FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
AGENDA ITEM #12
MEETING DATE July 17, 2024
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 2024-25
RECOMMENDATION
Adopt the attached resolution determining the Proposition 4 (Gann) Appropriation Limit calculation for Fiscal Year 2024-25. The Town's Fiscal Year 2025 appropriations are estimated to be $3,034 under the limit, based on the Fiscal Year 2024-25 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 2024-25 is $7,978,027. Based on the adopted budget for FY 2024-25, the Town is under its limit by $3,034 (<.1%).
FISCAL IMPACT
N/A
ATTACHMENTS
A. Resolution with Exhibit A&B. Calculation of Appropriation Limit B. California Department of Finance Memo (May 2024)
Town of Fairfax ATTACHMENT A
Resolution No. 2024-
RESOLUTION 24-__
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 2024-25
WHEREAS, the Town Council discussed and reviewed the proposed budget for fiscal year 2024-25 at the budget workshop conducted on May 8, 2024, as well as at the public hearing on May 22, 2024, and at the Town Council meeting on May 29, 2024.
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 2023-24 was $7,948,027.
2. During calendar year 2023 the population in Fairfax decreased by .38% and the per capita personal income in California increased by 3.62% resulting in an appropriations limit adjustment factor of 3.23%, as shown in the attached Exhibit A;
3. The appropriation limit for the Town of Fairfax for fiscal year 2024-25 is $8,201,545, as shown in the attached Exhibit A;
4. The Town is under the appropriation limit for 2024-25 by $3,034.
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 17th day of July 2024, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ATTEST
_________________________________ ______________________________
BARBARA COLER CHRISTINE FOSTER
MAYOR DEPUTY TOWN CLERK
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 0.9964 6,838,836 1.0573 1.0535 7,204,758 7,186,064 18,693 1/1/2021 7,525 7,498 0.9964 256,217 255,106 0.9957 2022/23 0.9896 7,204,758 1.0755 1.0643 7,668,087 7,619,038 49,050 1/1/2022 7,496 7,418 0.9896 256,537 253,686 0.9889 2023/24 0.9924 7,668,087 1.0444 1.0365 7,948,027 7,939,854 8,173 1/1/2023 7,410 7,354 0.9924 252,012 249,348 0.9894 2024/25 0.9962 7,948,027 1.0362 1.0323 8,204,579 8,201,545 3,034 1/1/2024 7,399 7,371 0.9962 250,360 249,041 0.9947 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 24-25 UPDATE 2.xlsx/app limit
Exhibit B p.2
TOWN OF FAIRFAX
CALCULATION OF APPROPRIATIONS LIMIT 2023-24 2024-25
per FY24 budget per FY25 budget
REVENUE:
PROCEEDS OF TAXES
Property Taxes - Secured 1 TAXES 3,450,000 3,570,000
Property Taxes - Unsecured 2 TAXES 65,000 70,000
Property Taxes - Prior 3 TAXES 5,000 5,000
Real Estate Transfer Tax 4 TAXES 70,000 40,000
Cigarette Tax
Supplemental Property Taxes 6 TAXES 100,000 63,000
ERAF Excess Distribution 7 TAXES 625,000 630,000
ERAF III Shift to State 8 TAXES - -
Property Tax In-Lieu of VLF (VLF Swap) 9 TAXES 900,000 900,000 MWPA Wildfire tax 9 TAXES 104,710 104,710
Storm Run-Off Fee 10 OTHER AGENCIES 53,200 53,200
In-Lieu Sales Tax (Triple Flip) 11 TAXES - -
Sales Tax - BB 12 TAXES 800,000 860,000
1/2 cent Sales Tax - Prop. 172 13 TAXES 123,690 120,000 Sales Tax - D 14 TAXES - -
Sales Tax - C 14 TAXES 1,044,000 1,055,000
Utility Users Tax - Telecom 15 TAXES 60,000 50,000
Utility Users Tax - Energy 16 TAXES 300,000 350,000
Hotel Users Tax 17 TAXES 18,000 20,000
Business Licenses 21 LICENSES 100,000 120,000
Homeowners Exemption 31 OTHER AGENCIES 12,450 12,600
Other Fed/State County 31 OTHER AGENCIES - -
TOTAL PROCEEDS OF TAXES 7,831,050 8,023,510
89.698% 88.442%
NON PROCEEDS OF TAXES
Garbage 18 FRANCHISE FEES 260,000 260,000
Gas & Electric 19 FRANCHISE FEES 80,000 85,000
Cable 20 FRANCHISE FEES 128,477 126,000
Taxi FRANCHISE FEES
Vehicle Code Fines 22 FINES 20,000 20,000
Parking & Other Fines 23 FINES 60,000 45,000
Women's Club and Other 24 RENTAL/MAINT FEES 10,000 15,000 CYO - Pavilion 25 RENTAL/MAINT FEES 2,000 -
Pavilion - Other 26 RENTAL/MAINT FEES 2,000 4,000
Pavilion - OCA Net Revenue 27 RENTAL/MAINT FEES 200 3,000 Police Training Reimbursement (POST) 32 OTHER AGENCIES 9,000 7,000 Planning/PW Grant 36 CHG FOR CURR SERV 85,000
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 7,000 Recreation Services & Fees 36 CHG FOR CURR SERV 79,420 89,000 Police Dispatch 37 CHG FOR CURR SERV 127,000 139,000
Environmental Grants 34 CHG FOR CURR SERV 81,000 130,000 Miscellaneous - General 33 CHG FOR CURR SERV 32,000 32,000 TOTAL NONPROCEEDS OF TAXES 899,417 1,048,500
TOTAL REVENUE 8,730,467 9,072,010
ALLOCATION OF INTEREST
Interest Income 28 INVESTMENT EARNINGS 121,300 201,300
Interest allocation factor 89.698% 88.442%
ALLOCATION TO Proceeds of Taxes 108,804 178,035
TOTAL PROCEEDS OF TAXES 7,939,854 8,201,545
9,273,310 8,851,767
- - Prop4 CalculationX 24-25 UPDATE 2.xlsx/LIMIT