DATE: June 7, 2022
TO: Honorable Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Henry Chen, Financial Services Manager/Treasurer
SUBJECT: RESOLUTION NO. 7450 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2022-2023 PURSUANT TO ARTICLE XIII-B OF THE
CALIFORNIA CONSTITUTION
Recommendation: Adopt
SUMMARY
Article XIII -B of the California Constitution imposes a limit ( the “ GANN Limit”) on tax proceeds that can be appropriated for expenditures in any given fiscal year . Section 7910 requires the City of Arcadia ( “City”) to establish the Limit by resolution. As calculated, the City’s proposed expenditures subject to the limit are $ 61,418,270 versus a limit of $108,019,236, meaning that the City is under the G ANN Limit by $46,600,966.
It is recommended that the City Council adopt R esolution No. 7450 establishing the annual adjustment factors and the resultant Limit for Fiscal Year 2022-23.
DISCUSSION
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the G ANN Initiative. This proposition created Article XIII -B of the State Constitution placing limits on the amount of revenue that can be spent by any city government. Each government was allocated a base year L imit, which is adjusted annually for inflation and population growth . The law also requires an annual review of the Limit calculation.
Certain revenues do not count toward the annual G ANN Limit. For instance, the expenditure of tax proceeds on voter -approved debt and funds restricted for certain purposes – such as State Gas Tax, the costs of complying with Court orders , and Federal mandates – are excluded in the calculation of the City’s GANN Limit.
To measure inflation, each City may choose the greater of the growth in the California Per Capita Income or the growth in the non- residential assessed valuation due to new construction within the City. At the present time, the data necessary to calculate the increase in the non-residential assessed valuation is not available from the Los Angeles
Resolution No. 7450 Establishing an Appropriation Limit for Fiscal Year 2022-2023
June 7, 2022
County Assessor. Thus, the change of California Per Capita Income at 7.55% has been used as the inflationary adjustment factor in the calculation of the Appropriation Limit.
The second factor for calculating the Limit is the change in population. Cities may choose the greater of the population growth within the County of Los Angeles (“County”) or the City. In the County, the population growth rate was -0.71%; the City’s population growth rate was -0.54% in 202 2. As a result, the City has chose n to use the C ity’s growth factor for FY2022-23’s GANN Limit calculation.
The attached E xhibits “A”, “A-1”, “B”, “C”, “C-1”, and “D”, demonstrate the City’s compliance with Article XIII -B of the State Constitution for the F iscal Year ending June 30, 2023. As calculated, the City’s Proceeds of Taxes B efore Exclusions is established at $61,961,670 (Exhibit “C”), and t he FY2022-23 Appropriation Limit is $108,019,236 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the A ppropriation Limit by $46,600,966.
ENVIRONMENTAL ANALYSIS
This proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. Thus, this matter is exempt under CEQA.
FISCAL IMPACT
The GANN Limit for the City of Arcadia in FY 202 2-23 is established at $108,019,236.
The appropriations subjected to the limit in the annual b udget are $61,418,270, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 20 22-23 Budget and has room for additi onal appropriations during the year as necessary.
RECOMMENDATION
It is recommended that the City Council determine that this action does not constitute a project and is therefore, exempt under , the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7 450 establishing an Appropriation Limit of $108,019,236 for Fiscal Year 2022-23 pursuant to Article III -B of the California Constitution.
Resolution No. 7450 Establishing an Appropriation Limit for Fiscal Year 2022-2023
June 7, 2022
Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2022-2023 Exhibit “A-1” - Population/Inflationary Adjustment
Exhibit “B” - Appropriations Subject to Limitation
Exhibit “C” - Calculation of Proceeds
Exhibit “C-1” - Interest Earnings produced by Taxes
Exhibit “D” - Exclusions
Resolution No. 7450
EXHIBIT "A"
AMOUNT
A. LAST YEAR'S LIMIT (2021‐2022) 100,980,870$
B. ADJUSTMENT FACTORS:
CITY OF ARCADIA POPULATION GROWTH 0.9946
PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0755
TOTAL ADJUSTMENT 1.0697
C. ANNUAL ADJUSTMENT 7,038,367
D. FISCAL 2022‐2023 LIMIT 108,019,236$
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2022‐2023
AMOUNT
PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 7.55%
POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.71%
POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.54%
