CC 2021-06-08_08b Appropriation Limit FY 2021_22MEMORANDUM
TO: CITY COUNCIL
FROM: NICOLE VALENTINE, ADMINISTRATIVE SERVICES DIRECTOR
SUBJECT: CONSIDERATION OF FISCAL YEAR 2021-22 APPROPRIATION LIMIT
D ATE: JUNE 8, 2021
SUMMARY OF ACTION:
Calculating the appropriation limit from tax proceeds is required annually by Propositions
4 and 111, and Government Code section 7900 et seq. Adoption of a Resolution
establishing the appropriation limit from tax proceeds for Fiscal Year 2021-22 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 2021-22.
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), codified at Government Code section 7900 et seq. This calculation
is based on the previous year’s appropriation limit ($25,284,708) multiplied by the per capita
personal income percentage increase (5.73%) and multiplied again by the population
percentage change (-0.35%). 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 2021-22, the
appropriation limit has been calculated to be $25,284,708.
This calculation means that the City cannot receive more than $25,284,708 in tax-based
revenues in Fiscal Year 2021-22. The estimated tax-based revenues for the Fiscal Year
Item 8.b. - Page 1
CITY COUNCIL
CONSIDERATION OF FISCAL YEAR 2021-22 APPROPRIATION LIMIT
JUNE 8, 2021
PAGE 2
have been calculated to be $17,032,795, approximately $8.2 million less than the
appropriation limit. Therefore, the City is in compliance with Article XIIIB of the California
Constitution.
ALTERNATIVES:
The following alternatives are provided for City Council consideration:
1. Adopt a Resolution establishing the appropriation limit for FY 2021-22; or
2. Revise and adopt a Resolution establishing the appropriation limit for FY 2021-22; or
3. Provide further direction to staff.
ADVANTAGES:
Adoption of the Resolution establishing the appropriation limit for FY 2021-22 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.
Attachment:
1. Proposed Resolution
Item 8.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 2021-22
WHEREAS, section 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 2021-22.
2.The appropriation limit for Fiscal Year 2021-22 is hereby set at twenty-five million,
two hundred eighty-four thousand, seven hundred eight dollars ($25,284,708).
3.Documentation used in the determination of the tax proceeds expenditure
appropriation limit is attached hereto as Exhibit A and incorporated herein by this
reference.
4.This Resolution is effective on its date of adoption.
On motion of Council Member , seconded by Council Member
, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this 8th day of June, 2021.
Attachment 1
Item 8.b. - Page 3
RESOLUTION NO.
PAGE 2
______________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
______
WHITNEY MCDONALD, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 8.b. - Page 4
EXHIBIT A
Appropriation limit for 2020-21 23,998,406 (A)
Multiplied by the appropriation limit change factors:
Per Capital Personal Income Change:5.73%
=
100
Population Change:
2020 17,617
2021 17,555 -0.35%
(62)
==
17,555 100
Appropriation limit factor: (B x C)1.0536 (D)
APPROPRIATION LIMIT FOR FISCAL YEAR 2020-21 (A x D)25,284,708$
17,032,795$
Amount under (over) limit 8,251,913
ESTIMATED 2020-21 PROCEEDS OF TAXES SUBJECT
TO APPROPRIATION LIMIT
Conversion to ratio:(62) -0.35% +100 0.99650 (C)0.99650
CITY OF ARROYO GRANDE
CALCULATION OF APPROPRIATION LIMIT FROM TAX PROCEEDS
FOR FISCAL YEAR 2021-22
Conversion to ratio:5.73% +100 1.0573 (B)1.0573
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