05 Staff Report - 2007/08 Gann Appropriation Limittown 0 MEETING DATE: JUNE 4, 2007
ITEM NO:
5 COUNCIL AGENDA REPORT
~g GASO
DATE: MAY 2, 2007
TO: MAYOR AND TOWN COUNCIL
FROM: DEBRA J. FIGONE, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FISCAL YEAR 2007/08 GANN
APPROPRIATION LIMIT FOR THE TOWN OF LOS GATOS
RECOMMENDATION:
Adopt resolution approving the Gann Appropriations Limit for FY 2007/08.
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 I I 1 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 in population and the cost of living.
A a
PREPARED BY: Steve nay, cc and Administrative Services Director
N:TINANCE\Council Staff Reports\GannTY 2008TY 2007-08 Gann Limit.doc
Reviewed by: Assistant Town Manager Town Attorney
Clerk Administrator -Finance Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: GANN APPROPRIATION LIMIT
MAY 2, 2007
DISCUSSION:
In alignment with State guidelines, the appropriation limit for fiscal year 2007/08 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 2007/08 Gann Appropriations Limit
follows:
FY 2007/08 Calculation
% Increase in
Change in
2006/07
2007/08
County
Per Capita
Appropriation Appropriation
Appropriation
Population
Income
Factor Limit
Limit
1.0152 X
1.0442
= 1.06007184 X $ 24,919,990
= $ 26,416,980
This Appropriations Limit is the total amount of tax money that can be appropriated by the Town
in the 2007/08 fiscal year. The proposed 2007/08 budget anticipates $20,195,980 in taxes, which
is $6,221,000 less than the appropriation limit of $26,416,980.
CONCLUSION:
It is recommended that the Council adopt the resolution approving the Gann Appropriations
Limit of $26,416,980.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
Attachments:
1. Resolution
2. Gann Appropriations Limit calculation
■
Attachment I
RESOLUTION 2007-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE 2007/08 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 2007/08 Fiscal Year
Appropriation Limit:
1. County population adjustments for 2007/08, plus 1.0152 (One point zero, one, five, two percent)
2. Town population adjustments for 2007/08, plus 1.0100 (One point zero, one percent)
3. Per Capita personal income change for 2007/08, plus 1.0442 (One point zero, four, four, two percent).
THEREFORE, BE IT RESOLVED, based on the foregoing figures and the provisions of
Article XIIIB of the Constitution of the State of California, the following figure accurately represents the
2007/08 Fiscal Year Appropriation Limit for the Town of Los Gatos as: $26,416,980 (Twenty Six
Million, Four Hundred Sixteen Thousand, Nine Hundred Eighty Dollars).
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos,
California, held on the day of , 2007 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
YE
Appropriation
Population
Population
Capita
June 30
Limit
Factor
Factor
Income
1998
14,714,173
1.0216
1.0201
1.0467
1999
15,733,994
1.0212
1.0137
1.0415
2000
16,734,358
1.0173
1.0071
1.0453
2001
17,795,043
1.0163
1.0095
1.0491
2002
18,973,081
1.0147
1.0107
1.0782
2003
20,757,490
1.0125
1.0051
0.9873
2004
20,750,044
1.0079
1.0010
1.0231
2005
21,397,082
1.0072
1.0004
1.0328
2006
22,258,018
1.0112
1.0026
1.0526
2007
23,691,192
1.0118
1.0044
1.0396
2008
24,919,990
1.0152
1.0100
1.0442
FY 2007/08 Calculation
Ending
Appropriation
Limit
%
Limit
Increase
15,733.994
6.93%
16,734, 4,3
6.36%
17,795,043
6.34%
18.973.081
6.62%
20,757,490
9.40%
20,750,044
-0.04%
21,397,082
3.12%
22,258,018
4.02%
23,691,192
6.44%
24,919,990
5.19%
26,416,980
6-01"/',)
% Increase in
Change in
2006/07
2007/08
County
Per Capita
Appropriation Appropriation
Appropriation
Population
Income
Factor Limit
Limit
1.0152 X
1.0442
= 1.06007184 X $ 24,919,990 =
$ 26,416,980
Percentage of Appropriation
2007/08 2007/08 Percentage
Tax Appropriation of
20,195,980 / $ 26,416,980 = 76%