FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
AGENDA ITEM #12
MEETING DATE: July 12, 2023
PREPARED FOR: Mayor and Town Council
PREPARED BY: 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 2023-24
RECOMMENDATION
Adopt the attached resolution determining the Proposition 4 (Gann) Appropriation Limit calculation for Fiscal Year 2023-24. The Town's Fiscal Year 2024 appropriations are estimated to be $8,173 under the limit, based on the Fiscal Year 2023-24 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 2023-24 is $7,939,854. Based on the adopted budget for FY 2023-24, the Town is under its limit by $8,173 (.1%).
FISCAL IMPACT
There is no fiscal impact.
ATTACHMENTS
A. Resolution with Exhibits A & B. Calculation of Appropriation Limit B. California Department of Finance Memo (May 2023)
RESOLUTION 23-__
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 2023-24
WHEREAS, the Town Council discussed and reviewed the proposed budget for fiscal year 2023- 24 at the Budget Workshop conducted on May 19, 2023, as well as at the Public Hearing on June 7, 2023, and at the Town Council meeting on July 12, 2023, 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 2022-23 was $7,668,087;
2. During calendar year 2022 the population in Fairfax decreased by .76% and the per capita personal income in California increased by 4.44% resulting in an appropriations limit adjustment factor of 3.65%, as shown in the attached Exhibit A;
3. The appropriation limit for the Town of Fairfax for fiscal year 2023-24 is $7,948,027, as shown in the attached Exhibit B;
4. The Town is under the appropriation limit for 2023-24 by $8,173.
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 12th day of July 2023, by the following vote, to wit:
AYES:
NOES:
ABSENT:
_________________________________
Chance Cutrano, 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 * % 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 2023/24 7,668,087 0.9924 1.0444 7,948,027 1.0365 7,939,854 8,173 1/1/2023 7,410 7,354 0.9924 252,012 249,348 0.9894 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 23-24 UPDATE.xlsx/app limit
Exhibit B
TOWN OF FAIRFAX
CALCULATION OF APPROPRIATIONS LIMIT 2022-23 2023-24
per FY23 budget per FY24 budget
REVENUE:
PROCEEDS OF TAXES
Property Taxes - Secured 1 TAXES 3,383,838 3,450,000
Property Taxes - Unsecured 2 TAXES 6,400 65,000
Property Taxes - Prior 3 TAXES 2,000 5,000
Real Estate Transfer Tax 4 TAXES 67,000 70,000
Cigarette Tax
Supplemental Property Taxes 6 TAXES 115,900 100,000
ERAF Excess Distribution 7 TAXES 650,000 625,000
ERAF III Shift to State 8 TAXES -
Property Tax In-Lieu of VLF (VLF Swap) 9 TAXES
MWPA Wildfire tax 9 TAXES
Storm Run-Off Fee 10 OTHER AGENCIES
-
900,000
104,000
53,200
900,000
104,710
53,200
In-Lieu Sales Tax (Triple Flip) 11 TAXES -
Sales Tax - BB 12 TAXES
1/2 cent Sales Tax - Prop. 172 13 TAXES
-
739,200
116,820
800,000
123,690
Sales Tax - D 14 TAXES -
Sales Tax - C 14 TAXES
Utility Users Tax - Telecom 15 TAXES
Utility Users Tax - Energy 16 TAXES
Hotel Users Tax 17 TAXES
Business Licenses 21 LICENSES
Homeowners Exemption 31 OTHER AGENCIES
1,044,000
60,000
300,000
18,000
100,000
12,450
Other Fed/State County 31 OTHER AGENCIES
-
950,400
63,000
300,000
17,000
120,000
13,000
- -
TOTAL PROCEEDS OF TAXES 7,601,758 7,831,050
89.532% 89.698%
NON PROCEEDS OF TAXES
Garbage 18 FRANCHISE FEES 280,000 260,000
Gas & Electric 19 FRANCHISE FEES 80,000 80,000
Cable 20 FRANCHISE FEES 120,000 128,477
Taxi FRANCHISE FEES
Vehicle Code Fines 22 FINES 30,000 20,000
