DATE: June 6, 2023
TO: Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
Henry Chen, Financial Services Manager/Treasurer
SUBJECT: RESOLUTION NO. 7499 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2023-24 PURSUANT TO ARTICLE XIII -B OF THE
CALIFORNIA CONSTITUTION
CEQA: Not a Project
Recommendation: Adopt
SUMMARY
Article XIII- B of the State Constitution imposes a limit (“the G ANN 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 L imit by resolution. As calculated, the City’s expenditures subject to the limit are $ 68,791,100 versus a limit of $111,983,542, meaning that the City is under the G ANN Limit by $ 43,192,442. It is recommended that the City Council adopt Resolution No. 7499 establishing the annual adjustment factors and the resultant Limit for the Fiscal Year 2023-24.
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 the costs of complying with Court orders and Federal mandates are not counted as they are restricted for certain purposes. Similarly, if the State specifies that funds transmitted to cities are restricted in their use (e.g., State Gas Tax) , they are excluded in the calculation of the City’s GANN Limit.
Resolution No. 7499 Establishing an Appropriation Limit for Fiscal Year 2023-24
June 6, 2023
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 County Assessor. Thus, the change of California Per Capita Income at 4.44% 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 C ounty of Los Angeles (County) or the City. In the County, the population growth rate was -0.75%; the City’s population growth rate was -0.74% in 2023. As a result, the City has chose n to use the C ity’s growth factor for FY 2023-24’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, 2024. As calculated, the City’s Proceeds of Taxes B efore Exclusions is established at $69,310,800 (Exhibit “C”), and the FY2023-2024 Appropriation Limit is $ 111,983,542 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the A ppropriation Limit by $43,192,442.
ENVIRONMENTAL ANALYSIS
The 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 2023 -24 is established at $1 11,982,542.
The appropriations subjected to the limit in the annual b udget are $6 8,791,100, which are well within the Limit. Therefore, the City may fully expend all funds appropriated in the FY 20 23-24 Budget and has room for additional appropriations during the year as necessary.
RECOMMENDATION
It is recommended that the City Council find this action is exempt from the requirements of the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7 499 establishing an a ppropriation limit for Fiscal Year 2023-24 pursuant to Article X III-B of the California Constitution.
Resolution No. 7499 Establishing an Appropriation Limit for Fiscal Year 2023-24
June 6, 2023
Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2023-24 Exhibit “A-1” - Population/Inflationary Adjustment
Exhibit “B” - Appropriations Subject to Limitation
Exhibit “C” - Calculation of Proceeds
Exhibit “C-1” - Interest Earnings produced by Taxes
Exhibit “D” - Exclusions
Resolution No. 7499
EXHIBIT "A"
AMOUNT
A. LAST YEAR'S LIMIT (2022‐2023) 108,019,236$
B. ADJUSTMENT FACTORS:
CITY OF ARCADIA POPULATION GROWTH 0.9926
PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0444
TOTAL ADJUSTMENT 1.0367
C. ANNUAL ADJUSTMENT 3,964,306
D. FISCAL 2023‐2024 LIMIT 111,983,542$
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2023‐2024
EXHIBIT "A‐1"
AMOUNT
PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 4.44%
POPULATION GROWTH ‐ LOS ANGELES COUNTY ‐0.75%
POPULATION GROWTH ‐ CITY OF ARCADIA ‐0.74%
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
CITY OF ARCADIA
POPULATION/COST OF LIVING ADJUSTMENT
FISCAL YEAR 2023‐2024
EXHIBIT "B"
AMOUNT SOURCE
A. PROCEEDS OF TAXES GRAND TOTAL 69,310,800$ EXHIBIT C B. EXCLUSIONS (MEDICARE TAX) (519,700) EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 68,791,100$
D. FISCAL 2023‐2024 LIMIT 111,983,542 EXHIBIT A
E. OVER/(UNDER) LIMIT (43,192,442)$
