Staff Report with attachments
PREPARED BY: Stephen Conway
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/07/2022 ITEM NO: 10
DATE: June 2, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Adopt a Resolution Establishing the Fiscal Year 2022/23 Gann Appropriation
Limit for the Town of Los Gatos
RECOMMENDATION:
Adopt a resolution establishing the Fiscal Year (FY) 2022/23 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
2022/23. The appropriation limit is based on population and per capita income data
PAGE 2 OF 2 SUBJECT: Adopt Resolutions Establishing the FY 2022/23 Gann Appropriations Limit for the Town of Los Gatos DATE: June 2, 2022
S:\COUNCIL REPORTS\2022\06-07-22\10 Gann Limit\Staff Report.Gann.docx
DISCUSSION (continued):
provided by the State of California Department of Finance. In alignment with State guidelines,
the appropriation limit for FY 2022/23 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 2022/23 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 2022/23. The proposed FY 2022/23 budget anticipates $33,766,598 in taxes, which is
$17,855,439 less than the appropriation limit of $51,622,037.
FISCAL IMPACT:
There is not direct identifiable fiscal impact from this action.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Resolution establishing the Gann Appropriation Limit for FY 2022/23
Town Per Capita 2021/22 2022/23
Population Income Appropriation Appropriation Appropriation
Factor Factor Factor Limit Limit
0.9961 X 1.0755 =1.071306 X 48,186,101$ =51,622,037$
FY 2022/23 Calculation
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Resolution 2022 - June 7, 2022
RESOLUTION 2022- RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE FY 2022/23 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 2022/23 is $51,622,037 as reflected in Exhibit A.
ATTACHMENT 1
2 of 3
Resolution 2022 - June 7, 2022
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los
Gatos, California, held on the 7th day of June 2022 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE: __________________
ATTEST:
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE: __________________
3 of 3
Resolution 2022 - June 7, 2022
EXHIBIT A
For Beginning County Town Per Capita Ending %
YE Population Population Income Limit
Limit Factor Factor Factor Limit Increase
2010 28,426,367 1.0156 1.0108 1.0062 29,048,811 2.19%
2011 29,048,811 1.0126 1.0101 0.9746 28,667,689 -1.31%
2012 28,667,689 1.0089 1.0096 1.0251 29,669,366 3.49%
2013 29,669,366 1.0124 1.0081 1.0377 31,169,671 5.06%
2014 31,169,671 1.0157 1.0147 1.0512 33,279,977 6.77%
2015 33,279,977 1.0150 1.0102 0.9977 33,701,485 1.27%
2016 33,701,485 1.0113 1.0020 1.0382 35,384,256 4.99%
2017 35,384,256 1.0126 1.0070 1.0537 37,754,174 6.70%
2018 37,754,174 1.0081 1.0040 1.0369 39,464,396 4.53%
2019 39,464,396 1.0099 1.0050 1.0367 41,317,775 4.70%
2020 41,317,775 1.0033 0.9998 1.0385 43,050,108 4.19%
2021 43,050,108 1.0037 1.0234 1.0373 45,831,327 *6.46%
2022 45,831,327 0.9944 0.9919 1.0573 48,186,101 5.14%
2023 48,186,101 0.9931 0.9961 1.0755 51,622,037 7.13%
Town Per Capita 2021/23 2022/23
Population Income Appropriation Appropriation Appropriation
Factor Factor Factor Limit Limit
0.9961 X 1.0755 =1.071306 X 48,186,101$ =51,622,037$
2022/23 2022/23 Percentage
Tax Appropriation of
Revenues Limit Limit
33,766,598 /51,622,037$ =65%
Percentage of Appropriation
*FY 2020/21 ending and FY 2021/22 beginning Appropriation Limit includes an adjustment of $130,503 to adress the
annexed parcels from Santa Clara County. The Town of Los Gatos increasing its base by $130,503 while the County of
Santa Clara decreasing its base with the same amount.
APPROPRIATION LIMIT FACTORS
Appropriation Appropriation
June 30
FY 2022/23 Calculation