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3 DATE: June 15, 2026
TO: Mayor and Members of the City Council
President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, City/District Manager
FROM: Nate Cruz, Finance Director/Treasurer
Waqas Hassan, Assistant Finance Director
DEPARTMENT: Finance
SUBJECT: ESTABLISHING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2026-2027
RECOMMENDATION
It is recommended that the City Council/EMID Board of Directors hold a public hearing and then adopt the attached resolutions establishing the appropriations limit for FY 2026-2027.
EXECUTIVE SUMMARY
Section 7900 of the California Government Code limits the growth in annual appropriations to the annual growth in population and inflation (known as the "Gann Limit"). Staff has applied the appropriate inflation and population adjustment factors to calculate the combined EMID and Foster City FY 2026-2027 appropriation limit of $202.6 million. The FY 2026-2027 appropriation subject to the limit is only $60.0 million.
BACKGROUND
Proposition 4 (Gann Initiative) was approved by voters in the November 6, 1979 Special Election, which added Article XIIIB to the State Constitution. Subsequent legislation added Section 7900 et seq. to the Government Code which provided additional
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3 interpretation and instructions implementing Proposition 4. The combined effect of the legislation restricts the growth of appropriations enacted by local government in their annual budgets and subsequent adjustments to inflation and population growth. The adjustments are provided annually by the California Department of Finance.
In June 1990, Proposition 111 was approved by the voters which, among other things, revised the spending limit calculations for state and local government effective July 1, 1990. The base year for determining an agency’s limit was set as FY 1986-1987 with two annual adjustment factors for:
Inflation – either (a) the percentage change in the California Per Capita Income or (b) the percentage change in the local assessment roll from the preceding year due to the addition of local non-residential new construction. Population – either (a) the City’s own population growth or (b) the population growth of the entire County.
ANALYSIS
The inflation factor selected by the City is the percentage change in California per capita income because it exceeds the assessed value in the preceding year due to new non-residential construction (4.95% vs -8.96%). Similarly, San Mateo County’s population change was selected as it was higher than Foster City’s population growth (-
0.02% vs. -0.90%). Growth data was published by the California Department of Finance in May 2026.
The resulting combined growth rate is 4.92%, as calculated by multiplying the California Per Capita Personal Income and the San Mateo County population growth rate.
Using the methodology for calculating the appropriations limit in accordance with Proposition 111, the following chart shows the appropriation bases, and the appropriation growth factors to establish the appropriations limit for FY 2026-2027.
APPROPRIATIONS LIMIT CALCULATIONS - FY 2026-2027 (BY AGENCY)
CITY DISTRICT TOTAL
FY 2025-2026 Appropriations Limit $99,730,382 $93,411,227 $193,141,609 FY 2026 -2027 Growth Factor 4.92% 4.92% 4.92%
FY 2026-2027 Appropriations Limit $104,637,117 $98,007,059 $202,644,176 FY 2026-2027 Appropriations Subject to Limit $30,966,577 $29,004,461 $59,971,038 Dollar amount under limit $73,670,540 $69,002,598 $142,673,138 Percentage of limit 29.59% 29.59% 29.59%
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3 The total appropriations subject to the Gann Limit are calculated as the total of all appropriated expenditures in the General Fund, Special Revenue Funds and the City CIP Fund, less all revenue sources that are not considered general tax proceeds (e.g. permits, recreation programs, rental income).
As required by law, the information used to calculate these limits is available in the Financial Services Department that will allow the public to determine the validity and bases for the appropriations limit recommended for adoption. Accordingly, the City Council/District Board is requested to hold a public hearing on these limits this evening and, subject to any public testimony received, adopt the attached resolutions to approve the appropriations limit specified herein.
California Environmental Quality Act
Not Applicable
FISCAL IMPACT
There is no budget impact on establishing the FY 2026-2027 Appropriations Limit.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Innovation and Sustainability
ATTACHMENTS:
Attachment 1 - City Resolution
Attachment 2 - EMID Resolution