Addendum1pW N OF
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DATE:
TO:
FROM:
SUBJECT
REMARKS:
MEETING DATE: 06/16/15
ITEM NO: 4
ADDENDUM
COUNCIL AGENDA REPORT
JUNE 15, 2015
MAYOR AND TOWN COUNCIL
LES WHITE, INTERIM TOWN MANAG
ADOPT RESOLUTION ESTABLISHING THE FY 2015/16 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
After the Staff Report was distributed on June 11, 2015, Staff received the following inquiry
from Council which is addressed below:
1. Why is there even a need for the State to mandate spending limits? I realize we are
spending below our limit but if we hypothetically wanted to use our reserves this
year and we have the revenue, why wouldn't we allowed to go beyond the GANN
limit?
Answer: The Gann limit requirement was introduced into law as Proposition 4 in 1980.
The purpose of the limit is to restrict the use of taxes collected annually by means of
growth limits which are a factor of population factor and increase in the Consumer Price
Index (CPI). Excess taxes collected above the growth limits are required to be returned
to the taxpayers. The taxes collected for the Town are well below the growth limit which
has grown since 1978. Unless taxes collected dramatically increase in future years, staff
does not anticipate that the Town would ever be in a position where excess taxes would
be collected. In spite of the large gap between the growth limit and taxes collected, State
law continues to require that the Town report and approve the new growth limits and
taxes collected on an annual basis.
The Gann limit does not impede or affect the Town's ability to use reserves or any other
non -tax revenue.
i
PREPARED BY: 1/
Director of Finance / Administrative Services
Reviewed by: U 1 Assistant Town Manager
Attorney
NAdGRWdminWorkFiles12015 Council ReportsUme 16TY 2015 -16 Gann Limit. Addendum.doc