CITY MANAGER' S REPORT
JUNE 8, 2026 CITY COUNCIL REGULAR MEETING
ITEM 4. 5
ITEM: GANN APPROPRIATION LIMIT FOR FISCAL YEAR
2026/7
RECOMMENDATION: Adopt Resolution Determining the Total Annual Appropriations Subject to Limitation, for Fiscal Year
2026/7
SUMMARY:
California voters adopted the GANN Initiative ( also known as GANN Limit) in 1979.
The purpose of the GANN Initiative is to limit tax revenues which can be appropriated in any fiscal year. The GANN Limit is calculated by increasing the base year tax revenues by the Population Growth factor and one of the following; Changes in Assessed Values attributed to Non - Residential Growth or Changes in the Per Capita Personal Income factor. Each option exists to allow for the use of whichever is greater or data that is readily available when completing the calculation. To comply with Article XIII. Bof the State Constitution and Government Code 7900 and as part of the budget process, the City adopts the GANN Limit.
After reviewing the GANN Limit' s
growth factors, staff recommends using the
Assessed Value attributed to Non -Residential Growth to set the appropriation limit at 576, 040, 438 (Attachment " B") for Fiscal Year 2026/7. The Fiscal Year 2026/7 budget remains in compliance within the appropriation limit.
BACKGROUND:
The GANN Limit originated with Proposition 4 and was passed by California voters in November 1979 ( also known as the Gann Initiative). The purpose of the GANN Limit is to limit tax growth.
Section 7910 of the Government Code of the State of California requires that the governing bodies of each local jurisdiction establish its appropriation limit for the following fiscal year pursuant to Article XIIIB of the State Constitution ( GANN Initiative). The GANN Initiative limits the amount of revenue which can be appropriated in any fiscal year. However, not all revenues are restricted, only those referred to as " proceeds of taxes". The limit is adjusted annually for population growth, inflation/ per capita income or changes to non- residential new construction, and other factors. Certain appropriations are exempt from the GANN Limit, such as voter - approved debt, court orders, and federal mandates.
The GANN Limit is calculated by increasing the base year tax revenues annually by a population growth factor and by one of the following:
1. The increase in Assessed Value attributed to Non -Residential Growth; or
2. The increase or decrease in California Per Capita Personal Income
CITY MANAGER' S REPORT
JUNE 8, 2026 CITY COUNCIL REGULAR MEETING
GANN LIMIT FISCAL YEAR 2026/7
PAGE 2
Staff has prepared the FY 2026/7 GANN Appropriation Limit calculation ( shown in Attachment " B" of the Proposed Resolution). The cost -of -living factor provided by the Department of Finance is personal income is 4. 95%. Staff recommends that the increase in per capita personal income of 4. 95% be used rather than the 0. 79% increase in assessed value attributed to non- residential growth.
The GANN Appropriation Limit for FY 2026/7 is $ 576, 040, 438 as calculated in Attachment " B" of the proposed resolution.
REASON FOR RECOMMENDATION:
The City is required by State law to annually adopt the GANN Limit.
FISCAL IMPACT:
The City' s FY 2026/7appropriations funded by tax revenues are within the required GANN Limit.
ATTACHMENTS:
A. Resolution Determining the Total Annual Appropriation Subject to Limitation, for Fiscal Year 2026/7
B. Proposition 4 Appropriation GANN Limit Calculations for Fiscal Year 2026/7
CITY MANAGER' S REPORT
JUNE 8, 2026 CITY COUNCIL REGULAR MEETING
GANN LIMIT FISCAL YEAR 2026/7
APPROVALS:
PAGE 3
Sandra Frias Date
Accou Manager
Cari J. 7es
Finan ' Director
Gh-- Aoaz
Date
Thomas Hedegard Date
Deputy City Manager
Salvador Navarrete Date
City Attorney
to - 2-.0
Stephen J. Salvatore Date
City Manager
RESOLUTION NO. 26-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LATHROP
DETERMINING THE TOTAL ANNUAL APPROPRIATION SUBJECT TO
LIMITATION, FOR FISCAL YEAR 2026/7
WHEREAS, the City of Lathrop has prepared and submitted to the City Council a budget for the fiscal year commencing July 1, 2026; and WHEREAS, the City Council should determine its final annual appropriations that are subject to limitation pursuant to Article XIII. Bof the State Constitution; and WHEREAS, said total annual appropriations subject to limitation of the City of Lathrop has been computed by the Director of Finance in accordance with the provisions in Article XIII. Band Government Code 7900, et seq; and WHEREAS, the increase in the per capita personal income of 4. 95% was used rather than the assessed value attributed to non- residential growth; and WHEREAS, the City of Lathrop has complied with all of the provisions of Article XIII. Band Government Code 7902 in determining the Gann Limit which has been calculated for fiscal year 2026/7 to be $ 576, 040, 438.
NOW, THEREFORE, BE IT RESOLVED that the City Council does hereby approve the Gann Limit for 2026/7to be $ 576, 040, 438 as calculated in the City Manager' sReport presented to Council with this resolution.
The foregoing resolution was passed and adopted this 8th day of June 2026, by the following vote of the City Council, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Paul Akinjo, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney
CITY OF LATHROP
PROPOSITION 4 APPROPRIATION GANN LIMIT CALCULATIONS
2006- 07 GANN LIMIT 61, 109, 202
2007- 08 GANN LIMIT 71, 980, 529
2008- 09 GANN LIMIT 80, 085, 537
2009- 10 GANN LIMIT 82, 111, 701
2010- 11 GANN LIMIT 81, 627, 242
2011- 12 GANN LIMIT 87, 006, 477
2012- 13 GANN LIMIT 91, 800, 534
2013- 14 GANN LIMIT 98, 612, 134
2014- 15 GANN LIMIT 101, 077, 437
2015- 16 GANN LIMIT 108, 061, 888
2016- 17 GANN LIMIT 121, 072, 539
2017- 18 GANN LIMIT 130, 843, 093
2018- 19 GANN LIMIT 150, 652, 737
2019-0 GANN LIMIT 202, 160, 908
2020-1 GANN LIMIT 235, 194, 000
2021-2 GANN LIMIT 264, 405, 095
2022-3 GANN LIMIT 303, 219, 763
2023-4 GANN LIMIT 418, 873, 057
2024-5 GANN LIMIT 469, 640, 472
2025-6 GANN LIMIT 520, 032, 895
2026-7 GANN LIMIT 576, 040, 438
2026-7 FINAL CALCULATION
The City will use the percentage change in per Capita Income to to calculate the Final Gann Limit.
ADJUST FOR CHANGE IN POPULATION
Based on California Department of Finance Information
Increase 5.5%
Adjust for Change in California Per Capita Income
Per Capita Income Change: 4. 95%
Adjust by the Above Factors:
Population 1. 0555 x Per Capita 1. 0495 = 1.077
520, 032, 895 x 1.077 = $576, 040, 438
If you have any questions, contact Cari James in the Finance Department.
Attachment B