STAFF REPORT
ADMINISTRATIVE SERVICES DEPARTMENT
DATE: June 2, 2026
TO: Honorable Mayor and City Council
FROM: Henry Chen, Administrative Services Director
SUBJECT: RESOLUTION NO. 7695 ESTABLISHING AN APPROPRIATION LIMIT FOR FISCAL YEAR 2026-27 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 (known as “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 GANN Limit are $7 5,892,700 versus a calculated GANN L imit of $131,848,699, meaning that the City is under the GANN Limit by $5 5,955,999. It is recommended that the City Council adopt Resolution No. 76 95 establishing the annual adjustment factors and the resultant GANN Limit for the Fiscal Year 2026-27.
DISCUSSION
In November 1979, the voters of the State of California 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 city 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 GANN Limit. For instance, the expenditure of tax proceeds on voter-approved debt, and the costs of complying with Establishing Fiscal Year 2026-27 Appropriation Limit
June 2, 2026
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.
To measure inflation, each City may choose the greater of : (1) the growth in the California Per Capita Income, or (2) the growth in the non -residential assessed valuation due to new construction within the City. Currently, 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 4.95% has been used as the inflationary adjustment factor in the calculation of the Appropriation Limit.
The second factor for calculating the GANN Limit is the change in population. Cities may use whichever is greater: the population growth of Los Angeles County or that of the City. In 2026, the population growth rate was - 0.64% in the LA County, while the City’s population growth rate was 1.36%. As a result, the City’s growth factor will be used for the FY 2026-27 GANN Limit calculation.
Exhibit “B” provides a summary demonstration of the City’s compliance with Article XIII-B of the California State Constitution for the fiscal year ending June 30, 2027.
Starting with the figures in Exhibit “C”, the City’s Proceeds of Taxes total $76,508,700.
This amount is reduced by the Medicare exclusion of $616,000 , identified in Exhibit “D,” resulting in appropriations subject to the limit of $75,892,700. The City’s FY 2026– 27 Appropriations Limit, calculated in Exhibit “A,” is $131,848,699. Accordingly, Exhibit “B” shows that the City of Arcadia is under its Appropriations Limit by $55,955,999.
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.
Establishing Fiscal Year 2026-27 Appropriation Limit
June 2, 2026
FISCAL IMPACT
The GANN Limit for the City of Arcadia in FY 2026 -27 is established at $131,848,699.
The appropriations subjected to the GAN N L imit in the Annual Budget are $75,892,700, which are well within the GANN Limit. Therefore, the City may fully expend all funds appropriated in the FY 2026 -27 Budget and has capacity for additional appropriations during the year as necessary.
RECOMMENDATION
It is recommended that the City Council determine that this action is not a project under the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7695 establishing an appropriation limit for Fiscal Year 2026 -27 pursuant to Article XIII-B of the California Constitution.
Attachments: Exhibit “A” - Appropriation Limit for Fiscal Year 2026-27 Exhibit “A-1” - Population/Inflationary Adjustment
Exhibit “B” - Appropriations Subject to Limitation
Exhibit “C” - Calculation of Proceeds
Exhibit “C-1” - Interest Earnings produced by Taxes
Exhibit “D” - Exclusions
Resolution No. 7695
EXHIBIT "A"
AMOUNT
A. LAST YEAR'S LIMIT (2025-2026) 123,941,248$
B. ADJUSTMENT FACTORS:
CITY OF ARCADIA POPULATION GROWTH 1.0136
PER CAPITA COST OF LIVING CHANGE AS A RATIO 1.0495
TOTAL ADJUSTMENT 1.0638
C. ANNUAL ADJUSTMENT 7,907,452
D. FISCAL 2026-2027 LIMIT 131,848,699$
CITY OF ARCADIA
APPROPRIATIONS LIMIT
FISCAL YEAR 2026-2027
EXHIBIT "A-1"
AMOUNT
PERCENTAGE CHANGE IN PER CAPITA PERSONAL INCOME 4.95%
POPULATION GROWTH - LOS ANGELES COUNTY -0.64%
POPULATION GROWTH - CITY OF ARCADIA 1.36%
SOURCE: DEPARTMENT OF FINANCE, STATE OF CALIFORNIA
CITY OF ARCADIA
POPULATION/COST OF LIVING ADJUSTMENT
FISCAL YEAR 2026-2027
EXHIBIT "B"
AMOUNT SOURCE
A. PROCEEDS OF TAXES GRAND TOTAL 76,508,700$ EXHIBIT C B. EXCLUSIONS (MEDICARE TAX) (616,000) EXHIBIT D C. APPROPRIATIONS SUBJECT TO LIMITATION 75,892,700$
