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Home My WebLink About8.1 AppropriationLimit97-98 ~,m... CITY CLERK File # n~[3][Q]-[l1[Q] . AGENDA STATEMENT CITY COUNCIL MEETING DATE: (June 25, 1997) ;' SUBJECT: Adoption of an Appropriations Limit for 1997/98 ~ared by: Paul S. Rankin., Assistant City Manager) EXHIBITS ATTACHED: 1. Proposed Resolution RECOMMENDATION: ~ FINANCIAL STATEMENT: Approve the selected factors used to calculate the 1997/98 Limit and adopt the Resolution. The 1997/98 proposed Limit is $41,167,504 and only $13,664,577 in 1997/98 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 Budgetprocess. The 1997/98 Appropriations Lunit 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 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 made annually 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. As previously noted, 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 1997.98, the appropriations subject to . this Limit total $13,664,577. ~ ------------------------C()PDiST()~------------------------~------- ITEMNO.~ H1budgetl97-98budl Apprlimilagaprlmt.doc - ::......~:._,:~ w:.1~"I!\I~,~' '_" Although the City is well below its allowed Limit, it is important to make revisions in a timely manner. 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. . 1997.98 Proposed Appropriations Limit Staffbas prepared the calculations necessary to adopt the Appropriations Limit for 1997/98 in accordance with State Law. The information included on pages xix and xx of the Preliminary 1997/98 Budget contained a minor mathematical error with the calculation in the percentage change in reported population. . This resulted in an understatement of the recommended Appropriations Limit by $15, 446. The error was corrected for this report as well as the posted notice of the calculation. The discretionary factors selected in calculating the 1997/98 Limit are: (1) the change in the City Population; and (2) the change in the State Per Capita Income. The City did not have available data from the Assessor to consider use of the factor relating to the change in the "non.residential assessed valuation". Therefore, the City will use the change in State Per Capita Income, which grew at 4.67%. Once the Assessor provides complete data related to "non-residential construction" added to the tax roll, Staff may recommend the adoption of a revision to the calculated Limit. Given the excess capacity _which currently exists in the adopted Limit, the practical outcome would have a ~i!limaLeffect~StaffWtll evaluate the desirability of amending the Limit once this data is made available. . The implementation of the laws. related to the Appropriations Limit, resulted in the publication of Unifonn 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 1997.98 calculation has resulted in an increase in the Limit and the adjustment factor used is 6.57%. This results in an adopted Limit which well exceeds the total spending by the City, let alone the spending ___.. associated with Proceeds of Taxes. This 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 itself was extremely vague and confusing..." The approach presented in the proposed 1997-98 calculation follows the established concepts to the letter and is consistent with past calculations. The new 1997/98 Appropriations Limit as calculated on Exhibit A of the Proposed Resolution (Exhibit I) is $41,167,504. The Preliminary 1997/98 Budget (including the recommended Higher Service Levels) includes appropriations of $13,664,577 which would be categorized as Proceeds of Taxes. Therefore, the appropriations subject to the Appropriations Limit are $27,502,927 below the allowed amount as calculated for 1997/98. Proposed Resolution Staffhas prepared a Resolution (Exhibit 1) which will adopt an Appropriations Limit for 1997/98. Staff recommends that the City Council adopt the Resolution. . ....).- RESOLUTION NO. - 97 . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN *************************** ADOPTING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 1997/98 OF 541,167,504 WHEREAS, State law requires that an Appropriations Limit be adopted by the City Council in conjunction with the Annual Budget process; and 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 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 1997-98 Appropriations Limit used the following discretionary factors: (1) the Growth in the City Population and (2) the Change in State Per Capita Income; and . WHEREAS, the calculation of the Appropriations Limit for 1997/98 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 1997-98 of541,167,504. 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 25th day of June, 1997. AYES: NOES: ABSENT: ATTEST: Mayor . City Clerk H:budgc:t\97-98bud\apprlimi\RESO.DOC CALCULATION OF FISCAL YEAR 1997-98 APPROPRIATIONS LIMIT A. SELECTION OF OPTIONAL FACTORS . 1. Population - City vs. County (% Decrease) 1/1/96 111/97 % Increase City of Dublin 24,983 25.445 1.849% OR 1,365.938 1.738% Alameda County 1,342.598 w.jWHwwm'tJff2t.r~tlt"%r~~~~il1'iAP~RR1in~"ni,1"~iifint-iWl.WM~~~~lJf1i~i ;;[.:;..~......._._-_-x-.-.-.-.;~m::::_..__..._...~:.x. ~~t-~~:~~.::~~~~'.ar~:'~~....[:!.V?i:'-!~~Hm.."-~=M*-~~R~_..._-.-.-.-_-_._-_-.-_-_..-..._.....__._-.......~~.................. *u..x:=.-:x::i:~~~s:~~~~ State Income vs. City Non-Residential Building Change in State Per Capita Income ::: 4.67% Change in Non-Residential Assesed Valuation ::: Information Not Available* *(Complete tax roll inf~rmation is not available from the Alameda County Assessor. ) f&Wj@1\Mtn@i%~i~I~&#.~~lm!lM~~n.~!~~.1@Itl!m~.iill1ffiW1 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 1996-97 Appropriations Limit Adjustment Factor 1.849+100 100 :: 1.01849 4.67+100 100 :: 1.04670 1.01849 x 1.04670 :: 1.0661 ::: 1997/98 Adjustment Factor C. CALCULATION OF APPROPRIATIONS LIMIT Fiscal Year 1996-97 Adopted Appropriations Limit::: $ 38.615,049 Fiscal Year 1997.98 Adjustment Factor x 1.0661 . ~W@f@tfRt.WJij~-GllJ.J7$U1UAfA.~1UUb1t}1.l31ttl1ii$.J14twlt1ltW*_t'EtIfilM@lRk1W#t] Resolution Adopting Fiscal Year 1997-98 Appropriations Limit - Exhibit A P.E.P. Budget Nielson Training (200.00 x 2) $ Administration Fee Recertication (20 x 6) Supplies: Party Recognition Luncheon (15.x8) Total P.E.P. Budget Murray Training (200.00 x 1) $ Administration Fee Recertication (20 x 6) Supplies Party Recognition Luncheon (15.x4) Total P.E.P. Budget Frederiksen Training (2) Administration Fee Recertification (20x8) Recognition Luncheon(15.xl0) Total Dublin Elementary (New School) Training (4) Administration Fee Supplies Party Recognition Luncheon(15.xl0) Total Total 400.00 200.00 120.00 200.00 250.00 120.00 $lr290.00 Total 200.00 200.00 120.00 300.00 175.00 60.00 $1.055.00 400.00 200.00 160.00 150.00 $ 910.00 800.00 200.00 250.00 175.00 150.00 $1.575.00 Total Budget for 1997 - 1998 $4,830.00 (Average cost per student = $7.10)