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Home My WebLink AboutItem 8.1 1996-97AdoptApproLimit ,--" ,t .... . , ...... .' .'. ~,., " ' ':I e e, CITY CLERK File # n[3l[3l[Q]-rzJID.. AGENDA STATEMENT CITY COUNCIL MEETING DATE: (June 27, 1996) ~I ~doption of an Appropriations Limit for 1996/97 ~'_ repared by: Paul S. Rankin, Assistant City Manager) EXIllBITS ATTACHED: 1. Proposed Resolution SUBJECT: .."~"'" RECOMMENDATION/....~. t'Y' Approve the selected factors used to calculate the 1996/97 Limit and , adopt the Resolution. FINANCIAL STATEMENT: The 1996/97 proposed Limit is $38,615,049 and only $12,767,757 in 1996/97 Appropriations are subject to this Limit. DESCRIPTION: Each year the City Council is required by State Law to adopt an Appropriations Limit in conjunction with the annual Budget process. The 1996/97 Appropriations Limit is calculated by multiplying the adopted Appropriations Limit calculated for the prior year by a factor reflecting growth increases. Description of Appropriations Limit ; The laws regulating the application of the Appropriations Limit, forbid an agency from appropriating specific funds which would exceed the Limit. The Appropriations Limit carries froward each year and is subject to an adjustment in accordance with a specified formula Each government entity is required to calculate an Appropriations Limit and include it as part of the Annual Budget This Limit may also be referred to as the Gann Limit or Proposition 4 Limit. The City has complied with this requirement as well as the posting of the proposed calculation 10 days prior to adoption. The adjustment made annually is based on a form~a which may include the following factors: . Change in City population; or . Change in population for the entire County; and . Change in State per capita income; or . Change in non-residential assessed valuation. As will be noted in the actual calculations, selection of some of the factors are discretionary. Typically, an agency selects from those factors which provide for the largest growth in the Limit. The Appropriations Limit does not apply to all funds appropriated by the City Council. The law only applies to those appropriations that are funded by "Proceeds of Taxes." Proceeds of Taxes are narrowly defined by State Law. Historically, the applicable appropriations made by the City of Dublin have always been well below the Limit. In Fiscal Year 1996-97, the appropriations subject to this Limit total $12,767,757. . ------------------------------------------------------------------- COPIES TO: ITEMNO.~ Hlbudget/96-97budl Apprlimi/agaprlmt.doc , i , j I ,:\~' Although theCi~ is well ~w its.al~owed.Limit, it is impo~t t~e revisio!18 in a timely maneer. ,. For record keepmg purpo~e Lmut carnes forward each FISC~, and havmg an accurate base- -" simplifies the calculation for the following Fiscal Year. The City must also adopt a Limit prior to the begmning of the Fiscal Year, in accordance with State Law. 1996-.97 PrQPoled ApprqpriatioDsl,imit A::. Staffhas prepared the calculations-necessary to adopt the Appropriations Limit for 1996/97 in accordanF --, with State Law. This information was also included on pages xvii and xviii of the Preliminary 1996/97 Budget. The discretionary factors' selected in calculating the 1996/97 Limit are: (1) the change in the County Population; and (2) the change in the "non-residential" assessed valuation. It is worth noting that the implementation of the laws related to the Appropriations Limit, resulted in the publication of Uniform Guidelines by the League of California Cities. This publication is also relied upon by the independent aUditors as they must issue a review of the calculation and identify that the methodology is consistent with the guidelines. The calculations used to determine the Limit as presented, are consistent with both the guidelines and the past calculations used in prior fiscal years. The 1996..;97 calculation has :resultod in an ,increase in the Limit which exceeds by a substantial amount any prior adjustment.