HomeMy WebLinkAbout18 - Adoption of the Annual Appropriation Limit - Gann LimitCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 18
June 10, 2003
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: ADOPTION OF THE ANNUAL APPROPRIATION (GANN) LIMIT
RECOMMENDATION:
Hold a public hearing and adopt, by Resolution, the City's Appropriation (Gann) Limit for
the 2003 -04 fiscal year in the amount of $30,781,765.
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 are under the Gann Limit during the past
twelve 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
Adoption of the Annual Appropriation (Gann) Limit
June 10, 2003
Page 2
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 $30,787,765
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.
Submitted by:
Dennis C. Danner
Administrative Services Director
Attachments
Resolution
L
CITY OF NEWPORT BEACH
COMPUTATION OF APPROPRIATION LIMIT FOR
FISCAL YEAR ENDING 30 JUNE 20041
AS PER ARTICLE XIIIB, CALIFORNIA STATE CONSTITUTION
PRIOR YEAR
FISCAL YEAR LIMIT
2003 -04 $94,769,006
INFLATION POPULATION
ADJUST. (1) ADJUST. (2)
NEW APPROP.
LIMIT
0.0231 0.1059 1 $107,226,040
note (1): Based on California per capita income increases
note (2): Based on Newport Beach population growth
CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR
FISCAL YEAR ENDING 30 JUNE 2004
Total Estimated Proceeds of Taxes $76,444,275
Less Authorized Exclusions
Net Proceeds of Taxes
note (3) $0
$76,444,275
note (3): Since 2003 -04 estimated gross proceeds were substantially less than
appropriations limit, exclusions were not calculated.
AMOUNT UNDER APPROPRIATIONS LIMIT 1$30,781,765
2
J
May 1, 2003
Dear Fiscal Officer:
Subject: Price and Population Information
Appropriations Limit
The California Revenue and Taxation Code, Section 2227, mandates the Department of Finance
(Finance) to transmit an estimate of the percentage change in population to local governments.
Each local jurisdiction uses their percentage change in population factor for January 1, 2003, in
conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit
for fiscal year 2003 -04. Enclosure I provides the change in California's per capita personal
income and an example for utilizing the price factor and population percentage change factor to
calculate the 2003 -04 appropriations limit. Enclosure II provides city and unincorporated county
population percentage changes, and Enclosure IIA provides county and incorporated areas
population percentage changes. The population percentage change data excludes federal and
state institutionalized populations and military populations, as noted.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. Consult the Revenue and
Taxation Code, Section 2228, for the various population options available to special districts to
assess population change in their district. Article XIII B, Section 9, of the State Constitution
exempts certain special districts from the appropriations limit calculation mandate. Special
districts required by law to calculate their appropriations limit must present the calculation as part
of their annual audit. No State agency reviews the appropriations limit.
Population Certification
The population certification program applies only to cities and counties. Revenue and Taxation
Code 11005.6, mandates Finance to automatically certify any population estimate that exceeds
the current certified population with the State Controller's Office. Finance will certify the
higher estimate to the State Controller by June 5, 2003.
Address questions about the price and population data to the Demographic Research Unit at
(916) 323 -4086.
Sincerely,
STEVE PEACE
Director
Enclosure
May 1, 2003
Enclosure I
A. Price Factor: Article XIII B species that local jurisdictions select their
cost -of- living factor to compute their appropriation limit by a vote of their governing
body. The cost -of- living factor provided here is per capita personal income. If the
percentage change in per capita personal income is selected, the percentage
change to be used in setting the 2003 -2004 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2003 -2004 2.31
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2003 -2004
appropriation limit.
2003 -2004:
Per Capita Change = 2.31 percent
Population Change = 1.69 percent
Per Capita converted to a ratio: 2.3100 +100 _ 1.0231
69 +100
Population converted to a ratio: 1.100 = 1.0169
Calculation of factor for FY 2003 -2004: 1.0231 x 1.0169 = 1.0404
J
MAY -02 -03 FR1 01:40 PM Demographic Research FAX N0. 916 327 0222 P.01
Enclosure 11
Annual Percent Change in Population Minus Exclusions ( "1
January 1, 2002 to January 1 , 2003 and Total Population, January 1, 2003
Total
County Percent Change - Population Minus Exclusions - p0oulation
Cily 2002 -2003 1 -1 -02 1 -1 -03 1- 1-2003
;9FT.Ccr
ALISO VIEJO
3.42
42.426
43.879
43.879
ANAHEIM
1.10
333,772
337,440
337,440
BREA
328
38,758
37.962
37.962
BUENA PARK
1.36
79,539
80,617
80.617
COSTA MESA
1.02
109,612
110,727
111,512
CYPRESS
1.08
47,137
47,644
47,644
DANA POINT
0.98
35.894
36,247
36.247
FOUNTAIN VALLEY
0.95
55,736
56,268
56,268
FULLERTON
1.94
128.974
131.474
131,474
GARDEN GROVE
1.02
166,192
169,911
169,911
HUNTINGTON BEACH
1.49
194,060
196.954
196,954
IRVINE
5.05
156.992
164.923
164.923
LAGUNA BEACH
1.41
24.248
24,589
24,589
LAGUNA HILLS
0.96
32.564
32.875
32,875
LAGUNA NIGUEL
2.72
63,371
65,092
65.092
LAGUNA WOODS
0.95
18,036
18.208
18,208
LA HABRA
1.07
60,540
61,188
61,188
LAKE FOREST
1.23
76,391
77,332
77,332
LA PALMA
0.96
15,803
15,954
15,954
LOS ALAMITOS
1.10
11,688
11.817
11,817
MISSION VIEJO
0.96
98,006
98.943
98,943
NEWPORT BEACH
10.59
72,328
79,987
79.987
ORANGE
1.45
132,601
134,523
134,523
PLACENTIA
1.88
48.191
49.097
49,097
RANCHO SANTA MARGARITA
0.96
48.347
48,810
48,810
SAN CLEMENTE
6.60
56,941
60,701
60,701
SAN JUAN CAPISTRANO
1,73
34.616
35215
35.215
SANTA ANA
1,30
342,784
347,237
347,237
SEAL BEACH
1.29
23,924
24,233
24,921
STANTON
1.13
37.983
38.411
38.411
TUSTIN
1.24
68,898
69,753
69,754
VILLA PARK
0.96
6,147
6.206
6,206
WESTMINSTER
1.34
89.442
90,643
90.643
YORBA LINDA
3.36
60.641
62,678
62,678
UNINCORPORATED
-5.68
116.211
109.613
109.804
COUNTY TOTAL
1.65
2.928,793
2.977.151
2.978.816
(') Exduaions Include residents an federal military irMallatiors end 9mtq
CO 011111 awtmalare.
Page 1
RESOLUTION NO. 2003-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DETERMINING
AND ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2003 -04 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 2003 for the City of Newport Beach is
$107,226,040. The computation of appropriations for the 2003 -04 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 2003 -04 fiscal year.
ATTEST:
ADOPTED this 10th day of June, 2003.
ty Clerk
Mayor
i7