AGENDA ITEM #17
TOWN OF FAIRFAX
STAFF REPORT
July 6, 2022
TO: Mayor and Town Council
FROM: Michael Vivrette, Finance Director
SUBJECT: Adoption of a Resolution Making Certain Findings and Determinations in Compliance with Section XIIIB of the California Constitution (Gann Initiative) and Setting the Appropriation Limit for Fiscal Year 2022-23
_______________________________________________________________________________________
RECOMMENDATION
Adopt the attached resolution determining the Proposition 4 (Gann) Appropriation Limit calculation for Fiscal Year 2022-23. The Town's Fiscal Year 2023 appropriations are estimated to be $49,050 under the limit, based on the Fiscal Year 2022-23 Adopted Budget.
DISCUSSION
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the Gann Initiative. The proposition created Article XIIIB of the State Constitution, placing limits on the amount of revenue that can be spent by all entities of government. Proposition 4 became effective for the 1980-81 fiscal year, but the formula for calculating the limits was based on the 1978-79 "base year" revenues. Appropriations backed by tax revenues collected by all funds within the Town are subject to measurement against the Town's calculated Gann Limit. Since the General Fund is the primary recipient of tax revenue, a rough estimate of the appropriations subject to that limit can be calculated by summing certain tax revenue that the General Fund receives. Please note that the “Proceeds of Taxes” are defined as general purpose taxes the Town receives such as sales and property taxes, but not special purpose taxes such as the special municipal service tax (Measure F).
Franchise fees and charges for services are also not included in the “Proceeds of Taxes.”
1. The Appropriation Limit calculation (see Exhibit A to the Resolution) starts with the appropriation limit from the prior year. This limit is updated with the “change factors” from population and CPI changes in the prior year as provided by the State Department of Finance (see Attachment B).
2. The result is compared to the current calculation of “Appropriations subject to limit” (Proceeds of taxes based on the budget for the new fiscal year). Note that in this calculation, the term “appropriations” refers to tax revenues to be received by the town. The Appropriation Limit needs to be higher than the “Appropriations subject to limit” or the Town might have to return revenues to the taxpayers, or pass a measure approving a higher limit.
The Appropriation Limit for the Town in Fiscal Year 2022-23 is $7,668,087. Based on the adopted budget for FY 2022-23, the Town is under its limit by $49,050 (.64%).
FISCAL IMPACT
N/A
ATTACHMENTS
A. Resolution with Exhibits A&B. Calculation of Appropriation Limit B. California Department of Finance Memo (May 2022)
RESOLUTION 22-__
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF FAIRFAX
MAKING CERTAIN FINDINGS AND DETERMINATIONS IN COMPLIANCE WITH SECTION
XIIIB OF THE CALIFORNIA CONSTITUTION (GANN INITIATIVE) AND SETTING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2022-23
WHEREAS, the Town Council discussed and reviewed the proposed budget for fiscal year 2022-23 at the budget workshop conducted on May 13, 2022, as well as at the public hearing on June 15, 2022, and at the Town Council meeting on July 6, 2022, NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Fairfax, that in compliance with Section XIIIB of the Constitution of California, the following is hereby found and determined:
1. The appropriation limit for the fiscal year 2021-22 was $7,204,758;
2. During calendar year 2021 the population in Fairfax decreased by 1.04% and the per capita personal income in California increased by 7.55% resulting in an appropriations limit adjustment factor of 6.43%, as shown in the attached Exhibit A;
3. The appropriation limit for the Town of Fairfax for fiscal year 2022-23 is $7,668,087, as shown in the attached Exhibit A;
