AgdaPkt 2018-06-11 Closed and Joint SA PFA

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6.3.A. - Page 1 REPORT To the Honorable Mayor and City Council From the City Manager June 11, 2018 SUBJECT Annual Appropriations Limit for Fiscal Year 2018-19 RECOMMENDATION Establish, by resolution, the Appropriations Limit for Fiscal Year 2018-19 BACKGROUND In 1979, the voters of the State of California passed Proposition 4, the Gann spending limit initiative (most recently amended in 2016 by Proposition 56). 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. Additionally, the State code states that fifteen days prior to the meeting in which the limit is adopted, documentation used in the determination of the appropriations limit shall be made available to the public. This staff report was posted on the City's website on the agenda section on May 25, 2018, www. redwood citv.orq/city-council-meetings-aqendas The calculation is also available in the FY 2018-19 recommended budget document, available at www.redwoodcitv.orq/budqet after June 7, 2018. ANALYSIS The recommended appropriations limit for FY 2018-19 is $707,019,533 while the limit for FY 2017-18 was $676,181,900. The proposed appropriations connected to the estimated proceeds of taxes for FY 2018-19 are $106,522,402, well below the $707,019,533 legal limit. The increase from FY 2017-18 is primarily due to a percent change of 4.03% in assessed valuation attributable to growth in non-residential new construction, one of the factors used in calculating the change in the appropriation limit. The resolution displays the calculations utilized to arrive at this amount.