D. FISCAL 2026-2027 LIMIT 131,848,699 EXHIBIT A
E. OVER/(UNDER) LIMIT (55,955,999)$
CITY OF ARCADIA
APPROPRIATIONS SUBJECT TO LIMITATION
FISCAL YEAR 2026-2027
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON PROCEEDS
OF TAXES TOTAL
Property Tax 22,023,900$ - $ 22,023,900$
Public Safety Augmentation 670,600 - 670,600 Sales & Use Tax 25,305,100 - 25,305,100
Transient Occupancy Tax 5,126,600 - 5,126,600 Property Transfer Tax 597,500 - 597,500
Utility Users Tax 9,999,400 - 9,999,400
Business License Tax 1,257,300 50,000 1,307,300 TOTAL TAXES 64,980,400$ 50,000$ 65,030,400$
FROM STATE
Motor Vehicle In Lieu 10,029,100$ -$ 10,029,100$
Gasoline Tax - 1,646,300 1,646,300
Road Maint./Rehabilitation (SB1) - 1,595,900 1,595,900 Homeowner's Exemption 70,000 - 70,000
POST - 2,000 2,000
SB 90 Reimbursements - 10,000 10,000
TOTAL FROM STATE 10,099,100$ 3,254,200$ 13,353,300$
OTHER GOVERNMENTS
Community Development (CDBG) -$ -$ -$
Citizens Options for Public Safety - 200,000 200,000
Homeland Security - - -
OTS Gran
t - 110,000 110,000
Other (PROP A&C) Taxes - 2,639,900 2,639,900
Prop A Park Maint. & Services - - -
Measure R - 897,700 897,700
Measure M - 1,017,400 1,017,400
Used Oil Grant - 8,000 8,000
Beverage Container Recycling Grant - 14,200 14,200
AQMD (AB2766) - 74,000 74,000
TOTAL OTHER GOVERNMENTS -$ 4,961,200$ 4,961,200$
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2026-2027
EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON PROCEEDS
OF TAXES TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2026-2027
LOCALLY RAISED
LICENSES AND PERMITS
Franchise Fee -$ 1,069,800$ 1,069,800$
Parking Permits - 610,000 610,000
Plan Check Fees - 1,850,000 1,850,000
Building Permits - 2,200,000 2,200,000
Mechanical, Electrical & Plumbing Permits - 500,000 500,000 Home Occupation Permits - 12,100 12,100
Miscellaneous Permits - 10,500 10,500
Planning Applications - 350,000 350,000
Fire Plan Check - 300,000 300,000
Engineering Permit Fees - 160,000 160,000
Fire Code Permit Fees - 180,000 180,000
Fire Code Inspections - 90,000 90,000
Off-site Improvement - - -
Water Landscape Review - 101,500 101,500
Technology Fee - 275,000 275,000
Unoccupied Residences - 1,700 1,700
Storm Water Plan Check Fees - - -
SB1473 building Permit - 1,000 1,000
PEG - 65,000 65,000
Charges for Current Service - 5,512,000 5,512,000
Recreation Activities - 1,642,000 1,642,000
Library Charges - 102,000 102,000
Rent & Royalty - 1,534,000 1,534,000
Transportation Impact fees - 400,000 400,000
Fire Impact fees - 125,000 125,000
Solid Waste Assessments - 700,000 700,000
Park/Dwelling Unit Fees - 1,500,000 1,500,000
TOTAL LICENSES & PERMITS -$ 19,291,600$ 19,291,600$ EXHIBIT "C"
REVENUE PROCEEDS OF
TAXES
NON PROCEEDS
OF TAXES TOTAL
CITY OF ARCADIA
CALCULATIONS OF PROCEEDS
FISCAL YEAR 2026-2027
FINES & PENALTIES
Miscellaneous Fines -$ 10,000$ 10,000$ Parking Citations - 500,000 500,000
Code Violations - 40,000 40,000
Fire Citations - 500 500
Planning Fines - 1,000 1,000
TOTAL FINES & PENALTIES -$ 551,500$ 551,500$
OTHER REVENUE
Parimutual Receipts 290,000$ -$ 290,000$
Admin. O/H Transi
t - 147,100 147,100
Admin. O/H Water - 1,587,100 1,587,100
Admin. O/H Sewer - 300,000 300,000
Admin. O/H Lighting District - 128,000 128,000
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 290,000$ 2,321,600$ 2,611,600$ Total Estimated Revenues
Before Revenue from Use of Money 75,369,500$ 30,430,100$ 105,799,600$ Revenue Earned from Use of Money
Earned on Non-Proceeds -$ 727,200$ 727,200$ 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 1,139,200 460,800 1,600,000
TOTAL REVENUE EARNED
FROM USE OF MONEY 1,139,200$ 1,596,800$ 2,327,200$
GRAND TOTA
L 76,508,700$ 32,026,900 $ 108,126,800 $
EXHIBIT "C-1"
AMOUNT
PROCEEDS OF TAXES (EXCLUDING INTEREST) 75,369,500$
TOTAL REVENUE (EXCLUDING INTEREST) 105,799,600$
PERCENT APPLICABLE TO PROCEEDS OF TAXES 71.20%
TOTAL INTEREST BUDGETED FOR GENERAL FUND 1,600,000$
INTEREST APPLICABLE TO PROCEEDS OF TAXES 71.20% 1,139,200$ INTEREST APPLICABLE TO NON-PROCEEDS OF TAXES 28.80% 460,800$
INTEREST DIRECTLY IDENTIFIED TO THE FUNDS WHICH REVENUES ARE IDENTIFIED AS NON PROCEEDS OF TAXES - FUND 104, 107, 108, 112, 114, 118, 142, 151, 153, 155, 156, 157, 161, 165 727,200$
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 2026-2027
EXHIBIT "D"
FEDERAL MANDATED COSTS:
MEDICARE TAX 616,000$
CITY OF ARCADIA
EXCLUSIONS
FISCAL YEAR 2026-2027