HomeMy WebLinkAbout05 - 2010-11 Appropriation LimitCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No.
June 8, 2010
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Tracy McCraner, Administrative Services Director
(949) 644 -3123 or tmccraner @newportbeachca.gov
SUBJECT: 2010 -11 APPROPRIATION LIMIT
RECOMMENDATION:
Adopt, by Resolution, the City's Appropriation (Gann) Limit for the 2010 -11 fiscal year in
the amount of $140,588,741.
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 of the City
Council. 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 since
Fiscal Year 1995 -96 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
2003 -04 Gann Limit Margin
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
2009 -10 Gann Limit Margin
2010 -11 Gann Limit Margin
Appropriation Limit Hearing
June 8, 2010
Page 2
$21,883,919
$30,781,765
$27,911,157
$28,823,421
$20,785,782
$19,268,776
$19,664,455
$26,189,014
$29,241,505
There are several factors which have a bearing on the Gann Limit, and on City
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 marked a reversal of the Gann Limit's trend toward obscurity, further
developments since then have had the effect of restoring the trend. The magnitude of
the change in 2009 -10 was due to weakened revenues along with a slightly larger than
expected increase in the City's population (as reported by the State Department of
Finance).
It is probable that the City of Newport Beach is a number of years away from having a
problem with the Gann Limit, if it ever does. Another factor supporting that prediction is
that we have not calculated authorized exclusions for a number of years, since the City
has been so far under the limit. Potential exclusions cover a wide variety of public fund
uses, including certain categories of debt service, contributions to some types of
reserves, federal mandates, and court orders. This part of the process is time
consuming and costly. There has been no reason to institute the process so far, but if
the Margin becomes small enough to warrant adding that cushion, we will do so.
Environmental Review:
The City Council's approval of this item does not require an environmental review.
Public Notice:
The Public Notice for this item was published in the Daily Pilot on May 29, 2010.
Appropriation Limit Hearing
June 8, 2010
Page 2
Fundinq Availability:
City funding is not required by this action.
Alternatives:
Not applicable.
Submitted by:
.O wvc 7M e- 64A✓UA,
Tracy Mcq4ner
Administra " e Services Director
Attachment: Resolution
RESOLUTION NO. 20107
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH DETERMINING AND ESTABLISHING AN
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2010 -11 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 2010
for the City of Newport Beach is $140,588,741. The computation of appropriations for the 2010-
11 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 2010 -11 fiscal year.
ATTEST:
ADOPTED this 8th day of June, 2010.
City Clerk
Mayor
CITY OF NEWPORT BEACH
COMPUTATION OF APPROPRIATION LIMIT FOR
FISCAL YEAR ENDING 30 JUNE 2011,
AS PER ARTICLE XIIIB, CALIFORNIA STATE CONSTITUTION
PRIOR YEAR
FISCAL YEAR LIMIT
2009 -10
note (1):
note (2):
$143,264,238
INFLATION POPULATION
ADJUST. (1) ADJUST. (2)
- 0.0254 0.0069
Based on California per capita income increases
Based on Orange Newport Beach population growth
NEW APPROP.
LIMIT
$140,588,741
CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR
FISCAL YEAR ENDING 30 JUNE 2011
Total Estimated Proceeds of Taxes
$111,347,236
Less Authorized Exclusions note (3) $0
Net Proceeds of Taxes 1 $111,347,236
note (3): Since 2010 -11 estimated gross proceeds were substantially less than
appropriations limit, exclusions were not calculated.
AMOUNT UNDER APPROPRIATIONS LIMIT 1 $29,241,505