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CC 2020-06-09_08b FY 2020_21 Appropriation Limit MEMORANDUM TO: CITY COUNCIL FROM: MICHAEL STEVENS, DIRECTOR OF ADMINISTRATIVE SERVICES BY: NICOLE VALENTINE, ACCOUNTING MANAGER SUBJECT: CONSIDERATION OF FISCAL YEAR 2020-21 APPROPRIATION LIMIT DATE: JUNE 9, 2020 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 2020- 21 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 2020-21. 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 ($23,029,973) multiplied by the per capita personal income percentage increase (3.00%) and multiplied again by the population percentage change (1.17%). 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 2020-21, the appropriation limit has been calculated to be $23,998,406. Item 8.b. - Page 1 CITY COUNCIL CONSIDERATION OF FISCAL YEAR 2018-19 APPROPRIATIONS LIMIT JUNE 9, 2020 PAGE 2 This calculation means that the City cannot receive more than $23,998,406 in tax-based revenues in Fiscal Year 2020-21. The estimated tax-based revenues for the Fiscal Year have been calculated to be $17,003,950, approximately $6.9 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 2020-21; or 2. Revise and adopt a Resolution establishing the appropriation limit for FY 2020-21; or 3. Provide further direction to staff. ADVANTAGES: Adoption of the Resolution establishing the appropriation limit for FY 2020-21 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 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 2020-21 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 2020-21. 2. The appropriation limit for Fiscal Year 2020-21 is hereby set at twenty three million, nine hundred ninety eight thousand, four hundred six dollars ($23,998,406). 3. Documentation used in the determination of the tax proceeds expenditure appropriation limit is attached hereto as Exhibit A and incorporated herein by this reference. 4. This Resolution is effective on its date of adoption. On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this 9th day of June, 2020. Item 8.b. - Page 3 RESOLUTION NO. PAGE 2 ______________________________ CAREN RAY RUSSOM, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: ______ BILL ROBESON, ACTING CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Item 8.b. - Page 4 EXHIBIT A Appropriation limit for 2019-20 23,029,973 (A) Multiplied by the appropriation limit change factors: Per Capital Personal Income Change:3.00% = 100 Population Change: 2019 17,876 2020 18,087 1.17% 211 == 18,087 100 Appropriation limit factor: (B x C)1.0421 (D) APPROPRIATION LIMIT FOR FISCAL YEAR 2020-21 (A x D) 23,998,406$ 17,003,950$ Amount under (over) limit 6,994,456 (C)1.01170 ESTIMATED 2020-21 PROCEEDS OF TAXES SUBJECT TO APPROPRIATION LIMIT CITY OF ARROYO GRANDE CALCULATION OF APPROPRIATION LIMIT FROM TAX PROCEEDS FOR FISCAL YEAR 2020-21 3.00% +100Conversion to ratio:1.03 (B)1.03 Conversion to ratio:211 1.17% +100 1.01170 Item 8.b. - Page 5 THIS PAGE INTENTIONALLY LEFT BLANK Item 8.b. - Page 6