GANNPREPARED BY: STEPHEN D. CONWAY
Director of Finance
Reviewed by: Assistant Town Manager Town Attorney Finance
S:\COUNCIL REPORTS\2016\06-07-16\04 Gann\Staff Report - FY 2016-17 Gann Limit FINAL.doc
MEETING DATE: 06/07/16
ITEM NO: 4
COUNCIL AGENDA REPORT
DATE: MAY 23, 2016
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2016/17 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
RECOMMENDATION:
Adopt the attached resolution establishing the Gann Appropriations Limit for FY 2016/17
(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 fiscal year (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
2016/17. 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 2016/17 was calculated using a factor comprised of the change in
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION ESTABLISHING THE FY 2016/17 GANN
APPROPRIATIONS LIMIT FOR THE TOWN OF LOS GATOS
MAY 23, 2016
County or Town population (whichever is higher) and the change in California per capita
personal income. Calculation of the FY 2016/17 Gann Appropriations Limit is as follows:
% Increase in Change in 2015/16 2016/17
County Per Capita Appropriation Appropriation Appropriation
Population Income Factor Limit Limit
1.0126 X 1.0537 =1.06697662 X 35,384,256$ =37,754,174$
FY 2016/17 Calculation
The appropriations limit is the total amount of tax money that can be appropriated by the Town
in FY 2016/17. The proposed FY 2016/17 budget anticipates $25,294,026 in taxes, which is
$12,460,148 less than the appropriation limit of $37,754,174.
CONCLUSION:
It is recommended that the Council adopt the attached resolution establishing the FY 2016/17
Gann Appropriations Limit of approximately $37,754,174.
ENVIRONMENTAL ASSESSMENT:
The adoption of the proposed resolution is not a project defined under CEQA, and no further
action is required.
Attachment:
1. Resolution establishing the Gann Appropriations Limit for FY 2016/17
RESOLUTION 2016-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ESTABLISHING THE FY 2016/17 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 2016/17 is $37,754,174 as reflected in Exhibit A.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 7th day of June 2016 by the following vote:
COUNCIL MEMBERS: AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA ATTACHMENT 1
For Beginning County Town Per Ending %
YE Population Population Capita Limit
Limit Factor Factor Income Limit Increase
2008 24,919,990 1.0152 1.0100 1.0442 26,416,980 6.01%
2009 26,416,980 1.0172 1.0318 1.0429 28,426,367 7.61%
2010 28,426,367 1.0156 1.0108 1.0062 29,048,811 2.19%
2011 29,048,811 1.0126 1.0101 0.9746 28,667,689 -1.31%
2012 28,667,689 1.0089 1.0096 1.0251 29,669,366 3.49%
2013 29,669,366 1.0124 1.0081 1.0377 31,169,671 5.06%
2014 31,169,671 1.0157 1.0147 1.0512 33,279,977 6.77%
2015 33,279,977 1.0150 1.0102 0.9977 33,701,485 1.27%
2016 33,701,485 1.0113 1.0020 1.0382 35,384,256 4.99%
2017 35,384,256 1.0126 1.0070 1.0537 37,754,174 6.70%
% Increase in Change in 2015/16 2016/17
County Per Capita Appropriation Appropriation Appropriation
Population Income Factor Limit Limit
1.0126 X 1.0537 =1.06697662 X 35,384,256$ =37,754,174$
2016/17 2016/17 Percentage
Tax Appropriation of
Revenues Limit Limit
25,294,026 /37,754,174$ =67%
FY 2016/17 Calculation
Percentage of Appropriation
APPROPRIATION LIMIT FACTORS
Appropriation Appropriation
June 30
EXHIBIT A