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
EXHIBIT "A‐1"
CITY OF ARCADIA
POPULATION/COST OF LIVING ADJUSTMENT
FISCAL YEAR 2022‐2023
EXHIBIT "B"
AMOUNT SOURCE
A. PROCEEDS OF TAXES GRAND TOTAL 61,961,670$ EXHIBIT C B. EXCLUSIONS (MEDICARE TAX) (543,400) EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 61,418,270$
D. FISCAL 2022‐2023 LIMIT 108,019,236 EXHIBIT A
E. OVER/(UNDER) LIMIT (46,600,966)$
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2022‐2023
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
Property Tax 18,694,800$ ‐ $ 18,694,800$
Public Safety Augmentation 564,400 ‐ 564,400 Sales & Use Tax 20,268,900 ‐ 20,268,900
Tra ns ient Occupancy Tax 3,899,400 ‐ 3,899,400 Property Tra ns fer Tax 638,400 ‐ 638,400
Utility Users Tax 7,538,500 ‐ 7,538,500
Business License Tax 1,180,000 50,000 1,230,000 TOTAL TAXES 52,784,400$ 50,000$ 52,834,400$ FROM STATE
Motor Vehicle In Lieu 8,607,700$ ‐$ 8,607,700$
Gasoline Ta x ‐ 1,667,400 1,667,400
Road Maint./Rehabilitation (SB1) ‐ 1,314,300 1,314,300 Homeowner's Exemption 76,100 ‐ 76,100
POST ‐ 10,000 10,000
SB 90 Reimbursements ‐ ‐ ‐
TOTAL FROM STATE 8,683,800$ 2,991,700$ 11,675,500$ OTHER GOVERNMENTS
Community Development (CDBG) ‐$ ‐$ ‐$
Citizens Options for Public Safety ‐ 170,000 170,000 Homeland Security ‐ ‐ ‐
OTS Grant ‐ 96,500 96,500
Other (PROP A&C) Ta xes ‐ 2,572,800 2,572,800 Prop A Park Ma int. & Services ‐ ‐ ‐
Mea s ure R ‐ 875,000 875,000
Mea s ure M ‐ 991,800 991,800
Used Oil Grant ‐ 15,500 15,500
Beverage Container Recycling Grant ‐ 14,500 14,500 AQMD (AB2766) ‐ 74,500 74,500
TOTAL OTHER GOVERNMENTS ‐$ 4,810,600$ 4,810,600$ CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2022 ‐2023
EXHIBIT C
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2022 ‐2023
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee ‐$ 1,007,300$ 1,007,300$ Parking Permits ‐ 598,400 598,400 Plan Check Fees ‐ 1,050,000 1,050,000 Building Permits ‐ 1,200,000 1,200,000 M echanical, Electrica l & Plumbing ‐ 300,000 300,000 Home Occupation Permits ‐ 8,300 8,300 Miscellaneous Permits ‐ 7,000 7,000 Planning Applications ‐ 348,000 348,000 Fire Plan Check ‐ 200,000 200,000 Engineering Permit Fees ‐ 140,000 140,000 Fire Code Permits ‐ 60,000 60,000 Fire Permit Inspections ‐ 140,000 140,000 Off‐site Improvement ‐ 10,000 10,000 Water Efficient Landscape ‐ 90,000 90,000 Technology Fee ‐ 130,000 130,000 Unoccupied Residences ‐ ‐ ‐ Storm Water Plan Check Fees ‐ 16,000 16,000 SB1473 building Permit ‐ 300 300 PEG ‐ 80,000 80,000 Charges for Current Service ‐ 3,471,400 3,471,400 Recreation Activities ‐ 1,325,100 1,325,100 Library Charges ‐ 84,700 84,700 Rent & Royalty ‐ 1,359,200 1,359,200 Transportation Impact fees ‐ 300,000 300,000 Solid Waste A ssessments ‐ 570,000 570,000 Park/Dwelling Unit Fees ‐ 1,400,000 1,400,000 TOTAL LICENSES & PERMITS ‐$ 13,895,700$ 13,895,700$ EXHIBIT C
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2022 ‐2023
FINES & PENALTIES
Miscellaneous Fines ‐$ 15,000$ 15,000$ Parking Citations ‐ 370,000 370,000 Code Violations ‐ 18,000 18,000 Fire Citations ‐ 500 500 TOTAL FINES & PENALTIES ‐$ 403,500$ 403,500$ OTHER REVENUE
Parimutual Receipts 400,000 $ ‐ $ 400,000$ Admin. O/H Tra ns it ‐ 129,400 129,400 Admin. O/H Water ‐ 1,396,500 1,396,500 Admin. O/H Sewer ‐ 264,000 264,000 Admin. O/H Lighting District ‐ 112,700 112,700 Admin. O/H Redevelopment ‐ ‐ ‐ Court A ppearances ‐ 5,000 5,000 Waste Management Admin. Fees ‐ 130,000 130,000 TOTAL OTHER REVENUE 400,000 $ 2,037,600$ 2,437,600$ Tota l Estimated Revenues
Before Revenue from Use of Money 61,868,200$ 24,189,100$ 86,057,300$ Revenue Ea rned from Use of Money
Ea rned on Non‐Proceeds ‐$ 176,000$ 176,000$ of Ta xes : Funds 104, 107, 112, 114, 118
142, 151, 153, 155, 156, 157, 161, 165
Proceeds of Ta xes : Fund 302 ‐ ‐ ‐ General Fund 93,470 36,530 130,000 TOTAL REVENUE EARNED
FROM USE OF MONEY 93,470 $ 212,530$ 306,000$ GRAND TOTAL 61,961,670 $ 24,401,630$ 86,363,300$
EXHIBIT "C‐1"
AMOUNT
PROCEEDS OF TAXES (EXCLUDING INTEREST) 61,868,200$
TOTAL REVENUE (EXCLUDING INTEREST) 86,057,300$
PERCENT APPLICABLE TO PROCEEDS OF TAXES 71.90%
TOTAL INTEREST BUDGETED FOR GENERAL FUND 130,000$
INTEREST APPLICABLE TO PROCEEDS OF TAXES 71.90% 93,470$ INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 28.10% 36,530$ INTEREST DRIECTLY IDENTIFIED TO THE FUNDS WHICH REVENUES ARE IDENTIFIED AS NON PROCEEDS OF TAXES ‐ FUND 104, 107, 112, 114, 118, 142, 151, 153, 155, 156, 157, 161, 165 176,000$ INTEREST DIRECTLY IDENTIFIED TO FUNDS WHICH REVENUES ARE IDENTIFIED AS PROCEEDS OF TAXES ‐ FUND 302 ‐$
CITY OF ARCADIA
INTEREST EARNINGS PRODUCED BY TAXES
FISCAL YEAR 2022‐2023
EXHIBIT "D"
FEDERAL MANDATED COSTS:
MEDICARE TAX 543,400$
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2022‐2023