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Home My WebLink AboutItem 8.1 AdoptAppropriationLimi (2) CITY CLERK File # 330-20 SUBJECT: AGENDA STATEMENT CITY COUNCIL MEETING DATE: (June 24, 1999) EXHIBITS ATTACHED: ....... Adoption of an Appropriations Limit for 1999-2000 (Prepared by: Joe Aguilar, Interim Administrative Services/Director) ... Proposed Resolution :RECOMMENDATION: Approve the selected factors used to calculate the.!.999:~2QO_0 and adopt the Resolution. FINANCIAL STATEMENT: The 1999-2000 proposed Limit is $54,252,572 and only $17,461,110 in 1999-2000 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 1999-2000 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 that 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, the selecting of the some of the factors is discretionary. Typically, an agenry Selects from those factors that provide for the largest gr°wth in the Lim/t[ '~ae Limit does not apply to all funds appropriated by the City Council. The law only applies to those appropriations that are financed by "proceeds of Taxes". State Law narrowly defines "Proceeds of Taxes',, Histoficgl_!y, the applicable appropriations made by the City of Dublin have always been well below the Limit. In Fiscal Year 1999-2000, the appropriations subject to this Limit total $17,461,110. COPIES TO: H/budget/Appropriation Limit/Agenda Rpt 2000.doc ITEM NO. FA!0though 'the City is well below its allowed Limit, it is important t° make revisions in a timely manner. r record keeping pUrPoSes, the Limit carries forWard each Fisca[Y~ar, and having an accurate base simplifies the calculation £or the following Fisca[ye~2A'The'city must also adopt a Limit prior to the beginning of the Fiscal Year, in accordance with State Law. 1999-2000 pronosed Annropriations Limit Staff has prepared the'C~l~Uiafi~n~ heCe~s'~ in 'adr~pt,the Appr0priati~sns Limit-~f6ff1999-2000 in accordance with State Law. The starting base is the 1998-1999 Limit of $48,700,693. The discretionary fact°rs selected in CalcUlating the'1999:2000 Limit 'are: '(1) the change in the City Population; and (2)the change in the assessed valuationfrom 16cai non~i:eSidential frOm the County AssesSOr is considered preliminary. If the Assessor provides a final computation related rec°~n~d ~ 'h~d0p~ri~ 6/'a revi'si$~-~i~'~"~e dil~[~ted Limit. staff will evaluate'~he desirability of amending the Limit in conjunction with the adoption of the Limit next year. .-AlloWed Methodolo~v The imPlementati°n ~'the laws related i6~ff/~ Appr~6isfiafionsLimit, resUlted in the pUblication of Uniform Guidelines by the League of California Cities. The City's independent auditors also rely on this publication2 ~uallY, they issue a review of the calculation and identify that the methodology is consistent with the gtiidelines. The Calculations USed tOdetennine the Limit, as presented, are consistent with both the guidelines and the past calculations. The 1'999-2000 calculation has resUlted in an increase, in the Limit~ ~d. ~e gdjustment factor usedis 11.4%. This increase in the calculated Limit well exceeds'the total SPending by the City, let alone the spending associated wi'th "pr0c:~dS~°i"~es;~2 ~'~ ~i~esul~ is P~lal!y cau§ed bYthe fact that the factors affecting the ~adjustments tO ithe Limit.may have not been anticipated by the ori~nal drafters of the legislation. Over the years the legislation has remained in place and there has been very little guidance from the iegislature,,affecting thc CalCulation of/he Limit. As noted in th~ LeagUe of Cities Guidelines, pubIishedin 1991; 'The State LegiSlature adopted a 'hands off' approach to i~pleme,n, ting Proposition4, even though the language of the initiative itself was extremely vague and confusing... The approach presented in the proposed 1999~2000 5alculation folloWs the established.concepts to the letter and is consistent with' past calculations. The new 19992200OAppropriafi°ns Limit as 5~ilCiilated on Exhibit A offfi~Pi~°posed R~S°IU~°n (Exhibit 1) is $54,252,572. The Preliminary 1999-2000 Budget (inclUding the recommended Higher Service Levels) includes ap,p, ropriations subject to the Limit totaling $17}461}110 that Would be categorized as "Proceeds of TaXes '. Therefore, the appropriations subject i[o the' ApprOpfiationSLimit hre below the allowed mount by approximatelY $36;791,462. Proposed Resolution Staffhas prepared a Resolution (Exhibit 1) which will ad°pt an Appropriations Limit for 1999-2000 Staffrecommends that the City council adoptthe ResOlUtion. ' RESOLUTION NO. - 99 A RESOLUTION OF TIlE CITY COUNCIL OF TItE CITY OF DUBLIN ADOPTING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 1999-2000 OF $54,252,572 WItEREAS, State law requires that an Appropriations Limit be adopted by the City Council in eonjun~tion with the Annual Budget process; and Wlt'EREAS, Article XIII B of the California Constitution places certain restrictions on appropriations made by cities; and Wlt-EREAS, the restrictions are applicable to appropriations, which are defined as "Proceeds of .. Taxes"; and WltEREAS, the law allows the option to select the factors to be used in the calculation of the Appropriations Limit; and WltEREAS, 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 of local non-reSidential constrUction; and WltF~REAS, the 1999-2000 ApprOpriatiOns Limit used the following discretionary factors: (1) the Growth in the City Population and (2) the change in the assessed valuation of local non-residential construction; and WItEREAS, the calCUlation of the Appropriations Limit for 1999-2000 is described in Exhibit A, attached hereto and by reference made a part hereof. NOW, Tmr~REFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby adopt the City of Dublin Appropriations Limit for Fiscal Year 1999-2000 of $54,252,572. BE IT FURTI~R 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 24th day of June, 1999. AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk· K2/G/6-24/99b/reso-approplimit. doc Mayor CALCULATION OF FISCAL YEAR 1999-2000 APPROPRIATIONS LIMIT (Based On Adopte~d Fis~ca, I Year 1998-99 Limit) SELECTION OF OPTIONAL FACTORS ....... ~ '~ .~ '. _,. ,_:. ~.-i ,~.~ ~ 1. Population - City vs. County ........... :, .~ ,~. (% Decrease) .1/1/98 .... :~'1/1/99 % InCrease City of Dublin .. 26,560 ': :-~ - 27,264 2,651% OR Alameda County 1,401,227 1,428,995 1,981% ~ 2. State Income vs. City Non-Residential Building .OR Change in State Per Capita Income = 4.530% Change in Non-Residential Assessed Valuation = 8.525%* *(Based on p~liminarY~tax roll info~atioh available fr°m the Alameda' County Assessor March 15,1999. The final tax roll figure may be different.) - B, CALCULATION OF GROVVTH LIMIT ADJUSTMENT The formula for calculating the adjustment is as follows: Selected Factor 1 + 100 = X 100 -!'~'!~leCt~d FactO:r:~-:~:i00 =- .. y'~'"- _ .. . .... . . .~-.:~.... ........ 100 .......... (X) x (Y) = Fiscal Year 1999-2000 Appropriations Limit Adjustment Factor 2.651 +1 O0 = 1.02651 lO0 8.525+100 = 1.08525 100 1.02651 x 1.08525 = 1.1140 = 1999-2000 Adjustment Factor C= CALCULATION OF APPROPRIATIONS LIMIT Fiscal Year 1998-1999 Adopted Appropriations Limit = Fiscal Year 1999-2000 Adjustment Factor Fiscal Year 1999-2000 Appropriations Limit $ 48,700,693 x 1.1140 $54,252,572 H/budget/Appropriation Limit/Budget pg 2000.doc