4. The Town is under the appropriation limit for 2022-23 by $49,050.
The foregoing Resolution was duly passed and adopted at a regular meeting of the Town Council of the Town of Fairfax, held in said Town on the 6th day of July 2022, by the following vote, to wit:
AYES:
NOES:
ABSENT:
_________________________________
Stephanie Hellman , Mayor
Attest:________________________
Michele Gardner, Town Clerk
ATTACHMENT A
Exhibit A
TOWN OF FAIRFAX
CALCULATION OF APPROPRIATION LIMIT POPULATION FACTORS - HIGHER OF:
PERSONAL YEAR
POP INCOME FACTOR LIMIT SUBJECT DIFF ENDED start end * % start end * % 2019/20 6,553,066 1.0009 1.0385 6,632,127 1.0394 6,470,966 161,161 1/1/2019 7,714 7,721 1.0009 258,566 258,540 0.9999 2020/21 6,632,127 0.9941 1.0373 6,838,836 1.0312 6,419,052 419,784 1/1/2020 7,443 7,399 0.9941 257,901 256,353 0.9940 2021/22 6,838,836 0.9964 1.0573 7,204,758 1.0535 7,186,064 18,693 1/1/2021 7,525 7,498 0.9964 256,217 255,106 0.9957 2022/23 7,204,758 0.9896 1.0755 7,668,087 1.0643 7,619,038 49,050 1/1/2022 7,496 7,418 0.9896 256,537 253,686 0.9889 POPULATION FACTOR 1 - Higher of: * NOTE: Ending estimates adjusted based on Dept of Finance revised 1) City Population increase OR beginning estimates provided following year. 2) County population increase
PRICE FACTOR 2 - Higher of: `
1) Change in Calif per capita personal income OR
2) Change in value of commercial building
APPROPRIATIONS FAIRFAX COUNTY
Prop4 CalculationX 22-23.xlsx/app limit
Exhibit B
TOWN OF FAIRFAX
CALCULATION OF APPROPRIATIONS LIMIT 2021-22 2022-23
per FY22 budget per FY23 budget
REVENUE:
PROCEEDS OF TAXES
Property Taxes - Secured TAXES 1 3,192,300 3,383,838
Property Taxes - Unsecured TAXES 2 6,400 6,400
Property Taxes - Prior TAXES 3 2,000 2,000
Real Estate Transfer Tax TAXES 4 62,400 67,000
Supplemental Property Taxes TAXES 6 120,000 115,900
ERAF Excess Distribution TAXES 7 650,000 650,000
ERAF III Shift to State TAXES 8 - -
Property Tax In-Lieu of VLF (VLF Swap) TAXES 9 860,000 900,000 MWPA Wildfire tax TAXES 9 96,000 104,000
Storm Run-Off Fee OTHER AGENCIES 10 53,200 53,200
In-Lieu Sales Tax (Triple Flip) TAXES 11 - -
Sales Tax - BB TAXES 12 672,000 739,200
1/2 cent Sales Tax - Prop. 172 TAXES 13 106,200 116,820 Sales Tax - D TAXES 14 - -
Sales Tax - C TAXES 14 864,000 950,400
Utility Users Tax - Telecom TAXES 15 58,000 63,000
Utility Users Tax - Energy TAXES 16 280,000 300,000
Hotel Users Tax TAXES 17 12,000 17,000
Business Licenses LICENSES 21 120,000 120,000
Homeowners Exemption OTHER AGENCIES 31 13,000 13,000
Other Fed/State County OTHER AGENCIES 31 - -
TOTAL PROCEEDS OF TAXES 7,167,500 7,601,758
87.157% 89.532%
NON PROCEEDS OF TAXES
Garbage FRANCHISE FEES 18 280,000 280,000
Gas & Electric FRANCHISE FEES 19 80,000 80,000
Cable FRANCHISE FEES 20 120,000 120,000
Vehicle Code Fines FINES 22 30,000 30,000
Parking & Other Fines FINES 23 100,000 100,000
Women's Club and Other RENTAL/MAINT FEES 24 10,000 10,000 CYO - Pavilion RENTAL/MAINT FEES 25 2,000 2,000
Pavilion - Other RENTAL/MAINT FEES 26 2,000 2,000
Pavilion - OCA Net Revenue RENTAL/MAINT FEES 27 300 300 Police Training Reimbursement (POST) 32 OTHER AGENCIES 7,000 9,000 Sale Of Maps & Publications CHG FOR CURR SERV 35 1,500 1,500 Special Police Services (includes booking fees) 36 CHG FOR CURR SERV 6,000 6,820 Recreation Services & Fees CHG FOR CURR SERV 61,208 36 61,208 SB2 Planning Grant CHG FOR CURR SERV 205,000 36
Police Dispatch CHG FOR CURR SERV 102,000 37 114,000
Environmental Grants CHG FOR CURR SERV 17,200 34 40,000 Miscellaneous - General CHG FOR CURR SERV 32,000 33 32,000 TOTAL NONPROCEEDS OF TAXES 1,056,208 888,828
TOTAL REVENUE 8,223,708 8,490,586
- 290,280
ALLOCATION OF INTEREST
Interest Income 28 INVESTMENT EARNINGS 21,300 19,300
Interest allocation factor 87.157% 89.532%
ALLOCATION TO Proceeds of Taxes 18,564 17,280
TOTAL PROCEEDS OF TAXES 7,186,064 7,619,038
8,245,008 8,509,886
Prop4 CalculationX 22-23.xlsx/LIMIT - -
: http://leginfo.legislature.ca.gov/faces/codes.xhtml.
