Staff Report.Gann Appropriation Limit
MEETING DATE: 08/20/2019
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
ITEM NO: 4
DATE: August 12, 2019
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Adopt a Resolution Establishing the FY 2019/20 Gann Appropriations Limit for
The Town of Los Gatos and Rescinding Resolution 2019-031
RECOMMENDATION:
Adopt a resolution establishing the FY 2019/20 Gann Appropriations Limit for the Town of Los
Gatos and rescinding Resolution 2019-031.
BACKGROUND:
On June 4, 2019, the Town Council adopted Resolution 2019-031 establishing the FY 2019/20
Gann Appropriation Limit for the Town of Los Gatos. The annual Gann Limit calculation
presented in the resolution had an error which was identified through the Town’s annual audit
process. The prior report inadvertently identified the County Population Factor as 1.0099
versus 1.0033. The correct calculation utilizing the appropriate County Population Factor can
be found in the Discussion portion of the staff report and the attached redlined resolution
(Attachment 1).
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 fiscal year (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
PREPARED BY: Stephen Conway
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
FY 2019/20 Calculation
CountyPer Capita2018/192019/20
PopulationIncome AppropriationAppropriationAppropriation
FactorFactorFactorLimitLimit
1.0033X1.0385=1.041927X$ 41,317,775 =$ 43,050,108
PAGE 2 OF 2
SUBJECT: Adopt a Resolution Establishing the FY 2019/20 Gann Appropriations Limit for
The Town of Los Gatos and Rescinding Resolution 2019-031
DATE: August 12, 2019
BACKGROUND (continued):
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 draft revised resolution establishing an appropriations
limit for FY 2019/20. 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 appropriation limit for FY 2019/20 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 2019/20 Gann Appropriations Limit is as follows:
The appropriations limit is the total amount of tax money that can be appropriated by the Town
in FY 2019/20. The proposed FY 2019/20 budget anticipates $30,447,571 in taxes, which is
$12,602,537 less than the appropriation limit of $43,050,108.
FISCAL IMPACT:
There is no direct identifiable fiscal impact from this action.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Draft Revised Enabling Resolution for establishing the Gann Appropriation Limit for FY
2019/20 Redline