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HomeMy WebLinkAbout21 - Annual Appropriation Gann LimitCouncil Agenda Number 21 CITY OF NEWPORT BEACH Administrative Services Department Resource Management • Fiscal Services • M.I.S.• Revenue • Accounting 11 June 2002 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL From: Dennis Danner, Administrative Services Director te�14- SUBJ: ADOPTION OF THE ANNUAL APPROPRIATION (GANN) LIMIT Recommendation: Hold a public hearing and adopt, by Resolution, the City's Appropriation (Gann) Limit for the 2002 -03 fiscal year in the amount of $94,769,006. Background: Article XIIIB of the California Constitution (Proposition 4) specifies that appropriations of government entities may increase annually only by a limited amount (primarily to allow for population increases and inflation). As in the past, SB 1352 (Revenue and Taxation Code Section 7910) requires each local government to establish its appropriations limit by resolution each year at a regularly scheduled or noticed special meeting. The attached resolution submitted for Council approval fulfills this requirement. As the following table shows, even without calculating authorized exclusions, the amount by which our Proceeds of Taxes are under the Gann Limit during the past eleven years has been sufficient to provide a reasonable margin of comfort. 1991 -92 Gann Limit Margin: $6,955,931 1992 -93 Gann Limit Margin: $6,527,790 1993 -94 Gann Limit Margin: $15,536,246 1994 -95 Gann Limit Margin: - $16,193,661 1995 -96 Gann Limit Margin: $19,624,749 1996 -97 Gann Limit Margin: $19,711,288 1997 -98 Gann Limit Margin: $20,285,768 1998 -99 Gann Limit Margin: $20,344,472 1999 -00 Gann Limit Margin: $21,751,495 2000 -01 Gann Limit Margin: $23,470,251 2001 -02 Gann Limit Margin $26,941,613 2002 -03 Gann Limit Margin $21,883,919 11 June 2002 Page 2 There are several factors which have a bearing on the Gann Limit, and on our expenditures subject to the Limit. However, actions by the State reducing our tax revenues, along with weak economic conditions during the early and mid 1990's established the trend which can be seen above. The detailed population and inflation adjustment calculations are still required, but they have been reduced to a level of relative insignificance by these larger factors. We are still required to perform the calculations and take appropriate Council action, but, unless the law is changed, it is apparent that staying under the Gann Limit is not something we are going to have to worry about any time soon. RESOLUTION NO. 2002- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DETERMINING AND ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2002 -03 IN ACCORDANCE WITH ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION AND GOVERNMENT CODE SECTION 7910. WHEREAS, Article XIIIB was added to the California Constitution at the special State -wide election held November 6, 1979 (commonly known as Proposition 4); and WHEREAS, Government Code Section 7910 was added to Chapter 12.05 by Statute at the Regular Session of the California Legislature; and WHEREAS, Proposition 111, which, among other things, provides new annual adjustment formulas for the Appropriations Limit, was approved by the voters in June, 1990, and WHEREAS, The League of California Cities and the State of California Department of Finance have published population and per capita income growth indexes, as well as guidelines for the uniform application of Proposition 111, and WHEREAS, Government Code Section 7910 requires the governing body of each local jurisdiction to adopt, by resolution, its appropriations limit; and WHEREAS, said appropriations limit must be adhered to in preparing and adopting this City's annual budget. NOW, THEREFORE, the City Council of the City of Newport Beach does hereby resolve as follows: Section 1: In accordance with Article XIIIB of the California Constitution and Government Code Section 7910, the appropriations limit for fiscal year commencing 1 July 2002 for the City of Newport Beach is $94,769,006. The computation of appropriations for the 2002 -03 fiscal year are set forth in detail in the attachment hereto, which is incorporated as though fully set forth herein. Section 2: Said appropriations limit shall be adhered to in the City of Newport Beach budget for the 2002 -03 fiscal year. ATTEST: ADOPTED this 11th day of June, 2002. City Clerk Mayor CITY OF NEWPORT BEACH COMPUTATION OF APPROPRIATION LIMIT FOR FISCAL YEAR ENDING 30 JUNE 2003, AS PER ARTICLE XIIIB, CALIFORNIA STATE CONSTITUTION PRIOR YEAR INFLATION POPULATION NEW APPROP. FISCAL YEAR LIMIT ADJUST. (1) ADJUST. (2) LIMIT 2002 -03 $94,050,612 - 0.0127 0.0206 $94,769,006 note (1): Based on California per capita income increases note (2): Based on Orange County population growth CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR FISCAL YEAR ENDING 30 JUNE 2003 Total Estimated Proceeds of Taxes $72,885,087 Less Authorized Exclusions Net Proceeds of Taxes note (3) $0 $72,885,087 note (3): Since 2002 -03 estimated gross proceeds were substantially less than appropriations limit, exclusions were not calculated. AMOUNT UNDER APPROPRIATIONS LIMIT 1$21r883,919