Finance Department. DATE: August 26, City Council. Director of Finance GANN APPROPRIATION LIMIT RECOMMENDATION:

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1 M E M O R A N D U M Finance Department DATE: TO: FROM: SUBJECT: City Council Dave Warren Director of Finance RECOMMENDATION: GANN APPROPRIATION LIMIT Adopt a Resolution establishing the Gann Appropriation Limit for Fiscal Year 2008/2009 and determining compliance with Government Code Section 7910., Bold, Bold, Bold, Bold BACKGROUND: In November of 1979, the voters of California passed Proposition IV which specified that government appropriations may increase annually by a factor comprised of change in population combined with either the Consumer Price Index (CPI) or the change in the per capita personal income. This measure was intended to provide citizen control of government spending and taxation. The adoption of the Gann Appropriation Limit is an annual requirement. The City of Placerville s Gann Limit is currently calculated to be $17,005,497. The General Fund tax proceeds subject to the Gann Limit are estimated to be $5,558,966. Like past budget years, the City of Placerville is well within the appropriations limit for Fiscal Year 2008/2009. ANAYSIS: The Gann limit calculation begins with the total forecasted General Fund revenues for Fiscal Year 2007/2008 (please see Exhibit A). Of the total forecasted revenues, revenue proceeds and nonproceeds are summarized in separate columns. Revenue proceeds are those revenue sources that are subject to the Gann Limit including most tax measures and intergovernmental revenue. Nonproceed revenues include most local fees, fines, and permits and are not subject to the Gann Limit. Total General Fund revenues for Fiscal Year 2007/2008 are forecasted to be $7,831,079. Of the $7,831,079 amount, $5,558,966 is calculated to be proceed revenues or revenues subject to the Gann Limit and $2,272,113 is calculated to be non-proceed revenue not subject to the Gann Limit. Interest income has been allocated based on the weighted average of each category. AGENDA 1 Gann Limit FY 08-09

2 The Council adopted Gann Limit for Fiscal Year 2007/2008 was $16,173,349. Each year, the City is required to adjust Placerville s Gann Limit by both the prior year per capita personal income increment and the prior year change in population (please see Note 4). This information is received from the State Department of Finance (please see the attached letter). The Fiscal Year 2008/2009 Gann Limit was adjusted by a per capita personal increment factor of and a population change factor of The Fiscal Year 2008/2009 Gann Limit is calculated to be $17,005,497. The forecasted General Fund proceed revenues subject to the Gann Limit is $5,558,966 leaving $2,272,113 ($7,831,079 - $5,558,966) of unused appropriation limit. As you can see, Placerville is well within the Gann Limit. This calculation was made available for public viewing at least fifteen days prior tonight s meeting. Staff respectfully requests the Council s approval of the Fiscal Year 2008/2009 Gann Limit calculation. Dave Warren Director of Finance Reviewed and Approved: John Driscoll City Manager/City Attorney AGENDA 2 Gann Limit FY 08-09

3 Exhibit A Calculation of Appropriations Subject to Proposition IV Limit For Fiscal Year Ended June 30, 2009 Forecasted Revenues Proceeds Non-Proceeds Allocated General Fund Taxes Property Tax $ 268,213 $ 268,213 $ - $ - Franchise Tax 248, , Sales Tax 3,789,735 3,789, Sales Tax-public safety Transient occupancy tax 179, , Business tax 166, , Real property transfer 46,120 46, Other taxes Total Taxes 4,698,104 4,698, Licenses and Permits Construction Permits 146, ,161 - Mobile home permits Other permits Total licenses and permits 146, ,161 - Intergovernmental Revenues Motor vehicle in lieu tax 824, , Off Highway vehicle license Other State reimbursements POST Reimbursements 2,366-2,366 Street Sweeping-Cal Trans Total intergovernmental revenues 827, ,746 2,366 - Charges for Services Plan check fees 77,741-77,741 - Subdivision fees Planning and zoning fees 47,333-47,333 - Engineering fees 145, ,930 - Environmental assessment fees Administrative Fees 1,118-1,118 - Police contract services 45,738-45,738 - Fire services Recreation fees 619, ,458 - Total charges for services 937, ,318 - Subtotal forwarded 6,608,695 5,522,850 1,085,845 - AGENDA 3 Gann Limit FY 08-09

