HomeMy WebLinkAboutItem 8.2 AppropriationsLimit98-99 (2)
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.,
CITY CLERK
File # D[3]~[Q]-[g][QJ
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AGENDA STATEMENT
CITY COUNCil MEETING DATE: (June 29, 1998)
SUBJECT:
Adoption of an Appropriations Limit for 1998/99
~repared by: Paul S. Rankin, Assistant City Manager)
EXHIBITS ATTACHED:
1.
Proposed Resolution
RECO~NDATION: LI. ~pprove the selected factors used to calculate the 199~/99 Limit and
I ~.. ~dopt the Resolution.
FINANCIAL STATEMENT:
The 1998/99 proposed Limit is $48,700,693 and only $15,275,805
in 1998/99 Appropriations are subject to this Limit.
DESCRll'TION:
Each year the City Council is required by State Law to adopt an Appropriations Limit in conjunction with
the annual Budget process. In a separate action the City Council bas considered the adoption of a Revised
Fiscal Year 1997-98 Appropriations Limit. The 1998/99 Appropriations Limit is calculated by
~ultiplying the adopted Appropriations Limit calculated for the prior year, by a factor reflecting growth
mcreases.
.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 restriction applies to appropriating monies categorized
as Proceeds of Taxes. The Appropriations Limit carries forward 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 prior to adoption.
The adjustment is made annually and is based on a formula 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 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 1998-99, the appropriations subject to this Limit total $15,275,805.
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COPIES TO:
ITEM NO.
8.2
Hlbudget/98-99budl Appl"limilagaprlmt.doc
Although the City is well below its allowed Limit, it is important to make revisions in a timely m~er. ·
For record keeping purposes, the Limit carries forward each Fiscal Year, and having an accurate base
simplifies the calculation for the following Fiscal Year. The City must also adopt a Limit prior to the
beginning of the Fiscal Year, in accordance with State Law.
1998~99 Proposed Appropriations Limit
Staffhas prepared the calculations necessary to adopt the Appropriations Limit for 1998/99 in accordance
with State Law. The starting base is a Revised Limit of $43,075,087.
The discretionary factors selected in calculating the 1998/99 Limit are: (1) the change in the City
Population; and (2) the change in the Assessed Valuation from local non-residential construction. The
data from the Assessor is considered preliminary. If the Assessor provides a:final computation related to
"nop.-residential construction" added to the tax roll, which is significantly different, Staff may recommend
the adoption of a revision to the calculated Limit. Staff will evaluate the desirability of amending the
Limit in conjunction with the adoption of the Limit next year.
Allowed Methodology
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.
The 1998-99 calculation has resulted in an increase in the Limit and the adjustment factor used is 13.06%.
This results in an adopted Limit which well exceeds the total spending by the City, let alone the spending
associated with Proceeds of Taxes. lbis result is partially caused by the fact that the factors affecting the
adjustments to the Limit may have not been anticipated by the original drafters of the legislation. Over
the years the legislation has remained in place and there has been very little guidance from the legislature
affecting the calculation of the Limit. 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..." The approach presented in the
proposed 1998-99 calculation follows the established concepts to the letter and is consistent with past
calculations.
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The new 1998/99 Appropriations Limit as calculated on Exhibit A of the Proposed Resolution (Exhibit 1)
is $48,700,693. The Preliminary 1998/99 Budget (including the recommended Higher Service Levels)
includes appropriations of$15,275,805 which would be categorized as Proceeds of Taxes. Therefore, the
appropriations subject to the Appropriations Limit are below the allowed amount by approximately
$33,424,888.
Proposed Resolution
Staffhas prepared a Resolution (Exhibit 1) which will adopt an Appropriations Limit for 1998/99. Staff
recommends that the City Council adopt the Resolution.
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RESOLUTION NO. ~ 98
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN
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ADOPTING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 1998/99 OF $48,700,693
WHEREAS, State law requires that an Appropriations Limit be adopted by the City Council in
conjunction with the Annual Budget process; and
WHEREAS, Article xm B of the California Constitution places certain restrictions on
appropriations made by cities; and
WHEREAS, the restrictions are applicable to appropriations, which are defined as "Proceeds of
Taxes"; and
WHEREAS, the law allows the option to select the factors to be used in the calculation of the
Appropriations Limit; and
WHEREAS, the City must select between the following factors: (A) the change in City
population, or, (B) Countywide population, and either: (1) the change in the State per capita income, or,
(2) the change in the assessed valuation oflocal non-residential construction; and
WHEREAS, the 1998-99 Appropriations Limit used the following discretionary factors: (1) the
Growth in the City Population and (2) the change in the assessed valuation oflocal non-residential
. construction; and
WHEREAS, the calculation of the Appropriations Limit for 1998/99 is described in Exhibit A,
attached hereto and by reference made a part hereof.
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 1998-99 of $48,700,693.
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 29th day of June, 1998.
AYES:
NOES:
ABSENT:
ATTEST:
Mayor
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City Clerk
H:budget\word\apprlimi\RESO.DOC
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CALCULATION OF FISCAL YEAR 1998-99
APPROPRIATIONS LIMIT
(Based On Adoption Of A Revision To The Adopted Fiscal Year 1997-98 limit)
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A.
SELECTION OF OPTIONAL FACTORS
1.
Population - City vs. County
QB.
City of Dublin
Alameda County
1/1/97
25,544
1,371,793
1/1198
(% Decrease)
% Increase
26/560
3.977%
1 ,401,227
2.146%
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State Income vs. City Non-Residential Building
Change in State Per Capita Income ;::: 4.150%
Change in Non-Residential Assessed Valuation ;::: 8.736%*
*(Based on preliminary tax roll information available from the Alameda County Assessor.
May 15,1998. The final tax roll figure may be different. ) ,
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2.
OR
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 1998-99 Appropriations Limit Adjustment Factor
3.977+100
100
;:::
1.03977
8.736+100
100
;:::
1.08736
1.03977 x 1.08736;::: 1.1306;::: 1998199 Adjustment Factor
c. CALCULATION OF APPROPRIATIONS LIMIT
REVISED Fiscal Year 1997-98 Adopted Appropriations Limit;:::
Fiscal Year 1998-99 Adjustment Factor
$ 43,075,087
x 1.1306
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EXHIBIT A