June 10, 2025
Agenda Item No. 7
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
Jason Al-Imam, Finance Director/Treasurer - 949-644-3126, [email protected] PREPARED BY:
Anthony Alannouf, Budget Analyst - 949-644-3122,
[email protected]
TITLE:
Resolution No. 2025-28: Adoption of Fiscal Year 2025-26 Appropriations Limit ABSTRACT:
As a governmental entity, the City of Newport Beach is subject to the Gann Appropriations Limit Initiative, which determines the amount that the City can spend from its tax revenues. The limit is adjusted annually for changes in population, combined with the change in California’s per capita personal income, and must be adopted by resolution. For Fiscal Year 2024-25, the City’s Gann appropriation limit totals $256,289,570. For Fiscal Year 2025-26, applicable tax proceeds are estimated at $247,453,704 and the City’s Gann appropriation limit totals $273,258,369. Therefore, the City will be $25,804,665 under the Gann Spending Limit.
RECOMMENDATIONS:
Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and Adopt Resolution No. 2025-28, A Resolution of the City Council of the City of Newport Beach, California, Determining and Establishing the Appropriations Limit for Fiscal Year 2025-26 in Accordance with Article XIIIB of the California Constitution and Government Code Section 7910, in the amount of $273,258,369.
DISCUSSION:
Article XIIIB of the California Constitution specifies that appropriations of government entities may increase annually only by a limited amount, primarily to allow for population increases and inflation. Each local government is required to establish its appropriations limit by resolution each year at a regularly scheduled or noticed special meeting of the City Council. Resolution No. 2025-28, submitted for City Council approval, fulfills this requirement.
The calculation of the City’s Appropriations Limit for Fiscal Year 2025-26 is:
FY2024-25 Appropriations Limit
$256,289,570
Inflation Adjustment Factor1
6.44%
Population Adjustment Factor2
0.17%
FY2025-26 Appropriations Limit
$273,258,369
1 Based on California per capita income increases as provided by the California Department of Finance, May 2025. 2 Based on Orange County population growth as provided by the California Department of Finance, May 2025.
Article XIIIB of the California Constitution limits the amount of tax proceeds that a government entity may appropriate (i.e., spend) in a given fiscal year. Tax proceeds include revenues from certain taxes levied by the government, unrestricted state subventions, and interest earned on those funds. The City’s estimated proceeds from taxes for Fiscal Year 2025-26 is $247,453,704 or $25,804,665 less than the $273,258,369 Appropriations Limit. Calculation of proceeds of taxes can exclude certain public fund uses, including categories of debt service, contributions to some types of revenues, and federal mandates. The exclusion calculation was not performed as the City continues to maintain appropriations significantly below its Appropriations Limit. In accordance with Government Code Section 7910, the documents used to calculate the Appropriations Limit were made available for public review at least 15 days prior to the scheduled hearing date.
FISCAL IMPACT:
There is no fiscal impact related to this item.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A – Resolution No. 2025-28
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Resolution No. 2025-28: Adoption of Fiscal Year 2025-26 Appropriations Limit June 10, 2025
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