DATE: June 3, 2025
TO: Honorable Mayor and City Council
FROM: Henry Chen, Administrative Services Director
SUBJECT: RESOLUTION NO. 7 640 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2025-26 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 GANN Limit”) on tax proceeds that can be appropriated for expenditures in any given fiscal year. Section 7910 requires the City of Arcadia to establish the GANN Limit by resolution. As calculated, the City’s expenditures subject to the limit are $73,558,000 versus a limit of $123,941,248, meaning that the City is under the G ANN Limit by $ 50,383,248. It is recommended that the City Council adopt Resolution No. 7640, establishing the annual adjustment factors and the resultant GANN Limit for Fiscal Year 2025-26.
DISCUSSION
In November 1979, California voters approved Proposition 4, commonly known as the GANN Initiative. This proposition created Article XIII -B of the State Constitution, placing limits on the amount of revenue that can be spent by any local government. Each government was allocated a base year GANN Limit, which is adjusted annually for inflation and population growth. The law also requires an annual review of the GANN Limit calculation.
Certain revenues do not count towards 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 towards the Limit, as they are restricted for certain purposes. Similarly, if the State specifies that funds transmitted to localities are restricted in their use (e.g., State Gas Tax) , they are excluded in the calculation of the GANN Limit.
Resolution No. 7640 Establishing an Appropriation Limit for Fiscal Year 2025-26
June 3, 2025
To measure inflation, each city may choose the higher of two factors : the growth in the California Per Capita Income or the growth in the N on-Residential Assessed Valuation resulting from new construction within the city. At this time, the data used 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 6.44 % has been used as the inflationary adjustment factor in the calculation of Arcadia’s Appropriation Limit.
The second factor for calculating the GANN Limit is the change in population. Cities may choose the greater of population growth between the County of Los Angeles ( “County”) or the city. In 2025, the population growth rate in the County is 0.30%, whereas the City’s population growth rate is 0.13%. As a result, the City has chosen to use the C ounty’s growth factor for FY 2025-26’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 Fiscal Year ending June 30, 2026. As calculated, the City’s Proceeds of Taxes B efore Exclusions is established at $74,130,300 (Exhibit “C”), and t he FY 2025-26 Appropriation Limit is $ 123,941,248 (Exhibit “A”). Exhibit “B” shows that the City of Arcadia is under the A ppropriation Limit by $50,383,248.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), a s it can be seen with certainty that it will have no impact on the environment.
FISCAL IMPACT
The GANN Limit for the City of Arcadia in FY 202 5-26 is established at $1 23,941,248.
The appropriations subjected to the limit in the annual budget are $73,558,000, which are well within the GANN Limit. Therefore, the City may fully expend all funds appropriated in the FY 2025-26 Budget and has the capacity for additional appropriations during the year, as necessary.
RECOMMENDATION
It is recommended that the City Council find this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and a dopt Resolution No. 7 640 establishing an appropriation limit for Fiscal Year 2025-26 pursuant to Article XIII-B of the California Constitution.
Resolution No. 7640 Establishing an Appropriation Limit for Fiscal Year 2025-26
June 3, 2025
Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2025-26 Exhibit “A-1” - Population/Inflationary Adjustment
Exhibit “B” - Appropriations Subject to Limitation
Exhibit “C” - Calculation of Proceeds
Exhibit “C-1” - Interest Earnings produced by Taxes
Exhibit “D” - Exclusions
Resolution No. 7640
EXHIBIT "A"
AMOUNT
A. LAST YEAR'S LIMIT (2024-2025) 116,093,338$
B. ADJUSTMENT FACTORS:
COUNTY OF LOS ANGELES POPULATION GROWTH 1.0030
PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0644
TOTAL ADJUSTMENT 1.0676
C. ANNUAL ADJUSTMENT 7,847,910
D. FISCAL 2025-2026 LIMIT 123,941,248$
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2025-2026
AMOUNT
PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 6.44%
POPULATION GROWTH - LOS ANGELES COUNTY 0.30%
POPULATION GROWTH - CITY OF ARCADIA 0.13%
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
EXHIBIT "A-1"
