HomeMy WebLinkAboutStaff Report 3828
City of Palo Alto (ID # 3828)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 6/3/2013
City of Palo Alto Page 1
Summary Title: Adoption of Proposed Calculation of the Appropriations Limit
for Fiscal Year 2014
Title: Adoption of Resolution Determining the Proposed Calculation of the
Appropriations Limit for Fiscal Year 2014
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that Council adopt the attached resolution determining the Proposition 4
(GANN) Appropriations Limit calculation for Fiscal Year 2014. The City's Fiscal Year 2014
appropriations are estimated to be $43.20 million under the limit, assuming Council approves
the Fiscal Year 2014 Proposed Budget.
Discussion
Article XIIIB of the State Constitution (Proposition 4, approved by voters in 1979) limits the
annual appropriations for State and local governments. The purpose of Proposition 4 is to limit
the spending, by local governments, of tax revenues in excess of non-capital General Fund
government expenditures. Should a local government have excess tax revenues in a given year,
the law requires the jurisdiction to return the revenues to tax payers. Historically, Palo Alto has
not had tax revenues in excess of allowed appropriations.
The Appropriations Limit (Limit) is adjusted annually on the basis of population and per capita
income “change factors.” These factors are received from the State in May, after the City's
proposed budget has been submitted to Council. Attached is the final Appropriations Limit
calculation, based on the “change factors” that have been received from the State. The
Appropriations Limit for Fiscal Year 2014 is $133.48 million. When compared to the
recommended 2014 Budget, the City's Fiscal Year 2014 budgeted appropriations are $43.20
million under the Limit. This is a change from Fiscal Year 2013 when the City was under the
limit by $28.28 million. The change is due mainly to a drop in appropriations subject to the
limit.
City of Palo Alto Page 2
Based on Article XIIIB, the City of Palo Alto can use the larger of two measurements of
population growth, (county or city population growth) in the Limit calculation. For Fiscal Year
2014, the City is using the Santa Clara County population factor, which is greater than the
population factor for the City of Palo Alto. In Fiscal Year 2013, the Santa Clara County
population factor was used in lieu of the City’s since the County’s population factor was higher
than the City’s. The City typically uses the highest factor in order to provide maximum
appropriation flexibility.
As required by State law, documentation used to compute the Limit has been made available to
the public at least fifteen days prior to the Council meeting at which the Limit is being adopted,
and notice was published of the availability of these materials.
Resource Impact
The adoption of the Fiscal Year 2014 Limit has no impact on City resources.
Policy Implications
This recommendation is consistent with existing City policies.
Environmental Review
This is not a project under section 21065 of the California Environmental Quality Act.
Attachments:
ATTACHMENT A: FY 2014 GANN - Proposed (PDF)
ATTACHMENT B: FY 2014 GANN Resolution (DOC)
Combined General Capital Debt Special
Funds Fund Projects Service Revenue
Total Budgeted Appropriations
FY 2014 Proposed Budget ($ millions)164.56 131.57 19.07 4.28 9.64
Less: Debt Service Transactions 4.28
Capital Outlay 19.07 19.07
Non-Proceeds of Taxes 50.94 46.22 4.72
Net Proposed Appropriations Subject to Limit $90.28 $85.35 $0.00 $4.28 $4.93
FY 2014 Appropriations Limit 133.48
Under Limit By 43.20
Computation of Appropriation Limit:
FY 2013 Appropriations Limit:$125,012,860
FY 2014 Santa Clara County
Population Change (estimated)1.57%
2013-2014 Per Capita Income Change (estimated)5.12%
(1.0157) x (1.0512) x $125,012,860 = $133,476,711
Historical Appropriations
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Appropriations Subject to the Limit 72.00 78.94 89.00 96.73 90.28
Appropriations Limit 116.38 115.06 119.00 125.01 133.48
Under Limit By 44.38 36.12 30.00 28.28 43.20
Projected Appropriations
FY 2015 FY 2016 FY 2017 FY 2018 FY 2019
Estimated Appropriations Subject to Limit 94.00 97.05 100.21 103.47 106.83
Estimated Appropriations Limit 137.82 142.30 146.93 151.70 156.64
Under Limit By 43.82 45.25 46.72 48.23 49.81
APPROPRIATIONS LIMITATION COMPLIANCE CALCULATION
FOR FY 2014 PROPOSED BUDGET
($ IN MILLIONS)
The City of Palo Alto remains well within its appropriations limit in FY 2014. Future year limit trends can be made based
on the average change in regional population and income growth. The appropriations subject to limitation includes
proceeds of taxes from the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Improvement
Funds. The following is a summary of estimated limits and estimated appropriations subject to the limit.
1
RESOLUTION NO.XXXX
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO DETERMINING
THE CALCULATION OF THE APPROPRIATIONS LIMIT FOR FISCAL YEAR
2014
WHEREAS, under Article XIIIB of the Constitution of the State
of California, the City of Palo Alto (City) may not appropriate any
proceeds of taxes in excess of its appropriations limit (Limit);
and
WHEREAS, since fiscal year 1991, the City is permitted to
annually adjust its Limit in accordance with inflation and
population adjustment factors; and
WHEREAS, pursuant to Government Code Section 37200, the
calculation of the Limit and the total appropriations subject to
the limit were set forth in the annual budget of the City for
fiscal year 2014, which was adopted by ordinance of the Council on
June 10, 2013; and
WHEREAS, pursuant to Government Code sections 7901 and 7910,
the final calculation of the Limit has been determined, and the
adjustment factors on which the calculation is based are a 5.12%
percent change in California per capita income and a 1.57% percent
change in the population growth for Santa Clara County; and
WHEREAS, the documentation used in the determination of the
Limit has been made available to the general public for fifteen
(15) days prior to the date of adoption of this resolution; and
WHEREAS, according to the final calculation, the City’s
appropriations subject to limitation are approximately $90.28
million.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION 1. The Council of the City of Palo Alto hereby
finds that, for fiscal year 2014, the final calculation of the
Appropriations Limit of the City of Palo Alto has been determined
ATTACHMENT B
2
in accordance with the adjustment factors referred to above, the
documentation used in the determination of the calculation has been
made available to the general public for the period of fifteen days
as required by law, and the City’s appropriations subject to
limitation are under the Limit by approximately $43.20 million.
SECTION 2. The Council hereby adopts the final calculation
of the Appropriations Limit of the City for fiscal year 2014, a
copy of which is attached hereto as Attachment A.
SECTION 3. The Council finds that the adoption of this
resolution does not constitute a project under the California
Environmental Quality Act, and, therefore, no environmental
assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: _______________________________
City Manager
___________________________
Senior Assistant City Attorney
______________________________
Director, Administrative
Services