May 2022
Dear Fiscal Officer:
Subject: Price Factor and Population Information
Appropriations Limit
California Revenue and Taxation Code section 2227 requires the Department of Finance to transmit an estimate of the percentage change in population to local governments. Each local jurisdiction must use their percentage change in population factor for January 1, 2022, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2022-23.
income and an example for utilizing the price factor and population percentage change factor to calculate the 2022-23 appropriations limit. Attachment B provides the city and unincorporated county population percentage change. Attachment C provides the population percentage change for counties and their summed incorporated areas. The population percentage change data excludes federal and state institutionalized populations and military populations.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. California Revenue and Taxation Code section 2228 provides additional information regarding the appropriations limit.
Article XIII B, section 9(C) of the California Constitution exempts certain special districts from the appropriations limit calculation mandate. The code section and the California Constitution can be accessed at the following website
Special districts required by law to calculate their appropriations limit must present the calculation as part of their annual audit. Any questions special districts have on this requirement should be directed to their county, district legal counsel, or the law itself. No state agency reviews the local appropriations limits.
Population Certification
The population certification program applies only to cities and counties. California Revenue and Taxation Code section 11005.6 mandates Finance to automatically certify any population Finance
will certify the higher estimate to the State Controller by June 1, 2022. Please Note: The p The per capita personal income change is based on historical data.
If you have any questions regarding this data, please contact the Demographic Research Unit at (916) 323-4086.
KEELY MARTIN BOSLER
Director
By:
ERIKA LI
Chief Deputy Director
ATTACHMENT B
May 2022
A. Price Factor: Article XIII B specifies that local jurisdictions select their cost of living factor to compute their appropriation limit by a vote of their governing body. The cost of living factor provided here is per capita personal income. If the percentage change in per capita personal income is selected, the percentage change to be used in setting the fiscal year 2022-23 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2022-23 7.55
B. Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2022-23 appropriation limit.
2022-23:
Per Capita Cost of Living Change = 7.55 percent
Population Change = -0.30 percent
Per Capita Cost of Living converted to a ratio: 7.55 + 100 = 1.0755 100
Population converted to a ratio: -0.30 + 100 = 0.997
100
Calculation of factor for FY 2022-23: 1.0755 x 0.997 = 1.0723 Fiscal Year 2022-23
Annual Percent Change in Population Minus Exclusions*
January 1, 2021 to January 1, 2022 and Total Population, January 1, 2022 County
City
Percent Change
2021-2022
--- Population Minus Exclusions ---
1-1-21 1-1-22
Total
Population
1-1-2022
Marin
Belvedere
Corte Madera
Fairfax
Larkspur
Mill Valley
Novato
Ross
San Anselmo
San Rafael
Sausalito
Tiburon
Unincorporated
-1.09
-1.17
-1.04
-1.28
-1.09
-1.06
-1.24
-0.99
-1.01
-1.22
-1.20
-1.21
2,103
10,147
7,496
12,963
14,002
52,720
2,330
12,772
61,179
7,159
9,065
64,601
2,080
10,028
7,418
12,797
13,850
52,162
2,301
12,645
60,560
7,072
8,956
63,817
2,080
10,028
7,418
12,797
13,850
52,441
2,301
12,645
60,560
7,072
8,956
66,987
County Total -1.11 256,537 253,686 257,135
*Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state and federal correctional institutions and veteran homes.