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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />June 27, 2016 <br /> <br />SUBJECT <br />Annual Appropriations Limit for Fiscal Year 2016-17 <br /> <br />RECOMMENDATION <br />Establish, by resolution, the appropriations limit for fiscal year 2016-17. <br /> <br />BACKGROUND <br />In 1979 the voters of the State of California passed Proposition 4, the Gann spending <br />limit initiative (most recently amended in 1990 by Proposition 111). The initiative <br />establishes and defines annual appropriation limits for state and local government <br />entities and requires that the City adopt an appropriations limit annually. Moreover, the <br />initiative provides for annual adjustments for changes in population (for the City or <br />County, whichever is greater) and either the statewide percentage change in per capita <br />personal income or percentage change in assessed valuation attributable to growth in <br />non-residential new construction. Growth factors are supplied by the Department of <br />Finance. The City is also required to make available to the public documentation used <br />in the determination of the appropriations 15 days prior to Council consideration. <br /> <br />ANALYSIS <br />The recommended appropriations limit for FY 2016-17 is $648,487,191 while the limit <br />for FY 2015-16 was $602,484,739. The proposed appropriations connected to the <br />estimated proceeds of taxes for FY 2016-17 are only $97,696,342, well below the <br />$648,487,191 legal limit. The increase from FY 2015-16 is primarily due to an increase <br />of 5.37% in per capita personal income, one of the factors used in calculating the <br />change in the appropriation limit. <br /> <br />The resolution displays the calculations utilized to arrive at this amount. This agenda <br />item and resolution are being released early to provide sufficient time for public review. <br />The documentation used in calculating the appropriations limit are available for review <br />as attachment 2 to the staff report. <br /> <br />ALTERNATIVES <br />There are no practical alternatives as Article XIIIB of the State Constitution requires that <br />the state and all local entities adopt an appropriations limit annually. <br /> <br /> <br />6.3.A. - Page 1