AgdaPkt 2015-06-08 Joint SA and PFA

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REPORT To the Honorable Mayor and City Council From the City Manager June 8, 2015 SUBJECT Annual Appropriations Limit for Fiscal Year 2015-16 RECOMMENDATION Adopt a resolution establishing the appropriations limit for fiscal year 2015-16. BACKGROUND In 1979 the voters of the State of California passed Proposition 4, the Gann spending limit initiative (most recently amended in 1990 by Proposition 111). The initiative establishes and defines annual appropriation limits for state and local government entities and requires that the City adopt an appropriations limit annually. Moreover, the initiative provides for annual adjustments for changes in population (for the City or County, whichever is greater) and either the statewide percentage change in per capita personal income or percentage change in assessed valuation attributable to growth in non-residential new construction. ANALYSIS The recommended appropriations limit for FY 2015-16 is $602,484,739 while the limit for FY 204-15 was $573,095,639. The proposed appropriations connected to the estimated proceeds of taxes for FY 2015-16 are only $91,095,776, well below the $602,484,739 legal limit. The increase from FY 2014-15 is primarily due to an increase of 3.82% in per capita personal income, one of the factors used in calculating the change in the appropriation limit. The resolution displays the calculations utilized to arrive at this amount. ALTERNATIVES There are no practical alternatives as Article XIIIB of the State Constitution requires that the state and all local entities adopt an appropriations limit annually. FISCAL IMPACT There is no fiscal impact associated with adopting the recommended appropriations limit as the appropriation of the proceeds of taxes is well under the recommended limit. 7.2.C. - Page 1