CITY OF ARCADIA
POPULATION/COST OF LIVING ADJUSTMENT
FISCAL YEAR 2025-2026
EXHIBIT "B"
AMOUNT SOURCE
A. PROCEEDS OF TAXES GRAND TOTAL 74,130,300$ EXHIBIT C B. EXCLUSIONS (MEDICARE TAX) (572,300) EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 73,558,000$
D. FISCAL 2025-2026 LIMIT 123,941,248 EXHIBIT A
E. OVER/(UNDER) LIMIT (50,383,248)$
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2025-2026
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
Property Tax 21,132,300$ - $ 21,132,300$
Public Safety Augmentation 649,700 - 649,700
Sales & Use Tax 23,415,300 - 23,415,300
Transient Occupancy Tax 6,537,000 - 6,537,000
Property Transfer Tax 571,800 - 571,800
Utility Users Tax 9,197,400 - 9,197,400
Business License Tax 1,339,000 50,000 1,389,000 TOTAL TAXES 62,842,500$ 50,000 $ 62,892,500$
FROM STATE
Motor Vehicle In Lieu 9,744,800$ -$ 9,744,800$
Gasoline Tax - 1,588,600 1,588,600
Road Maint./Rehabilitation (SB1) - 1,492,300 1,492,300
Homeowner's Exemption 70,000 - 70,000
POST - 3,600 3,600
SB 90 Reimbursements - 10,000 10,000
TOTAL FROM STATE 9,814,800$ 3,094,500$ 12,909,300$
OTHER GOVERNMENTS
Community Development (CDBG) -$ -$ -$
Citizens Options for Public Safety - 204,200 204,200
Homeland Security - - -
OTS Gra nt - 85,800 85,800
Other (PROP A&C) Ta xes - 2,639,900 2,639,900
Prop A Pa rk Ma int. & Services - - -
Mea s ure R - 897,700 897,700
Mea s ure M - 1,017,400 1,017,400
Us ed Oil Gra nt - 8,000 8,000
Beverage Container Recycling Grant - 14,200 14,200
AQMD (AB2766) - 74,000 74,000
TOTAL OTHER GOVERNMENTS -$ 4,941,200$ 4,941,200$
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2025-2026
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2025-2026
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee -$ 1,172,300$ 1,172,300$
Parking Permits - 600,000 600,000
Plan Check Fees - 1,480,000 1,480,000
Building Permits - 1,625,000 1,625,000
Mechanical, Electrical & Plumbing - 370,000 370,000
Home Occupa tion Permits - 9,500 9,500
Miscellaneous Permits - 10,000 10,000
Planning Applications - 372,000 372,000
Fire Pla n Check - 190,000 190,000
Engineering Permit Fees - 163,000 163,000
Fire Code Permit Fees - 160,000 160,000
Fire Code Ins pections - 90,000 90,000
Off-site Improvement - - -
Water Landscape Review - 65,000 65,000
Technology Fee - 255,000 255,000
Unoccupied Residences - 1,500 1,500
Storm Water Plan Check Fees - - -
SB1473 building Permit - 1,100 1,100
PEG - 70,000 70,000
Charges for Current Service - 5,366,100 5,366,100
Recreation Activities - 1,506,600 1,506,600
Library Charges - 102,000 102,000
Rent & Royalty - 1,490,000 1,490,000
Transportation Impact fees - 420,000 420,000
Solid Waste Assessments - 600,000 600,000
Park/Dwelling Unit Fees - 1,536,000 1,536,000
TOTAL LICENSES & PERMITS -$ 17,655,100$ 17,655,100$
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON
PROCEEDS OF
TAXES
TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2025-2026
FINES & PENALTIES
Miscellaneous Fines -$ 10,000$ 10,000$
Parking Citations - 350,000 350,000
Code Violations - 30,000 30,000
Fire Citations - 500 500
TOTAL FINES & PENALTIES -$ 390,500$ 390,500$
OTHER REVENUE
Parimutual Receipts 285,000$ -$ 285,000$
Admin. O/H Tra ns it - 142,800 142,800
Admin. O/H Water - 1,540,900 1,540,900
Admin. O/H Sewer - 291,300 291,300
Admin. O/H Lighting District - 124,300 124,300
Admin. O/H Redevelopment - 4,400 4,400
Court Appearances - 5,000 5,000
Waste Management Admin. Fees - 150,000 150,000
TOTAL OTHER REVENUE 285,000$ 2,258,700$ 2,543,700$ Total Estimated Revenues
Before Revenue from Use of Money 72,942,300$ 28,390,000 $ ############ Revenue Earned from Use of Money
Earned on Non-Proceeds -$ 631,300$ 631,300$
of Taxes: Funds 104, 107, 112, 114, 118
142, 151, 153, 155, 156, 157, 161, 165
Proceeds of Taxes: Fund 302 - 408,800 -
General Fund 1,188,000 462,000 1,650,000
TOTAL REVENUE EARNED
FROM USE OF MONEY 1,188,000$ 1,502,100$ 2,281,300$ GRAND TOTAL 74,130,300$ 29,892,100 $ ############
EXHIBIT "C-1"
AMOUNT
PROCEEDS OF TAXES (EXCLUDING INTEREST) 72,942,300$
TOTAL REVENUE (EXCLUDING INTEREST) 101,332,300$
PERCENT APPLICABLE TO PROCEEDS OF TAXES 72.00%
TOTAL INTEREST BUDGETED FOR GENERAL FUND 1,650,000$
INTEREST APPLICABLE TO PROCEEDS OF TAXES 72.00% 1,188,000$ INTEREST APPLICABLE TO NON-PROCEEDS OF TAXES 28.00% 462,000$
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, 165 631,300$
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 2025-2026
EXHIBIT "D"
FEDERAL MANDATED COSTS:
MEDICARE TAX 572,300$
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2025-2026