3. Appropriations (GANN) Limit — Colma City Council, July 9, 2025

Staff Report re Adoption of the FY 2025-26 Appropriation Limit Page 1 of 2

STAFF REPORT
TO: Mayor and Members of the City Council
FROM: Stuart Schillinger
VIA: Dan Barros, City Manager
MEETING DATE: July 9, 2025
SUBJECT: Adoption of FY 2025-26 Appropriation (GANN) Limit

RECOMMENDATION
Staff recommends that the City Council adopt the following:

RESOLUTION ADOPTING THE FY 2025-26 APPROPRIATION LIMIT, PURSUANT TO CEQA GUIDELINE 15378

EXECUTIVE SUMMARY
Each year as part of the annual budget process, the City Council is required by state law to adopt an Appropriations Limit (Limit). The Limit for the Fiscal Year 2025-26 is $69,694,451.

FISCAL IMPACT
Adoption of the Limit will ensure the Town appropriations are in compliance with State requirements. The FY 2025-26 Appropriations subject to the limit (“Proceeds of Taxes”) total $23,635,938 which means the Town is $46,058,513 below the authorized limit.

BACKGROUND
California voters approved propositions amending the State Constitution and requiring the annual Town budget include a calculation of the Appropriations Limit, also known as the Gann Limit. This requirement was imposed by Proposition 4 (1979) and later amended by Proposition 111 (1990).

The requirement imposes a restriction on the amount of governmental revenue which may be appropriated in any fiscal year. The Appropriations Limit was first based on actual appropriations during the base year (1986-87), and it can be increased each year based on a specific formula and specified growth factors. The Appropriations Limit does not apply to all funds. It only applies to funds that are “proceeds of taxes.”
Each year, the adjustment to the Appropriations Limit takes into consideration two factors: 1) the change in the cost of living, and 2) the change in population. For each of these factors, the Town may select between two optional factors. Additionally, State law requires that the calculation factors must be available to the public for 15 days prior to adoption.

AGENDA ITEM #3

Staff Report re Adoption of the FY 2025-26 Appropriation Limit Page 2 of 2

To comply with State law, the documentation used in the determination of the appropriations limit was made available to the public beginning on June 11, 2025 for a full 15 days prior to the City Council meeting.

ANALYSIS
The appropriation limit analysis includes two parts. The first part is the calculation of the appropriation limit based on the change in the county’s or the city’s population and the State’s per capita personal income. The new FY 2025-26 Appropriations Limit, as calculated and attached to the proposed resolution, is $69,694,451. The increased adjustment factor of 1.0651 is calculated using the County’s population change of 0.07 percent and the change in the State per capita personal income of 6.44 percent. These adjustments were published in the Department of Finance’s Price and Population Report.

The second part of the analysis is to verify that the “Proceeds of Taxes” do not exceed the limit calculated above. The “Proceeds of Taxes” is determined based on the City Council adopted budget for the new fiscal year. The City Council adopted the FY 2025-26 Operating and Capital Budget on June 25, 2025, with a projection of $24,227,774 million as general fund revenues. Of this amount, the “proceeds of taxes” subject to the limit is $23,6355,938 which is $46,058,513 less than the FY 2024-25 Appropriations Limit of $69,694,451.

Reasons For the Recommended Action/Findings
Adoption of the FY 2025-26 Appropriation Limit will comply with State laws.

Council Adopted Values

Approval of the FY 2025-26 Appropriation Limit is the responsible action because the Town’s FY 2025-26 Budget complied with State laws.

ENVIRONMENTAL
The adoption of the resolution is exempt from environmental review pursuant to CEQA Guideline 15378 as a governmental fiscal activity without any impact on the environment.

CONCLUSION
Staff recommends that the Council adopt the attached resolution.

