HomeMy WebLinkAbout24 - 2008-09 Apppropriation Limit HearingCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 24
June 10, 2008
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Dennis C. Danner, Administrative Services Director 949 -644 -3123
ddanner@city.newport-beach.ca.us
SUBJECT: 2008 -09 APPROPRIATION LIMIT HEARING
RECOMMENDATION:
Hold a public hearing and adopt, by Resolution, the City's Appropriation (Gann) Limit for
the 2008 -09 fiscal year in the amount of $139,044,407.
DISCUSSION:
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 will have been under the Gann Limit for a
twelve year period is sufficient to provide a reasonable margin of comfort.
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
2003 -04 Gann Limit Margin
$30,781,765
2004 -05 Gann Limit Margin
2005 -06 Gann Limit Margin
2006 -07 Gann Limit Margin
2007 -08 Gann Limit Margin
2008 -09 Gann Limit Margin
2008 -09 Appropriation Limit Hearing
June 10, 2008
Page 2
$27,911,157
$28,823,421
$20,785,782
$19,268,776
$19,664,455
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. The dramatic increase in the margin in
2003 -04 was primarily the result of the annexation related population adjustment.
Although 2006 -07 clearly marked a reversal of the Gann Limit's trend toward obscurity,
the magnitude of the change for 2007 -08 was much smaller. In 2008 -09, the "Margin"
reversed course again, increasing slightly. So at this point, no ongoing up or down
trend is evident.
It is probable that the City is a number of years away from having a problem with the
Gann Limit, if it ever does. One reason for this is that we have not bothered to
calculate authorized exclusions for a number of years, since we were so far under the
limit. If the Margin becomes small enough to warrant doing so, we will institute that
calculation; thereby providing an additional cushion..
Submitted by:
Dennis Danner
Administrative Services Director
Attachments: Resolution
RESOLUTION NO. 2008-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH
DETERMINING AND ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2008-
09 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 Proposftion 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 2008
for the City of Newport Beach is $139,044,407. The computation of appropriations for the 2008-
09 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 2008 -09 fiscal year.
ADOPTED this 10th day of June, 2008.
Mayor
ATTEST:
City Clerk
CITY OF NEWPORT BEACH
COMPUTATION OF APPROPRIATION LIMIT FOR
FISCAL YEAR ENDING 30 JUNE 20093
AS PER ARTICLE X11113, CALIFORNIA STATE CONSTITUTION
PRIOR YEAR INFLATION POPULATION
FISCAL YEAR LIMIT ADJUST. (1) ADJUST. (2)
2008 -09 $131,978,593 0.0429 0.0102
note (1): Based on California per capita income increases
note (2): Based on Orange County population growth
NEW APPROP.
LIMIT
$139,044,407
CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR
FISCAL YEAR ENDING 30 JUNE 2009
Total Estimated Proceeds of Taxes $119,379,952
Less Authorized Exclusions
Net Proceeds of Taxes
note (3) $0
$119,379,952
note (3): Since 2008 -09 estimated gross proceeds were substantially less than
appropriations limit, exclusions were not calculated.
AMOUNT UNDER APPROPRIATIONS LIMIT $19,664,455