HomeMy WebLinkAbout2007/06/05 Item 9
CITY COUNCIL
AGENDA STATEMENT
ITEM TITLE:
JUNE 5, 2007, Item
It;
RESOLUTION ESTABLlSIDNG THE APPROPRIATIONS
LIMIT FOR THE CITY OF CHULA VISTA FOR FISCAL
YEAR 2007-08
SUBMITTED BY:
REVIEWED BY:
DIRECTOR OF FIN~.cErrREASURER ~
CITY MANAGER rJ I
4/5THS VOTE: YES D NO ~
BACKGROUND
Article XIIIB of the California Constitution approved by the voters in 1979 and commonly
referred to as the Gann Initiative, requires each local government to establish an Appropriations
Limit by resolution each year at a regularly scheduled meeting or noticed special meeting. The
purpose of the limit is to restrict spending of certain types of revenues to a level predicated on a
base year amount increased annually by an inflation factor.
ENVIRONMENTAL REVIEW
Not Applicable
RECOMMENDATION
That the City Council adopt a resolution establishing an appropriations limit of $511 ,957,324 for
the 2007 -08 fiscal year.
BOARDS/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
Article XIIIB of the California Constitution, approved by the voters in 1979, imposed the
concept of spending limits on local governments. This Constitutional provision and related
implementing legislation specifies that annual increases in appropriations financed from
"Proceeds of Taxes" are limited to a base year (1978-79) amount increased annually by an
inflation factor comprised of the change in population of the City combined with the greater of
the change in new non-residential construction or the change in the California per capita personal
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JUNE 5, 2007, Item~.
Page 2 of3
income. By definition, "Proceeds of Taxes" includes such revenues as property taxes, sales and
use taxes, utility users taxes, transient occupancy taxes, and state subventions. Revenues from
other sources like fees/charges and federal grants are considered "Non-Proceeds of Taxes" and
are not subject to the annual spending limit. This calculation has always been perfunctory for the
City of Chula Vista, since the proceeds of taxes for the City are far less than the statutory
appropriation limit.
The State Department of Finance and the San Diego County Assessor's Office are charged with
providing the data necessary for local jurisdictions to establish their appropriation limit.
According to these sources, for purposes of the fiscal year 2007-08 calculation, the population
increased 1.87% and California per capita personal income increased by 4.42%. New non-
residential construction increased 4.91 % and was used in the formula to compute the limit since
this increase was higher than the increase in California per capita personal income.
The fiscal year 2007-08 Appropriation Limit has been calculated as follows:
FY 2006-07 Appropriation Limit (as restated)
$479,053,749
Increased by an inflation factor composed
of the increases in population and new
non-residential construction
X 1.0687
Fiscal Year 2007-08 Appropriations Limit
$511.957.324
The "Proceeds of Taxes" as included in the fiscal year 2007-08 Proposed Budget that are subject
to the appropriations limit are estimated to be $97,543,636 (see attachment). Therefore the City
has what is referred to as an appropriation "gap" of $414,413,688 ($511,957,324 - $97,543,636).
Simply stated, this means that the City could collect and spend up to $414,413,688 more in taxes
during fiscal year 2007-08 without exceeding the Constitutional limit.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site
specific and consequently the 500 foot rule found in California Code of Regulations section
1 8704.2(a)(1) is not applicable to this decision.
FISCAL IMPACT
This action will enable the City to appropriate and spend tax revenues estimated at $97,543,636
included in the proposed budget for fiscal year 2007-08.
ATTACHMENTS
Attachment A Appropriations Gap Calaculation
Prepared by: Phillip Davis, Assistant Director of Finance, Finance Department
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'"
JUNE 5, 2007, Item~
Page 3 of3
ATTACHMENT A
APPROPRIATION (GANN) LIMIT GAP CALCULATION
FOR FISCAL YEAR 2007-08
Proceeds of Taxes
Property Taxes.
Sales and Use Taxes
Transient Ocupancy Taxes
Utility Taxes
Other Local Taxes
Real Property Transfer Tax
Business License
State Motor Vehicle Licenses
State Homeowners Property Taxes
Total Proceeds of Taxes
Appropriation Limit
FY 2007-08
Proposed Budget
30,250,317
35,062,406
2,672,344
6,682,703
2,000,000
1,222,450
19,373,416
280,000
97,543,636
511,957,324
GAP (Under Limit)
(414,413,688)
Prooeec:Is cl Taxes Ca I pa. ed to Leg;II Spencing Unit
..$6))
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$<100 .
$n)
$2ll
$1ClJ
ro
FY IJ3.04
.
FY04<:6
FYC6{B
FY CJ3.07
FY07.{ll
1_ A"<x:aDsdTa>el -+- ~ Unit 1
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RESOLUTION NO. 2007-
RESOLUTION ESTABLISHING THE APPROPRIATIONS
LIMIT FOR THE CITY OF CHULA VISTA FOR FISCAL
YEAR 2007-08
WHEREAS, Article XIIIB of the California Constitution, approved by the voters in
1979, imposed the concept of spending limits on local governments; and
WHEREAS, this Constitutional provision and related implementing legislation
specifies that annual increases in appropriations financed from "Proceeds of Taxes" are limited
to a base year (1978-79) amount increased annually by an inflation factor comprised of the
change in population of the City combined with the greater of the change in new non-
residential construction or the change in the California per capita personal income; and
WHEREAS, the State Department of Finance and the San Diego County Assessor's
Office are charged with providing the data necessary for local jurisdictions to establish their
appropriation limit; and
WHEREAS, according to these sources, for purposes of the fiscal year 2007-08
calculation, the population increased 1.87% and California per capita personal income
increased by 4.42%; and
WHEREAS, new non-residential construction increased 4.91 % and was used in the
formula to compute the limit since this increase was higher than the increase in California per
capita personal income; and
WHEREAS, the fiscal year 2007-08 Appropriation Limit has been calculated as
follows:
FY 2006-07 Appropriation Limit (as restated)
$479,053,749
Increased by an inflation factor composed
of the increases in population and new
non-residential construction
X 1.0687
Fiscal Year 2007-08 Appropriations Limit
$511.957.324
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NOW, THEREFORE BE IT RESOLVED that the Council of the City ofChula Vista
hereby establishes the appropriations limit for the City ofChula Vista Fiscal Year 2007-08.
Presented by:
Approved as to form by:
Maria Kachadoorian
Director of Human Resources
'--t-L _ ()~. ~ :b-
Ann Moore
City Attorney
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