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June 2, 2026
ITEM TITLE
Gann Limit: Establish Appropriations Limit for Fiscal Year 2026-27 Report Number: 26-0059
Location: No specific geographic location
Department: Finance
G.C. § 84308 Regulations Apply: No
Environmental Notice: This activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (“CEQA”) State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution establishing the appropriations limit (“Gann Limit”) for the City of Chula Vista (“City”) for Fiscal Year 2026-27.
SUMMARY
Article XIIIB of the California Constitution requires each local government to establish a Gann Limit for the General Fund by resolution each year at a regularly scheduled meeting or noticed special meeting. The purpose of the Gann Limit is to restrict spending of certain types of revenues to a level predicated on a base year amount increased annually by an inflation factor.
ENVIRONMENTAL REVIEW
The proposed activity has been reviewed for compliance with CEQA, and it has been determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because the proposed activity consists of a governmental fiscal/administrative activity which does not result in a physical change in the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
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DISCUSSION
Article XIIIB of the California Constitution imposes the concept of spending limits on local governments. This Constitutional provision and related implementing legislation specifies that annual increases in general fund appropriations financed from Proceeds of Taxes are limited to a base year amount increased annually by an inflation factor. By definition, “Proceeds of Taxes” includes such revenues as property taxes, sales and use taxes, utility user taxes, transient occupancy taxes, and state subventions. Revenues from other sources like fees, charges, and federal grants are considered “Non -Proceeds of Taxes” and are not subject to the annual spending limit. The proceeds of taxes for City have historically been less than the statutory Gann Limit.
Under current guidelines, local jurisdictions may choose among measures of population growth and inflation to compute the annual inflation factor. These measures of growth are provided by the State Department of Finance and the San Diego Assessor’s Office. According to these sources, the City’s population increased 0.41 percent. California per capita personal income increased by 4.95 percent and the City’s local assessment roll increased by 6.00 percent from the addition of local, nonresidential new construction.
The City of Chula Vista’s annu al population growth (0.41%) and the annual change in new non-residential construction (6.00%) were selected to calculate the fiscal year 2026-27 Gann Limit.
The fiscal year 2026-27 Gann Limit has been calculated as follows:
Fiscal Year 2025-26 Gann Limit $1,452,743,519
Increased by an inflation factor composed of the
Increase in population and
Increase in New non-residential construction X 1.0643693
Fiscal Year 2026-27 Gann Limit $1,546,255,595
The Proceeds of Taxes included in the fiscal year 2026 -27 budget that are subject to the Gann Limit are estimated to be $240,503,192 (see Attachment 1). The City has what is referred to as an appropriation “gap” of $1, 305,752,403 ($1,546,255,595 - $240,503,192). As a result, the City may collect and spend up to $1,305,752,403 more in taxes during fiscal year 2026-27 without exceeding the Constitutional limit.
DECISION-MAKER CONFLICT
Staff have reviewed the decision contemplated by this action and have determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff are not independently aware, and have not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current-year fiscal impact as a result of this action.
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ONGOING FISCAL IMPACT
This action will enable the City to appropriate and spend tax revenues estimated at $240,503,192 included in the fiscal year 2026-27 budget.
ATTACHMENTS
1. Fiscal Year 2026-27 Gann Limit
Staff Contact: Adrian Del Rio, Director of Finance/Treasurer