Parking & Other Fines 23 FINES 100,000 60,000
Women's Club and Other 24 RENTAL/MAINT FEES 10,000 10,000 CYO - Pavilion 25 RENTAL/MAINT FEES 2,000 2,000
Pavilion - Other 26 RENTAL/MAINT FEES 2,000 2,000
Pavilion - OCA Net Revenue 27 RENTAL/MAINT FEES 300 200 Police Training Reimbursement (POST) 32 OTHER AGENCIES 9,000 9,000 Sale Of Maps & Publications 35 CHG FOR CURR SERV 1,500 1,500 Special Police Services (includes booking fees) 36 CHG FOR CURR SERV 6,820 6,820 Recreation Services & Fees 36 CHG FOR CURR SERV 61,208 79,420 SB2 Planning Grant 36 CHG FOR CURR SERV
Police Dispatch 37 CHG FOR CURR SERV 114,000 127,000
Environmental Grants 34 CHG FOR CURR SERV 40,000 81,000 Miscellaneous - General 33 CHG FOR CURR SERV 32,000 32,000 TOTAL NONPROCEEDS OF TAXES 888,828 899,417
TOTAL REVENUE 8,490,586 8,730,467
ALLOCATION OF INTEREST
Interest Income 28 INVESTMENT EARNINGS 19,300 121,300
Interest allocation factor 89.532% 89.698%
ALLOCATION TO Proceeds of Taxes 17,280 108,804
TOTAL PROCEEDS OF TAXES 7,619,038 7,939,854
8,509,886 8,851,767
Prop4 CalculationX 23-24 UPDATE.xlsx/LIMIT - -
May 2023
Dear Fiscal Officer:
Subject: Price Factor and Population Information
Appropriations Limit
California Revenue and Taxation Code section 2227 requires the Department of Finance (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, 2023, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2023-24. Attachment A provides the change in California’s per capita personal income and an example for utilizing the price factor and population percentage change factor to calculate the 2023-24 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: http://leginfo.legislature.ca.gov/faces/codes.xhtml.
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 estimate that exceeds the current certified population with the State Controller’s Office. Finance will certify the higher estimate to the State Controller by June 1, 2023.
Please Note: The prior year’s city population estimates may be revised. 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.
JOE SPEPHENSHAW
Director
By:
Erika Li
Chief Deputy Director
Attachment ATTACHMENT B
May 2023
Attachment A
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 2023-24 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2023-24 4.44
B. Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2023-24 appropriation limit.
2023-24:
Per Capita Cost of Living Change = 4.44 percent
Population Change = -0.35 percent
Per Capita Cost of Living converted to a ratio: 4.44 + 100 = 1.0444 100
Population converted to a ratio: -0.35 + 100 = 0.9965
100
Calculation of factor for FY 2023-24: 1.0444 x 0.9965 = 1.0407
Fiscal Year 2023-24
Attachment B
Annual Percent Change in Population Minus Exclusions*
January 1, 2022 to January 1, 2023 and Total Population, January 1, 2023 County
City
Percent Change
2022-2023
--- Population Minus Exclusions ---
1-1-22 1-1-23
Total
Population
1-1-2023
Marin
Belvedere
Corte Madera
Fairfax
Larkspur
Mill Valley
Novato
Ross
San Anselmo
San Rafael
Sausalito
Tiburon
Unincorporated
-1.59
-0.82
-0.76
-1.23
-1.11
-1.05
-0.57
-0.88
-0.92
-1.29
-1.18
-1.21
2,078
9,967
7,410
12,728
13,817
51,648
2,280
12,515
60,237
6,955
8,903
63,474
2,045
9,885
7,354
12,571
13,664
51,104
2,267
12,405
59,681
6,865
8,798
62,709
2,045
9,885
7,354
12,571
13,664
51,392
2,267
12,405
59,681
6,865
8,798
66,032
County Total -1.06 252,012 249,348 252,959
*Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state and federal correctional institutions and veteran homes.