2011060601 - FY2011/12 Gann Appropriations LimitMEETING DATE: JUNE 6, 2011
ITEM NO:
COUNCIL AGENDA REPORT
DATE: May 23, 2011
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2011/12 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
RECOMMENDATION:
Adopt the attached resolution establishing the Gann Appropriations Limit for FY 2011/12
(Attachment 1).
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 appropriations (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. 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:
Attached for Council consideration is a resolution establishing an appropriations limit for
FY 2011/12. The appropriations limit is based on population and per capita income data
provided by the State of California Finance Department. In alignment with State guidelines, the
PREPARED BY: Steve Conway, Finance and Administrative Services Director
N:\FINANCE\COUNCIL\Council Staff Reports\Gann\FY 2012\FY 2011-12 Gann Limit.doc
Reviewed by: P Assistant Town Manager Town Attorney
Clerk Administrator iFinance ommunity Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2011/12 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
MAY 23, 2011
appropriation limit for FY 2011/12 was calculated using a factor comprised of the change in
County or Town population (whichever is higher) and the change in California per capita
personal income. Calculation of the FY 2011/12 Gann Appropriations Limit is as follows:
FY 2011/12 Calculation
% Increase in Change in 2010/11 2011/12
Town Per Capita Appropriation Appropriation Appropriation
Population Income Factor Limit Limit
1.0096 X 1.0251 = 1.03494096 X $ 28,667,689 = $ 29,669,366
The appropriations limit is the total amount of tax money that can be appropriated by the Town
in the FY 2011/12. The proposed FY 2011/12 budget anticipates $22,550,895 in taxes, which is
$7,118,471 less than the appropriation limit of $29,669,366.
CONCLUSION:
It is recommended that the Council adopt the attached resolution establishing the FY 2011/12
Gann Appropriations Limit of approximately $29,669,366.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
Attachment:
1. Resolution establishing the Gann Appropriations Limit for FY 2011/12
RESOLUTION 2011-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE FY 2011/12 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.
THEREFORE, BE IT RESOLVED, that the Annual Appropriations Limit for the Town of Los Gatos for
FY 2011/12 is $29,669,336 as reflected in Exhibit A.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos,
California, held on the 6th day of June 2011 by the following vote:
COUNCIL MEMBERS: AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTACHMENT 1
APPROPRIATION LIMIT FACTORS
For Beginning County Town
YE Appropriation Population Population
June 30 Limit Factor Factor
2003 20,757,490 1.0125 1.0051
2004 20,750, 044 1.0079 1.0010
2005 21,397,082 1.0072 1.0004
2006 22,258,018 1.0112 1.0026
2007 23,691,192 1.0118 1.0044
2008 24,919,990 1.0152 1.0100
2009 26,416,980 1.0172 1.0318
2010 28,426, 367 1.0156 1.0108
2011 29,048,811 1.0126 1.0101
2012
Per
Capita
Income
FY 2011/12 Calculation
0.9873
1.0231
1.0328
1.0526
1.0396
1.0442
1.0429
1.0062
0.9746
Ending
Appropriation
Limit
% Increase in Change in 2010/11 2011/12
Town Per Capita Appropriation Appropriation Appropriation
Population Income Factor Limit Limit
1.0096 X 1.0251 = 1.03494096 X $ 28,667,689 = $ 29,669,366
Percentage of Appropriation
2011/12 2011/12 Percentage
Tax Appropriation of
Revenues Limit Limit
22,550,895 / $ 29,669,366 = 76%
cvo
Limit
Increase
-0.04%
3.12%
4.02%
6.44%
5.19%
6.01%
7.61 %
2.19%
-1.31%
EXHIBIT A