05 Staff Report - FY 2006/07 Gann Appropriation Limit~o`NN of MEETING DATE: August 21, 2006
ITEM NO:
k
tos ~Ajos COUNCIL AGENDA REPORT
DATE: AUGUST 21, 2006
TO: MAYOR AND TOWN COUNCIL
i
FROM: DEBRA J. FIGONE, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FISCAL YEAR 2006/07 GANN
APPROPRIATION LIMIT FOR THE TOWN OF LOS GATOS
RECOMMENDATION:
Adopt resolution approving the Gann Appropriations Limit for FY 2006/07.
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 fiscal year 1980/81, mandated an appropriations
(spending) limit on the amount of tax revenues that the State and most local government
jurisdictions may appropriate within a fiscal year. This limit grows annually by a population and
cost-of-living factor.
The State Appropriation Limit was since modified by two subsequent initiatives - Proposition 98
in 1988 and Proposition 111 in 1990. Proposition 98 established the return of tax revenues
exceeding appropriation limit levels to the State of citizens through a process of refunds, rebates,
or other means. Proposition 111 allowed more flexibility in the appropriation calculation factors.
Only tax proceeds are subject to this limit. Charges for services, fees, grants, loans, donations
and other non-tax proceeds are excluded. Exemptions are also made for voter-approved debt,
debt which existed prior to January 1, 1979, and for the cost of compliance with court or Federal
government mandates.
The Town Council adopts an annual resolution establishing an appropriations limit for the
following fiscal year using population and per capita personal income data.provided by the State
of California's Department of Finance. Each year's limit is based on the amount of tax proceeds
that were authorized to be spent in fiscal year 1978/79, with inflationary adjustments made
annually to reflect increases linpopulation and the co -of living.
PREPARED BY: Stevce and Administrative Services Director
NAFINANCMCouncil Staff Reports\Gann\FY 2007\FY 2006-07 Gann Limit.doc
Reviewed by: _L~)_Assistant Town Manager Town Attorney
_QL
Clerk Administrator Finance Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: GANN APPROPRIATION LIMIT
AUGUST 21, 2006
DISCUSSION:
In alignment with State guidelines, the appropriation limit for fiscal year 2006/07 was calculated
using a factor comprised of the change in population for the county combined with the change in
California per capita personal income. Calculation of the 2006/07 Gann Appropriations Limit
follows:
FY 2006/07 Calculation
% Increase in Change in 2005/06 2006/07
- -County- ----Per Capita--- Appropriation----Appropriation Appropriation--
Population Income Factor Limit Limit
1.0118 X 1.0396 = 1.05186728 X $ 22,774,821 = $ 23,956,089
This Appropriations Limit is the total amount of tax money that can be appropriated by the Town
in the 2006/07 fiscal year. The proposed 2006/07 budget anticipates $18,882,250 in taxes, which
is $5,073,839 less than the appropriation limit of $23,956,089.
CONCLUSION:
It is recommended that the Council adopt the resolution approving the Gann Appropriations
Limit of $ 23,956,089.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
Attachments:
1. Resolution
2. Gann Appropriations Limit calculation
Attachment 1
RESOLUTION 2006-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE 2006/07 FISCAL YEAR APPROPRIATION LIMIT
FOR THE TOWN OF LOS GATOS
WHEREAS, the Town of Los Gatos -has established its Base Year appropriation limit as.
$5,849,120 (Five Million, Eight Hundred Forty-nine, One Hundred Twenty Dollars); and
WHEREAS, the cumulative appropriate changes to the Town's population, the Consumer Price
Index, and per capita income statewide since the base year established the revised Proposition 111,
1996/97 Fiscal Year Appropriation Limit as $14,714,173 (Fourteen Million, Seven Hundred Fourteen
Thousand, One Hundred Seventy Three Dollars) as adjusted; and
WHEREAS, to the best of this Town's knowledge and belief, the State Department of Finance
figures provided to this Town in response to Proposition 111 passed by the voters in June 1990, as
audited, reflect the appropriate statistics relevant to the calculation of the 2006/07 Fiscal Year
Appropriation Limit:
1. County population adjustments for 2006/07, plus 1.0118 (One point zero, one, one, eight percent)
2. Town population adjustments for 2006/07, plus 1.0044 (One point zero, zero, four, four percent)
3. Per Capita personal income change for 2006/07, plus 1.0396 (One. point zero, three, nine, six percent).
THEREFORE, BE IT RESOLVED, based on the foregoing figures and the provisions of
Article XM of the Constitution of the State of California, the following figure accurately represents the
2006/07 Fiscal Year Appropriation Limit for the Town of Los Gatos as: $23,956,089 (Twenty Three
Million, Nine Hundred Fifty Six Thousand, Eighty Nine Dollars).
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town. of Los Gatos,
California, held on the 21st day of August, 2006 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
Attachment 2
APPROPRIATION LIMIT FACTORS
For
Beginning
County
Town
Per
Ending
%
YE
Appropriation
Population
Population
Capita
Appropriation
Limit
June 30
Limit
Factor
Factor
Income
Limit
Increase
1997
13,016,370
1.0800
1.007
1.0467
14,714,173
13.04%
1998
14,714,173
1.0216
1.0201
1.0467
15,733,994
6.93%
1999
15,733,994
1.0212
1.0137
1.0415
16,734,358`
6.36%
2000
16,734,358
1.0173
1.0071
1.0453
- 17;795,043
6.34%
2001
17,795,043
1.0163
1.0095
1.0491
18;973,081
6.62%
__2002_.-
1.8,973,08.1-- .
1_0142
_LQ107____.__
- _._.1..07$2_
20;.7.57,490:_
--9,40V-o-
2003 .
20,757,490
1.0125
1.0051
0.9873
20;750;044
-0.04%
2004
20,750,044
1.0079
1.0010
1.0231
2.1;397,082,'1
3.12%
2005
21,397,082.
1.0072
1.0004
1.0328
22,258,01&'
4.02%
2006
21,397,082
1.0112
1.0026
1.0526
22,774,821'
6.44%
2007
22,774,821
1.0118
1.0044
1:0396
234956,089
7.63%d,
FY 2006/07 Calculation
% Increase in
Change in
2005/06
2006/07
County
Per Capita
Appropriation Appropriation
Appropriation
Population
Income
Factor Limit
Limit
1.0118 X
1.0396
= 1.05186728 X $ 22,774,821 =
$ 23,956,089
Percentage of Appropriation
2006/07
2006/07
Percentage
Tax
Appropriation
of
Revenues
Limit
Limit
18,882,250
/ $ 23,956,089 =
79%