Reso FY 14/15 Appropriations Limitpow" of MEETING DATE: 06/02/14
ITEM NO: 5
�OS'BA'i0S COUNCIL AGENDA REPORT
DATE: MAY 14, 2014
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER,,,
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2014/15 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
RECOMMENDATION:
Adopt the attached resolution establishing the Gann Appropriations Limit for FY 2014/15
(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 2014/15. 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 2014/15 was calculated using a factor comprised of the change in
PREPARED BY: Stephen '' ect�nance / Administrative Services
Reviewed by: =Assistant Town Manager 19Y6<Town Attorney Finance
NAFINANCE)COUNCIUComcil State Reports \Gam\FY 2015\FY 2014 -15 Gam Limit doc
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2014/15 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
MAY 14, 2014
County or Town population (whichever is higher) and the change in California per capita
personal income. Calculation of the FY 2014/15 Gann Appropriations Limit is as follows:
FY 2014/15 Calculation
% Increase in
Change in
2013/14
2014/15
County
Per Capita
Appropriation Appropriation
Appropriation
Population
Income
Factor Limit
Limit
1.0150 X
0.9977 =
1.0126655 X $ 33,279,977 =
$ 33,701,485
The appropriations limit is the total amount of tax money that can be appropriated by the Town
in FY 2014 /15. The proposed FY 2014/15 budget anticipates $22,383,532 taxes, which is
$11,317,953 less than the appropriation limit of $33,701,485.
CONCLUSION:
It is recommended that the Council adopt the attached resolution establishing the FY 2014/15
Gann Appropriations Limit of approximately $33,701,485.
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 2014/15
RESOLUTION 2014-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE FY 2014/15 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 2014/15 is $33,701,485 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 2d day of June 2014 by the following vote:
COUNCIL MEMBERS: AYES:
I►GYi.3
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
I:71610*11
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA ATTACHMENT 1
APPROPRIATION LIMIT FACTORS
For
Beginning
County
Town
Per
Ending
%
YE
Appropriation
Population
Population
Capita
Appropriation
Limit
June 30
Limit
Factor
Factor
Income
Limit
Increase
2006
22,258,018
1.0112
1.0026
1.0526
23,691,192
6.44%
2007
23,691,192
1.0118
1.0044
1.0396
24019,990
5.19%
2008
24,919,990
1.0152
1.0100
1.0442
26,416080
6.01%
2009
26,416,980
1.0172
1.0318
1.0429
28,426,367
7.61%
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
33,279077
6.77%
2015
33,279077
1.0150
1.0120
0.9977
33,701,485
1.27%
FY 2014/15 Calculation
% Increase in
Change in
2013/14
2014/15
County
Per Capita
Appropriation
Appropriation
Appropriation
Population
Income
Factor
Limit
Limit
1.0150 X
0.9977
= 1.0126655
X $ 33,279,977 =
$ 33,701,485
Percentage ofAooroorlation
2014/15 2014/15 Percentage
Tax Appropriation of
Revenues Limit Limit
22,383,532 / $ 33,701,485 = 66%
EXHIBIT A
O �
• DEPARTMENT OF
0911�R�1'F i N A N C E EDMUND G. BROWN JR. • GOVERNOR
STATE CAF170I • ROOM 1 145 ■ SACRAMENTO CA ■ 95614 -4998 ■ WWw.Op F.cn.ppV
OFFICE OF THE DIRECTOR
May 2014
Dear Fiscal Officer:
Subject: Price and Population Information
Appropriations Limit
The California Revenue and Taxation Code, section 2227, mandates the Department of Finance
(Finance) to transmit an estimate of the percentage change in population to local governments.
Each local jurisdiction must use their percentage change in population factor for January 1, 2014,
in conjunction with a change in the cost of living, or price factor, to calculate their appropriations
limit for fiscal year 2014 -15. Attachment A provides the change in California's per capita personal
income and an example for utilizing the price factor and population percentage change factor to
calculate the 2014 -15 appropriations limit. Attachment B provides city and unincorporated county
population percentage change. Attachment C provides population percentage change for
counties and their summed incorporated areas. The population percentage change data excludes
federal and state institutionalized populations and military populations.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. Consult the Revenue and
Taxation Code section 2228 for further information regarding the appropriations limit. Article XIII
B, section 9(C), of the State Constitution exempts certain special districts from the appropriations
limit calculation mandate. The Code and the California Constitution can be accessed at the
following website: http : /: / /Ieginfo.legislature.cagov /faces /codes.xhtmi /faces /codes.xhtmi.
Special districts required by law to calculate their appropriations limit must present the calculation
as part of their annual audit. Any questions special districts have on this issue should be referred
to their respective county for clarification, or to their legal representation, or to the law itself. No
state agency reviews the local appropriations limits.
Population Certification
The population certification program applies only to cities and counties. Revenue and Taxation
Code section 11005.6 mandates Finance to automatically certify any population estimate that
exceeds the current certified population with the State Controller's Office. Finance will certify
the higher estimate to the State Controller by June 1, 2014.
Please Note: Prior year's city population estimates may be revised.
If you have any questions regarding this data, please contact the Demographic Research Unit at
(916) 323 -4086.
MICHAEL COHEN
Director
By:
KEELY M.BOSLER
Chief Deputy Director
Attachment
May 2014
Attachment A
A. Price Factor: Article XIII B specifies that local jurisdictions select their cost of living
factor to compute their appropriation limit by a vote of their governing body. The cost
of living factor provided here is per capita personal income. If the percentage
change in per capita personal income is selected, the percentage change to be used
in setting the fiscal year 2014 -15 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2014 -15 -0.23
B. Following is an example using sample population change and the change in
California per capita personal income as growth factors in computing a 2014 -15
appropriation limit.
2014 -15:
Per Capita Cost of Living Change = -0.23 percent
Population Change = 0.95 percent
Per Capita Cost of Living converted to a ratio:
Population converted to a ratio:
-0.23+100 =0.9977
100
0.95+100 =1.0095
100
Calculation of factor for FY 2014 -15:
0.9977 x 1.0095 = 1.0072
Fiscal Year 2014 -15
Attachment B
Annual Percent Change in Population Minus Exclusions'
January 1, 2013 to January 1, 2014 and Total Population, January 1, 2014
County
Percent Change
- Population Minus Exclusions
Total
Population
City
2013 -2014
1.1.13
1 -1.14
1.1 -2014
Santa Clara
Campbell
4.01
40,373
41,993
41,993
Cupertino
0.62
59,575
59,946
59,946
Gilroy
1.76
51,505
52,413
52,413
Los Altos
0.67
29,769
29,969
29,969
Los Altos Hills
1.16
8,258
8,354
8,354
Los Gatos
1.02
30,225
30,532
30,532
Milpitas
3.31
67,845
70,092
70,092
Monte Sereno
0.97
3,417
3,450
3,450
Morgan Hill
2.87
40,049
41,197
41,197
Mountain View
0.76
76,204
76,781
76,781
Palo Alto
0.82
66,318
66,861
66,861
San Jose
1.72
983,574
1,000,536
1,000,536
Santa Clara
0.86
120,196
121,229
121,229
Saratoga
0.66
30,683
30,887
30,887
Sunnyvale
0.82
145,864
147,055
147,055
Unincorporated
0.26
86,022
86,243
87,263
County Total
1.50
1,839,877
1,867,538
1,868,558
"Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state and
federal correctional institutions and veteran homes.
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