AgdaPkt 2012-06-25 - Laserfiche WebLink

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6.3.A. - Page 1 RE PO RT To the Honorable Mayor and City Council From the Cit Mana er June 25, 2012 SUBJECT Annual Appropriations Limit for Fiscal Year 2012-13 RECOMMENDATION By resolution, establish the appropriations limit for Fiscal Year 2012-13. BACKGROUND In 1979 the voters of the State of California passed Proposition 4 (amended in 1980 by Proposition 111), the Gann spending limit initiative. 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 2012-13 is $515,216,485 while the limit for FY 2011-12 was $374,820,769. The estimated proceeds of taxes for FY 2012-13 are only $69,000,000, well below the $515,216,485 legal limit. The substantial increase from FY 2011-12 is primarily due to the increase (35.8%) in the amount of the increase in assessed valuation of real property that is attributable to non-residential new construction, one of the factors used in calculating the change in the appropriation limit. The attachment 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. ENVIRONMENTAL IMPACT Not a project under the California Environmental Quality Act.