- This is primarily due to the formula outlined in the Guidelines, for changes in non- residential construction. Given the state of the current real estate market, the City had very little ebJl1\8f! ,in its overall total assessed valuation. The Total change in Assessed Valuation of all types was just slightly over $6.375 million. The Assessor has reported that the Assessed Value related to "non-residential construction" added to the tax roll totaled approximately 54.016 million. Therefore, the adjustInent faCtor wsed is 62,.989D..i compared to the option of using Growth In State Per Capita Income, which only increased by 4.67%. Itis not possible to determine whether anyone ever considered the current real estate trimds when the law and guidelines were drafted. As noted in the League of Cities Guidelines. publiShed in 1991, "The State Legislature adopted a 'hands off' approach to implementing Proposition 4, even though the language of the initiative itselfwas extremely vague and confusing:.." Th~ appro~h presented in.the proposed calculation follows the established concepts to th. ,'"t";, " letter and IS CODSlstent With past calculations. .:\::(:~ The new 1996/97 AP;:E~~: Limit as calculated "on Exhibit A of the Proposed Resolution (Exhibit 1) ", is 538.615,049. The ' .. 1996197 Budget (including the recomm~ed Higher ServiceLeve1s) includes appropriations ofS12,767,7S7wbieh would be categorized as Proceeds of Taxes. Therefore, the appropriations subject to the APPlOpxiations Limit are $25,847,292 ~,tbeaUowed amoUDtas c8fcu1ated for 1996/97. , PrQposed RtIIiolution Sta:ff has prepared a Resolution (Exhibit 1) which will adopt an Appropriations Limit for 1996/97. Staff. recommends that the City Council adopt the Resolution. , .,'" I'.. ," '...~ . .,,: : '.~ ~', ' lo,., " , , J ,...~: .... . ." '.:,:, , , . ' , '."" . ' '. e RESOLUTION NO. - 96 e A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN *************************** ADOPTING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 1996/97 OF $38,615,049 . WHEJ..lliAS, State law requires that an Appropriations Limit be adopted by the City Council in cOnjunctIOn WIth the Annual Budget process; ana WHEREAS, Article XIII B of the California Constitution places certain restrictions on appropriations made by cities; and WHEREAS, the restrictions are applicable to appropriations, which are defmed as "Proceeds of Taxes"; and ~RE~.. the law allows the option to select the factors to be used in the calculation of the AppropnatIOns LlIDlt; and ' WHEREAS the City must select between the following factors: (A) the change in City p'o,pulation, or, .cB) CountywIde pop~ationl and either: (1) th~ change in 1;he State per capita income, or, l2) the change 10 the assessed valuatlon of ocal non-resldentlal constructIOn; and WHEREAS, the Alameda County Assessor has p.fovided preliminary data as of May 15, 1996 for tax roll changes related to non-residential' assessed valuation; and WHEREAS, the 1996-97 Appropriations Limit used the following discretionary factors: (1) the Growth 41 the County Population ana (2) the Change in Assessed Valuatlon due to "non~residentla1 constructlon";and WHEREAS; the calculation of the Appropriations Limit for 1996/97 is described in Exhibit A, attached hereto and oy reference made a part liereof. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby adopt the City of Dublin Appropriations Limit for Fiscal Year 1996-97 of$38,615,049. BE IT FURTHER RESOLVED that the limit has been calculated in accordance with State Law and is shown in Exhibit A, attached hereto. PASSED, APPROVED AND ADOPTED this 27th day of June, 1996. AYES: NOES: ABSENT: ATTEST: Mayor CIty Clerk H:budget\96-97bud\apprlimi\RESO,DQC EXHIBIT 1 e e CALCULATION OF FISCAL YEAR 1996-97 APPROPRIATIONS LIMIT ... .. A. SELECTION OF OPTIONAL FACTORS e> 1. Population - City vs. County QB City of Dublin Alameda County 1/1/95 24,826 1,331,027 1/1/96 24,979 1,342,361 % Decrease % Increase 0,006% 0.008% m:MmM:::::::,,:!@:tgm@tJmmgm:::::~$.'m.I<<:Jf..,lgtll'!:::mm~Jjmigi1:J;;gp.mtegjndfttiQQEQt4wmIg~lIU~._mmm!!;:mIgg@;) 2. State Income vs. City Non-Residential Building Change in State Per Capita Income Change in Non-Residential Assesed Valuation = 4.67% = 62.989%* QB *(Complete tax roll information is not available from the Alameda County Assessor. This is based only on non-residential changes recorded by the Assessor as of May 15, 1996) itlWtiilll&1fM:!t:;tgli!3llmiigqtIU.libifiVi:J.ftlliNl.fif8.iiiqlbfiilUliiuJ.1lV@JUitipJjU:.B.IMttlmm B. CALCULATION OF GROWTH LIMIT ADJUSTMENT .-.'. The formula for calculating the adjustment is as follows: Selected Factor 1 + 100 100 = x Selected Factor 2 + 100 100 ::: Y (X) x (Y) = Fiscal Year 1996-97 Appropriations Limit Adjustment Factor 0.008+ 100 100 = 1.00008 62.989 + 100 100 = 1,62989 1.00008 x 1.62989 = 1.6300 = 1996/97 Adjustment Factor C. CALCULATION OF APPROPRIATIONS LIMIT Fiscal Year 1995-96 Adopted Appropriations Limit = $ 23,690,214 Fiscal Year 1996-97 Adjustment Factor x 1.6300 .".. I1Wmltttn$;m1mgi~I,M)Y':i!'tl:,!glfAp.pf9.p.nll{qt!!i14~mlJ.lll;mr.j~~liU~IIIJmm;;mmllimlmmm;;MMRrm.mmmtl EXIDBIT A /