4 Exhibit A (Continued) Calculation of Appropriations Subject to Proposition IV Limit For Fiscal Year Ended June 30, 2009 Forecasted General Fund, Continued Revenues Proceeds Non-Proceeds Allocated Subtotal forwarded $ 6,608,695 $ 5,522,850 $ 1,085,845 $ - Fines and forfeitures Vehicle code fines 343, ,649 - Abandoned vehicle abatement 5,647-5,647 - Parking citations 33,130-33,130 - Other court fines Restitution-booking fees DUI cost recovery (8,851) - (8,851) - Total fines and forfeitures 373, ,575 - Use of Money and Property Interest 50, ,875 Concession fees Pool/Scout/Town Hall rentals 29,861-29,861 - Sundry revenues 59,892-59,892 - Total use of money and property 140,628-89,753 50,875 Other Financing Sources Overhead allocation 708, ,181 - Total other financing sources 708, ,181 - Subtotal General Fund 7,831,079 5,522,850 2,257,354 50,875 Interest allocation (Note 2) 36,116 14,759 - Total General Fund $ 5,558,966 $ 2,272,113 $ 50,875 AGENDA 4 Gann Limit FY 08-09

5 Exhibit B Calculation of Appropriations Subject to Proposition IV Limit For Fiscal Year Ended June 30, 2009 Limit at June 30, 2008 $ 16,173, /2009 per capita personal income increment (Note 4) 16,867, to 2008 population change Appropriations Limit FY 08/09 $ 17,005,497 Appropriation Limit FY 08/09 $ 17,005,497 Total FY 05/06 General Fund revenues subject to 5,558,966 Appropriations Limit (Schedule A) Unused appropriations limit $ 11,446,531 AGENDA 5 Gann Limit FY 08-09

6 Notes to Proposition IV Limit Calculation For the Fiscal Year Ended June 30, 2009 Note 1: Summary of Significant Policies A. Background In November of 1979, the voters of California passed Proposition IV, which added Article XIIIB to the State Constitution. This article specifies that appropriations made by governmental entities may increase annually by a factor comprised of the change in population, combined with either the change in U.S. Consumer Price Index or California per capita personal income. B. Accounting Basis The City of Placerville prepares the annual budget using an accrual Method of accounting. This method is in conformance with generally accepted accounting principles, and accordingly, the calculation included in this report has been prepared on the budgetary basis used by the City. C. Proceeds / Non-proceeds of Tax The revenue for each governmental type fund has been allocated between proceeds and non-proceeds of tax based on guidelines established by the Office of the State Controller. Please refer to Exhibit A for the City of Placerville s revenue allocation. Note 2: Interest Allocation Interest earned in the general fund is required to be allocated between Proceeds and non-proceeds of taxes. The following calculation was Performed to make this allocation: Total General Fund (Excluding Non- Interest) Proceeds Proceeds Total Revenue Amount $7,780,204 $5,522,850 $2,257,354 Percent % 70.99% 29.01% Interest Allocated $ 50,875 $ 36,116 $ 14,759 AGENDA 6 Gann Limit FY 08-09

7 Note 3: Enterprise Fund Actives Each enterprise fund activity must be analyzed to determine if excess revenues exist which may be construed to be proceeds of tax. This analysis was performed for both the Water and Sewer Enterprise Funds. It was determined that the costs of providing these services equal the revenues generated. Accordingly, no excess revenues exist as of June 30, Note 4: Population and Price Indexes The State of California Department of Finance provides to each agency subject to the provisions of Article XIIIB, the population information for the applicable city of county, as well as statewide consumer s price index and per capita income information. These factors are used in the City of Placerville s Appropriations Limit calculation as illustrated on Exhibit B. AGENDA 7 Gann Limit FY 08-09