ATTACHMENTS
A. Resolution Adopting the FY 2025-26 Appropriation Limit

Res 2025-##, FY 2025-26 Appropriations Limit Page 1 of 3 RESOLUTION NO. 2025-##

OF THE CITY COUNCIL OF THE TOWN OF COLMA
RESOLUTION ADOPTING THE FY 2025-26 APPROPRIATION LIMIT, PURSUANT TO CEQA GUIDELINE 15378
The City Council of the Town of Colma does resolve as follows.

1.Background
(a)Article XIIIB of the California Constitution places certain restrictions on annual appropriations by cities;
(b)The restrictions only apply to those appropriations which meet the definition of “Proceeds of Taxes”;
(c) The FY 2025-26 Appropriations Limit Calculation was publicly noticed and posted on the Town’s website on June 11, 2025, which is more than fifteen days for review consistent with California Government Code Section 7910;
(d)The adoption of the Appropriations Limit must identify the optional calculation factors to be used as adjustment factors.

2.Findings
(a)The first adjustment factor, the Town must select between: (A) the change in Town population, or (B) Countywide population, and the Town has selected the Change in Colma’s population; and
(b)The second adjustment factor the Town must select between: (1) the change in the State per capita income, or, (2) the change in the assessed valuation of local nonresidential construction, and the Town has selected the change in the State per capita income; (c)The detailed calculation of the Appropriations Limit for Fiscal Year 2025-26 is described in Exhibit A, attached hereto and by reference made a part hereof. (d)The City Council finds that the Fiscal Year 2025-26 budget does not exceed the constitutional appropriation limit placed on “Proceeds of Taxes” for Fiscal Year 2025-26 and is $46,058,513 below the authorized limit.

3.Appropriation Limit
The Appropriation Limit for the Fiscal Year 2025-26 shall be, and hereby is determined to be $69,694,451.
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ATTACHMENT A

Res 2025-##, FY 2025-26 Appropriations Limit Page 2 of 3 //

Certification of Adoption
I certify that the foregoing Resolution No. 2025-## was duly adopted at a regular meeting of the City Council of the Town of Colma held on July 9, 2025, by the following vote:

Name Voting Present, Not Voting Absent
Aye No Abstain Not Participating

Voting Tally

Dated ______________________ ___________________________________

Attest: ____________________________

Res 2025-##, FY 2025-26 Appropriations Limit Page 3 of 3

EXHIBIT TO RESOLUTION 2025-##
FISCAL YEAR 2025-26 APPROPRIATIONS LIMIT

Each year, the adjustment to the Appropriations Limit takes into consideration two factors: 1) the change in the cost of living, and 2) the change in population. For each of these factors, the Town may select between two optional factors.

Selection of Optional Factors

1. Change in Population (Town of Colma vs. San Mateo County)

Options
Population
1/1/2024
Population
1/1/2025

% Increase
a. Town of Colma 1,421 1,411

-0.70%
b. County of San Mateo 747,647

748,196 .07%

2. Change in State per capita Personal Income vs. Colma Non-Residential Building Construction Options % Increase
a. Change in State Per Capita Personal Income 6.44%
b. Change in Colma Non-Residential Assessed Valuation N/A* * Change in non-residential assessed valuation was not available.

For the Fiscal Year 2025-26 calculation, the Town selected County’s population growth rate of -0.50% and the change in the State Per Capita Income of 3.62%.

APPROPRIATION LIMIT CALCULATION 2024-25

Population Change (San Mateo Co.) .07% ((0.07+100)/100 = 1.0007) State Per Capita Personal Income 6.44% ((0.0644+100)/100 = 1.0644) Calculation of Factor for 2025-26 1.0310 1.0007 x 1.0644 = 1.0651 Prior Year Appropriation Limit (2024-25) $ 65,434,655 Appropriation Limit 2025-26 $ 69,694,451 $65,434,655 x 1.00651 =

The 2025-26 Appropriations subject to the limit (“Proceeds of Taxes”) total $23,635,938, which means the Town is $46,058,513 below the authorized limit.