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09 Staff Report.Gann with attachments PREPARED BY: Gitta Ungvari Finance Director Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 06/04/2024 DATE: May 28, 2024 TO: Mayor and Town Council FROM: Laurel Prevetti, Town Manager SUBJECT: Adopt a Resolution Establishing the Fiscal Year 2024/25 Gann Appropriation Limit for the Town of Los Gatos RECOMMENDATION: Adopt a resolution establishing the Fiscal Year (FY) 2024/25 Gann Appropriation Limit for the Town of Los Gatos. BACKGROUND: On November 6, 1979, California voters approved Proposition 4, commonly known as the Gann Spending Limitation Initiative, establishing Article XIIIB of the California State Constitution. This Proposition, which became effective in FY 1980/81, mandated an appropriation (spending) limit on the amount of tax proceeds that the State and most local government jurisdictions may appropriate within a fiscal year. Charges for services, fees, grants, loans, donations, and other non-tax proceeds are excluded from the spending limitation. Exemptions are also made for voter-approved debt prior to January 1, 1979 and the cost of court-related or Federal government mandates. The Initiative was later modified by two propositions: Proposition 98 in 1988 and Proposition 111 in 1990. Proposition 98 established the return of tax revenues exceeding appropriation limit levels to the State or citizens through a process of refunds, rebates, or other means. Proposition 111 allowed more flexibility in the appropriation calculation factors. DISCUSSION: Attachment 1 for Council consideration is a resolution establishing an appropriation limit for FY 2024/25. The appropriation limit is based on population and per capita income data provided by the State of California Department of Finance. In alignment with State guidelines, the PAGE 2 OF 2 SUBJECT: Adopt a Resolution Establishing the FY 2024/25 Gann Appropriations Limit for the Town of Los Gatos DATE: May 28, 2024 DISCUSSION (continued): appropriation limit for FY 2024/25 was calculated using inflation and population factors comprised of the change in County or Town population (whichever is higher) and the change in California per capita personal income. The calculation of the FY 2024/25 Gann Appropriation Limit is as follows: The appropriation limit is the total amount of tax money that can be appropriated by the Town in FY 2024/25. The proposed FY 2024/25 budget anticipates $39,523,911 in taxes, which is $16,241,252 less than the appropriation limit of $55,765,163. FISCAL IMPACT: There is not a fiscal impact from this action. ENVIRONMENTAL ASSESSMENT: This is not a project defined under CEQA, and no further action is required. Attachment: 1. Resolution establishing the Gann Appropriation Limit for FY 2024/25 County Per Capita 2023/24 2024/25 Population Income Appropriation Appropriation Appropriation Factor Factor Factor Limit Limit 1.0002 X 1.0362 =1.036407240 X 53,806,227$ =55,765,163$ FY 2024/25 Calculation 1 of 3 Resolution 2024- June 04, 2024 DRAFT RESOLUTION 2024- RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ESTABLISHING THE FY 2024/25 APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS WHEREAS, Article XIIIB of the California Constitution (Limitation of Government Appropriations) was passed by the California electorate on November 6, 1979, and became effective on July 1, 1980; and WHEREAS, Chapter 1205, Statute of 1980, Section 7900 of the California Government Code formally implements methods for governmental entities to establish and define annual appropriations limits; and WHEREAS, the growth factors used to calculate the Annual Appropriations Limit are County or Town population change and the increase in the California per capita income; WHEREAS, in addition to the annual inflation and population adjustments, state law requires the Appropriations Limit to be adjusted in the event that the financial responsibility for providing services is transferred in whole or in part from one entity of government to another; and THEREFORE, BE IT RESOLVED: that the Annual Appropriations Limit for the Town of Los Gatos for FY 2024/25 is $55,765,163 as reflected in Exhibit A. ATTACHMENT 1 2 of 3 Resolution 2024- June 04, 2024 PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 4th day of June 2024 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA DATE: __________________ ATTEST: TOWN CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA DATE: __________________ 3 of 3 Resolution 2024- June 04, 2024 EXHIBIT A For Beginning County Town Per Capita Ending % YE Population Population Income Limit Limit Factor Factor Factor Limit Increase 2010 28,426,367 1.0156 1.0108 1.0062 29,048,811 2.19% 2011 29,048,811 1.0126 1.0101 0.9746 28,667,689 -1.31% 2012 28,667,689 1.0089 1.0096 1.0251 29,669,366 3.49% 2013 29,669,366 1.0124 1.0081 1.0377 31,169,671 5.06% 2014 31,169,671 1.0157 1.0147 1.0512 33,279,977 6.77% 2015 33,279,977 1.0150 1.0102 0.9977 33,701,485 1.27% 2016 33,701,485 1.0113 1.0020 1.0382 35,384,256 4.99% 2017 35,384,256 1.0126 1.0070 1.0537 37,754,174 6.70% 2018 37,754,174 1.0081 1.0040 1.0369 39,464,396 4.53% 2019 39,464,396 1.0099 1.0050 1.0367 41,317,775 4.70% 2020 41,317,775 1.0033 0.9998 1.0385 43,050,108 4.19% 2021 43,050,108 1.0037 1.0234 1.0373 45,831,327 *6.46% 2022 45,831,327 0.9944 0.9919 1.0573 48,186,101 **5.14% 2023 48,186,101 0.9931 0.9961 1.0755 51,622,037 7.13% 2024 51,622,037 0.9975 0.9980 1.0444 53,806,227 4.23% 2025 53,806,227 1.0002 0.9959 1.0362 55,765,163 3.64% County Per Capita 2023/24 2024/25 Population Income Appropriation Appropriation Appropriation Factor Factor Factor Limit Limit 1.0002 X 1.0362 =1.036407240 X 53,806,227$ =55,765,163$ 2024/25 2024/25 Percentage Tax Appropriation of Revenues Limit Limit 39,523,911 /55,765,163$ =71% APPROPRIATION LIMIT FACTORS Appropriation Appropriation June 30 FY 2024/25 Calculation Percentage of Appropriation *FY 2020/21 ending and FY 2021/22 beginning Appropriation Limit includes an adjustment of $130,503 to address the annexed parcels from Santa Clara County. The Town of Los Gatos increased its base by $130,503 while the County of Santa Clara decreased its base with the same amount. **The State issued a list in December 2022 per State Subventions Pursuant to Government Code Section 7903(AN) that listed the Town of Los Gatos needing to report $7 million State Subvention pass through grant. The Town is still under the Gann Appropriation Limit with the additional $7 million pass through grant from FY 2021/22.