEEDS FOR FISCAL YEAR 2018-19 Appropriation limit for 2017-18 $ 21,350,578 (A) Multiplied by the appropriation limit change factors: Per Capita Personal Income Change: 3.67% Conversion to ratio:3.67% + 100 =1.0367 (B) 100 Population Change: 2017 17,874 2018 17,912 0.21% Change 38 Conversion to ratio:38 .21% + 100 1.00210 (C) == 17,912 100 Appropriation limit factor: (B x C)1.0389 (D) APPROPRIATION LIMIT FOR FISCAL YEAR 2018-19 (A x D) $ 22,180,626 ESTIMATED 2018-19 PROCEEDS OF TAXES SUBJECT TO APPROPRIATION LIMIT $ 15,975,475 Amount under/(over) limit 6,205,151$ Item 9.b. - Page 5 THIS PAGE INTENTIONALLY LEFT BLANK Item 9.b. - Page 6