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2023‐2024
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
Property Tax 19,524,300$ ‐ $ 19,524,300$
Public Safety Augmentation 702,800 ‐ 702,800 Sales & Use Tax 24,422,900 ‐ 24,422,900
Tra ns ient Occupancy Tax 4,461,700 ‐ 4,461,700 Property Tra ns fer Tax 618,500 ‐ 618,500
Utility Users Tax 8,423,000 ‐ 8,423,000
Business License Tax 1,364,200 50,000 1,414,200 TOTAL TAXES 59,517,400$ 50,000$ 59,567,400$ FROM STATE
Motor Vehicle In Lieu 8,856,000$ ‐$ 8,856,000$
Gasoline Ta x ‐ 1,609,500 1,609,500
Road Maint./Rehabilitation (SB1) ‐ 1,406,400 1,406,400 Homeowner's Exemption 69,800 ‐ 69,800
POST ‐ 10,000 10,000
SB 90 Reimbursements ‐ ‐ ‐
TOTAL FROM STATE 8,925,800$ 3,025,900$ 11,951,700$ OTHER GOVERNMENTS
Community Development (CDBG) ‐$ ‐$ ‐$
Citizens Options for Public Safety ‐ 170,000 170,000 Homeland Security ‐ ‐ ‐
OTS Grant ‐ 97,600 97,600
Other (PROP A&C) Ta xes ‐ 2,957,300 2,957,300 Prop A Park Ma int. & Services ‐ ‐ ‐
Mea s ure R ‐ 1,005,600 1,005,600
Mea s ure M ‐ 1,139,700 1,139,700
Used Oil Grant ‐ 9,000 9,000
Beverage Container Recycling Grant ‐ 14,500 14,500 AQMD (AB2766) ‐ 74,300 74,300
TOTAL OTHER GOVERNMENTS ‐$ 5,468,000$ 5,468,000$ CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2023 ‐2024
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2023 ‐2024
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee ‐$ 1,091,700$ 1,091,700$
Parking Permits ‐ 598,400 598,400
Plan Check Fees ‐ 955,000 955,000
Building Permits ‐ 1,000,000 1,000,000
M echanical, Electrica l & Plumbing ‐ 390,000 390,000 Home Occupation Permits ‐ 9,500 9,500 Miscellaneous Permits ‐ 9,500 9,500 Planning Applications ‐ 361,000 361,000
Fire Plan Check ‐ 180,000 180,000
Engineering Permit Fees ‐ 150,000 150,000 Fire Code Permit Fees ‐ 150,000 150,000
Fire Code Inspections ‐ 70,000 70,000 Off‐site Improvement ‐ 12,000 12,000
Water Landscape Review ‐ 80,000 80,000 Technology Fee ‐ 190,000 190,000
Unoccupied Residences ‐ ‐ ‐
Storm Water Plan Check Fees ‐ 15,000 15,000 SB1473 building Permit ‐ 300 300
PEG ‐ 80,000 80,000
Charges for Current Service ‐ 4,336,500 4,336,500 Recreation Activities ‐ 1,558,300 1,558,300
Library Charges ‐ 82,500 82,500
Rent & Royalty ‐ 1,299,100 1,299,100
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 ‐$ 14,888,800$ 14,888,800$ EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2023 ‐2024
FINES & PENALTIES
Miscellaneous Fines ‐$ 13,700$ 13,700$ Parking Citations ‐ 470,000 470,000
Code Violations ‐ 18,000 18,000
Fire Citations ‐ 500 500
TOTAL FINES & PENALTIES ‐$ 502,200$ 502,200$ OTHER REVENUE
Parimutual Receipts 432,000$ ‐$ 432,000$
Admin. O/H Tra ns it ‐ 134,600 134,600
Admin. O/H Water ‐ 1,452,400 1,452,400
Admin. O/H Sewer ‐ 274,600 274,600
Admin. O/H Lighting District ‐ 117,200 117,200 Admin. O/H Redevelopment ‐ ‐ ‐
Court A ppearances ‐ 4,000 4,000
Waste Management Admin. Fees ‐ 130,000 130,000 TOTAL OTHER REVENUE 432,000$ 2,112,800$ 2,544,800$ Tota l Estimated Revenues
Before Revenue from Use of Money 68,875,200$ 26,047,700$ 94,922,900$ Revenue Ea rned from Use of Money
Ea rned on Non‐Proceeds ‐$ 470,400$ 470,400$ of Ta xes : Funds 104, 107, 112, 114, 118
142, 151, 153, 155, 156, 157, 161, 165
Proceeds of Ta xes : Fund 302 ‐ 267,400 ‐ General Fund 435,600 164,400 600,000 TOTAL REVENUE EARNED
FROM USE OF MONEY 435,600$ 902,200$ 1,070,400$ GRAND TOTAL 69,310,800$ 26,949,900$ 95,993,300$
EXHIBIT "C‐1"
AMOUNT
PROCEEDS OF TAXES (EXCLUDING INTEREST) 68,875,200$
TOTAL REVENUE (EXCLUDING INTEREST) 94,922,900$
PERCENT APPLICABLE TO PROCEEDS OF TAXES 72.60%
TOTAL INTEREST BUDGETED FOR GENERAL FUND 600,000$
INTEREST APPLICABLE TO PROCEEDS OF TAXES 72.60% 435,600$ INTEREST APPLICABLE TO NON‐PROCEEDS OF TAXES 27.40% 164,400$ 470,400
INTEREST DIRECTLY 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
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 2023‐2024
$
EXHIBIT "D"
FEDERAL MANDATED COSTS:
MEDICARE TAX 519,700$
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2023‐2024