CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Resolution Approving the Correction of the Fiscal Year 2022-23 and 2023-24 Appropriation Limits and Adopting the Annual Appropriations Limit for Fiscal Year 2024-25 Meeting Date: June 25, 2024
RECOMMENDATION:
Adopt a Revision to the Resolution establishing the Gann appropriation limit for the fiscal year 2022-23 and find that the adopted appropriations are within the limit.
Adopt a Revision to the Resolution establishing the Gann appropriation limit for the fiscal year 2023-24 and find that the adopted appropriations are within the limit.
Approve and adopt the proposed Resolution selecting the California per capita personal income price factor of 3.62 and Commerce’s population growth of 0.57 as the annual adjustment factors used in calculating the appropriation limit for the City of Commerce, and assign the number next in order.
BACKGROUND/ANALYSIS:
Article XIII(B) of the California Constitution provides that an appropriation limit be established each year that creates a restriction on the amount of proceeds of taxes which can be appropriated in any fiscal year. The limit is based on actual appropriations during the 1978-79 fiscal year, and is increased each year using the growth in population and inflation.
Proposition 111 modified the selection process of the annual adjustment factors and now allows cities to choose either the growth in the California Per Capita Income or the growth in the non-residential assessed valuation due to new construction within the City as the inflation factor. The City can also choose between the population growth of the City of Commerce or Los Angeles County as the growth factor. Proposition 111 requires a recorded vote of the Council regarding which of the annual adjustment factors has been selected each year.
During our 2022-23 Annual Financial Audit, it was brought to our attention by our new audit firm, The Pun Group, which the Gann appropriation limits adopted by resolutions 22-56 & 23-62, respectively, had typographical errors in the formula resulting in a considerable difference to the limit for 2022-23 and carrying over into the figures for 2023-24. As a result, we are being asked to make these corrections to comply with the Department of Finance when establishing appropriation limits. It is important to point out that this revision has zero fiscal impact.
ALTERNATIVES:
Approve staff recommendation.
Choose the growth in the non-residential assessed valuation due to new construction within the City as the inflation factor.
Choose the population growth of Los Angeles County as the growth factor.
FISCAL IMPACT:
There is no Fiscal Impact for the revision (2023/23 and 2023-24) or the adoption (2024-25) of the Gann appropriation limits. Adoption of the Gann appropriations limit ensures that the city complies with Proposition 4 and 111, which were passed by the voters in 1979 and 1990, respectively, and which place limits on the amount of tax revenue that can be spent by local governments.
RELATIONSHIP TO STRATEGIC GOALS:
This report is applicable to the following 2016 Strategic Plan Fiscal Sustainability Guiding Principle 1: Demonstrate fiscal responsibility through establishing financial policies, budgeting practices that meet the Financial Standards of Excellence requirements.
Recommended by: Vilko Domic, Assistant City Manager
Approved as to Form: Noel Tapia, City Attorney
Respectfully submitted: Ernie Hernandez, City Manager
ATTACHMENTS:
Gann Limit Amendment Resolution 2022-23 – Calculation of Limitation Included Gann Limit Amendment Resolution 2023-24 – Calculation of Limitation Included Gann Limit Resolution 2024-25 -- Calculation of Limitation Included