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Home My WebLink About2009/06/16 Item 3 CITY COUNCIL AGENDA STATEMENT .$} (If::.. ClIT OF ...~ (HULA VISTA JUNE 16,2009, Item 2:> ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING THE APPROPRIATIONS LIMIT FOR THE CITY OF CHULA VISTA FOR FISCAL YEAR 2009- 2010 SUBMITTED BY: DIRECTOR OF rSURER'I/k.. CITY MANAGE ASSISTANT CITY NAGER >---J REVIEWED BY: 4/5THS VOTE: YES D NO 0 SUMMARY 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 The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that establishing the appropriations limit is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change to the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject 'to CEQA. RECOMMENDATION Council adopts the resolution. BOARDS/COMMISSION RECOMMENDATION Not Applicable. 3-1 JUNE 16, 2009, Item~ Page 2 of 4 DISCUSSION Article XlIIB 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 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 2009-2010 calculation, the population increased 1.2% and California per capita personal income increased by 0.62%. New non- residential construction decreased by -3.5% consequently California per capita personal income was used in the formula to compute the limit since this increase was higher than the decrease in new non-residential construction. The fiscal year 2009-10 Appropriation Limit has been calculated as follows: Fiscal Year 2008-09 Appropriation Limit $607,303,566 Increased by an inflation factor composed of the increases in population and CA per capita personal income X 1.0183 Fiscal Year 2009-10 Appropriations Limit $618.401.675 The "Proceeds of Taxes" as included in the fiscal year 2009-10 Proposed Budget that are subject to the appropriations limit are estimated to be $84,016,291 (see attachment). Therefore the City has what is referred to as an appropriation "gap" of$534,385,384 ($618,401,675 - $84,016,291). Simply stated, this means that the City could collect and spend up to $534,385,384 more in taxes during Fiscal Year 2009-2010 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)(I) is not applicable to this decision. 3-2 JUNE 16,2009, lteml Page 3 of 4 CURRENT YEAR FISCAL IMP ACT This action will enable the City to appropriate and spend tax revenues estimated at $84,016,291 included in the proposed budget for fiscal year 2009-2010. ON-GOING FISCAL IMPACT None. ATTACHMENTS Attachment A - Appropriations Gap Calculation Prepared by: Phillip Davis, Assistant Director of Finance, Finance Department 3-3 JUNE 16,2009, Iteml Page 4 of 4 ATTACHMENT A APPROPRIATION (GANN) LIMIT GAP CALCULATION FOR FISCAL YEAR 2009-010 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 2009-10 Proposed Budget 27,199,440 25,545,500 2,552,514 8,169,144 841,402 1,150,000 18,286,803 271,488 84,016,291 618,401,675 GAP (Under Limit) (534,385,384) PI oreeds ci Taxes Cooplred to Legal Spending Unit ",$70) c 0 ~:;ro:J :a; :;ro:J . $<100 $n:J $:ill $11XJ ro FY C503 e _______ e e . FY= FY07-Q3 FYreal FYIIl-10 1_ R1:x:e3::EdTaxe; -PwtPiOOO1 Unit I 3-4 RESOLUTION NO. 2009- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING THE APPROPRIATIONS LIMIT FOR THE CITY OF CHULA VISTA FOR FISCAL YEAR 2009- 2010 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 iinplementing legislation specifies that annual increases in appropriations financed from "Proceeds of Taxes" are limited to a base year (1978-1979) 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, by definition, "Proceeds of Taxes" includes such revenues as property taxes, sales and use taxes, utility users taxes,. transient occupancy taxes, and state subventions; and WHEREAS, 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; and WHEREAS, this calculation has always been perfunctory for the City ofChula Vista, since the proceeds of taxes for the City are far less than the statutory appropriation limit; 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 2009/2010 calculation, the population increased 1.2 percent and California per capita personal income increased by 0.62 percent; and WHEREAS, new non-residential construction decreased by -3.5 percent consequently California per capita personal income was used in the formula to compute the limit since this increase was higher than the decrease in new non-residential construction; and WHEREAS, the Fiscal Year 2009/2010 Appropriation Limit has been calculated to be $618,401,675; and WHEREAS, the "Proceeds of Taxes" as included in the Fiscal Year 2009/2010 Proposed Budget that are subject to the appropriations limit are estimated to be $84,016,291; and WHEREAS, the City has what is referred to as an appropriation "gap" of $534,385,384 ($618,401,675 - $84,016,291); and 3-5 Resolution No. 2008- Page 2 WHEREAS, this means that the City could collect and spend up to $534,385,384 more in taxes during Fiscal Year 2009/2010 without exceeding the Constitutional limit. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City ofChula Vista does hereby establish an appropriations limit of $618,401,675 for Fiscal Year 2009/2010. Presented by Approved as to form by ~~.._ /1 ,// ,'" ~~!. (I, ~I' \ -t 't J, ! . I ,I i ~ ; .j, '(1" I ~'II . "'\)J(" Bart Mie~fel .'J ,',' ' City ~mey Maria Kachadoorian Director of Finance ];l.AttomeyiRESOLUTIONSIFINANCE\AppropriWon Limit for FY 2009-2010_0520 09.do{3 - 6