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HomeMy WebLinkAbout04 - Appropriations Limit Adoption�2�WPO�T == CITY OF A v� "` FoaN`P NEWPORT.- REACH City Council Staff Report Agenda Item No. 4 June 14, 2011 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Tracy McCraner, Administrative Services Director/Treasurer 949 - 644 -3123, tmccraner @newportbeachca.gov PREPARED BY: Susan Giangrande, Budget Manager APPROVED: tL-\A TITLE: Adoption of Fiscal Year 2011 -12 Appropriations Limit ABSTRACT: As a governmental entity, the City is subject to the Gann Spending Limitation Initiative, which limits the amount of annual appropriations of tax proceeds. The limitation is based upon the prior fiscal year amount, adjusted for changes in population combined with the change in California per capita personal income and must be adopted by Resolution. T1 1Z►171Wom Adopt, by Resolution 2011 -_, the City's Appropriations (Gann) Limit for Fiscal Year 2011 -12 in the amount of $144,448,989. FUNDING REQUIREMENTS: There is no fiscal impact related to this item. DISCUSSION: Article XIIIB of the California Constitution specifies that appropriations of government entities may increase annually only by a limited amount, primarily to allow for population increases and inflation. Each local government is required 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. The calculation of the City's Appropriation Limit for Fiscal Year 2011 -12 is 1 Adoption of Fiscal Year 2011 -12 Appropriations Limit June 14, 2011 Page 2 FY 2010 -11 Appropriations Limit $140,588,741 Inflation Adjustment Factor' 0.0251 Population Adjustment Factor' 0.0023 FY 2011 -12 Appropriations Limit $ 144,448,989 ' Based on California per capita income increases as provided by the California Department of Finance, May 2011. 2 Based on Newport Beach population growth as provided by the California Department of Finance, May 2011. The City of Newport Beach proceeds of taxes for Fiscal Year 2011 -12 is estimated to be $115,000,875 which means that our appropriations will be under the Appropriations Limit by $29,448,114, a significant margin of comfort. Calculation of proceeds of taxes can exclude certain public fund uses, including categories of debt service, contribution to some types of reserves, and federal mandates. The exclusion calculation can be time consuming and costly, so we have not included that as part of our process since our appropriations are significantly below the Appropriations Limit. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). The Public Notice for this item was published in the Daily Pilot on May 28, 2011. Submitted by: Tracy McCrbner Administrative Services Director /Treasurer Attachments: Resolution 2011- 2 RESOLUTION NO. 2011- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DETERMINING AND ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2011 -12 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 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 2011 for the City of Newport Beach is $144,448,989. The computation of appropriations for the 2011 -12 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 2011 -12 fiscal year. ATTEST: ADOPTED this 14th day of June, 2011. City Clerk Mayor 3 COMPUTATION OF APPROPRIATION LIMIT FOR FISCAL YEAR ENDING 30 JUNE 20123 AS PER ARTICLE XIIIB, CALIFORNIA STATE CONSTITUTION FISCAL YEAR 2009 -10 PRIOR YEAR LIMIT $140,588,741 INFLATION POPULATION ADJUST. (1) ADJUST. (2) Iexl)t&l�ixoAYFtI note (1): Based on California per capita income increases note (2): Based on Orange Newport Beach population growth NEW APPROP. LIMIT $144,448,989 CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR FISCAL YEAR ENDING 30 JUNE 2012, Total Estimated Proceeds of Taxes $115,000,875 Less Authorized Exclusions Net Proceeds of Taxes note (3) $0 $115,000,875 note (3): Since 2010 -11 estimated proceeds are substantially less than the Appropriations Limit, exclusions were not calculated. AMOUNT UNDER APPROPRIATIONS LIMIT $29,448,114 r