REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, Controller/Director
Finance Department
BY: EDWARD CHINEVERE, MBA, Assistant Director, Budget
Budget and Management Studies Department
PEDRO RIVERA, Budget Manager
Budget and Management Studies Department
SUBJECT
..Title
***RESOLUTION – Adopt Fiscal Year 2025-2026 GANN Appropriation Limit Resolution. (Subject to Mayor’s Veto)
..Body
RECOMMENDATION
It is recommended that the Council adopt the attached resolution , which selects Per Capita Personal Income and County population as the factors to be used in calculating the FY 2026 appropriations limit (Method B). This method appears to give the City the most flexibility in terms of an adjusted spending limit.
EXECUTIVE SUMMARY
State law requires the City to adopt an annual appropriations limit, otherwise known as the Gann Limit, in conjunction with the adoption of the budget. The new limit amount is calculated by applying the growth rates in population and per capita personal i ncome to the previous fiscal years limit amount.
Staff has prepared two Gann Limit levels which both meet the legal standards for calculation. Staff is recommending that Council adopt the level which will give the City the greatest difference between FY 2026 enacted appropriations and the calculated FY 2026 Gann Limit.
BACKGROUND
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 City are subject to measurement against the City’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 all tax revenue (property tax, sales tax, etc.) that the General Fund receives. On a local level, the City of Fresno has
never exceeded its appropriations limit. Indeed, the City's appropriations subject to the limit has, in the years since Proposition 4 was approved, never exceeded 65% of the calculated limit. However, in order to address an increasing number of complaint s about the restrictions of Proposition 4 and to increase the accountability of local governments in adopting their limits, the voters approved Proposition 111 in June 1990. Among other things, Proposition 111 alters the methodology outlined in Proposition 4 for determining the appropriations limit. It also requires an annual vote of the City Council on which adjustment factors will be used in determining the particular fiscal year's appropriation limit.
Under Proposition 111, the factors used to determine each year's limit were modified to be: 1) Either the California Per Capita Income or the percentage change in the local assessment roll from the preceding year due to the addition of local non -residential construction in the City, and 2) Either the City's own population growth or the population growth of the entire County.
Additionally, Article XIIIB requires the appropriations limit be adjusted permanently whenever there is a transfer of financial responsibility between two or more government agencies. One example of this would be the booking fees and fees for Property Tax administration that the City is required to pay under Senate Bill No. 2557 (1990).
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a “project” and is therefore exempt from the California Environmental Quality Act requirements.
LOCAL PREFERENCE
Local preference is not applicable because this Resolution does not include a bid or award of a construction or service contract.
FISCAL IMPACT
By approving the Gann limit that selects Per Capita Income and C ity Population, the City Council is adopting the FY 2025-2026 Gann limit that provides the City with the most flexible spending limit.
Attachment:
GANN Resolution
GANN Limit Calculation 2026
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Date Adopted:
Date Approved:
Effective Date:
City Attorney Approval:______
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Resolution No.
RESOLUTION NO. _______
A RESOLUTION OF THE COUNCIL OF THE CITY OF
FRESNO, CALIFORNIA, SELECTING METHOD TO
DETERMINE GANN APPROPRIATION LIMIT, RELATING
TO THE FISCAL YEAR 2025-2026 CITY BUDGET
WHEREAS, in November 1979, Proposition 4 (the Gann Initiative) was approved, which added Article XIIIB to the State Constitution, placing limits on the amount of revenue that all government entities may spend; and
WHEREAS, the purpose of Proposition 4 was to limit the growth in the appropriations of state and local governments to changes in the per capita income and population in order to control spending levels (the Gann Limit); and WHEREAS, Proposition 4 requires the City to adopt an annual appropriations limit in conjunction with the adoption of the City’s annual budget; and WHEREAS, the Gann Limit is calculated by applying the growth rates in population and per capita income to the previous fiscal year’s limit amount; and WHEREAS, staff has prepared two alternative methods, shown in Attachment A, for calculating the Gann Limit, each of which complies with Proposition 4, as amended.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Fresno as follows:
1. In conjunction with the adoption of the F iscal Year 2025-2026 annual budget, the Council adopts Per Capita Personal Income and County Population, shown as Method B in Attachment A attached hereto, as the factors for the purpose of determining the City’s Fiscal Year 2025-2026 Gann Limit.
2. This resolution shall be effective upon final approval.
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* * * * * * * * * * * * * *
STATE OF CALIFORNIA )
COUNTY OF FRESNO ) ss.
CITY OF FRESNO )
I, TODD STERMER, City Clerk of the City of Fresno, certify that the foregoing resolution was adopted by the Council of the City of Fresno, at a regular meeting held on the day of ,2025.
AYES :
NOES :
ABSENT :
ABSTAIN :
Mayor Approval: , 2025
Mayor Approval/No Return: , 2025
Mayor Veto: , 2025
Council Override Vote: , 2025
TODD STERMER, MMC
City Clerk
BY:
Date
Deputy
APPROVED AS TO FORM:
ANDREW JANZ
City Attorney
BY:
Sukhman S. Sekhon Date
Deputy City Attorney
Attachment: A – Gann Limit Calculation 2026
Attachment "A"
GANN CALCULATION GANN CALCULATION
Fiscal Year 2026 Fiscal Year 2026
Method A Method B
Using: 1) Percent change in Per Capita Personal Income Using: 1) Percent change in Per Capita Personal Income 2) Percent change in City Population 2) Percent change in County Population Beginning Balance 827,152,667$ Beginning Balance 827,152,667$ Adjustment 0 Adjustment 0
Beginning Balance 827,152,667$ Beginning Balance 827,152,667$ Per Capita Income Change Ratio 1.0644 Per Capita Income Change Ratio 1.0644 City Population Growth Ratio 1.0077 County Population Growth Ratio 1.0084 FY 2025-2026 Factor 1.07259588 FY 2025-2026 Factor 1.07334096 Appropriations Limit Fiscal Year
2026 887,200,543$
Appropriations Limit Fiscal Year
2026 887,816,838$
Net Annual Adjustment in Dollars 60,047,876 Net Annual Adjustment in Dollars 60,664,171 Per Capital Personal Income Change
Over Prior Year 6.44%
County Population Growth 0.84%
City Population Growth 0.77%
COMPUTATION OF SPENDING LIMIT
METHOD A or B FOR 2026
Source: May 2025, State of California, Department of
Finance letter
K:\USERS\DOCS\FY\FY26 Enabling Docs\FY 2026 GANN\GANN limit calculation 2026