PISMO BEACH COUNCIL AGENDA REPORT
Agenda Item #9.G
SUBJECT/TITLE:
FISCAL YEAR 2023 REVISED APPROPRIATIONS LIMIT (GANN LIMIT) FOR THE
CITY OF PISMO BEACH
RECOMMENDATION:
Adopt a Resolution accepting a revised FY 2023 Appropriations Limit for the City of Pismo Beach, rescinding Resolution No. R-2022-044.
EXECUTIVE SUMMARY:
The California State Constitution requires that government entities calculate and adopt an appropriations limit each year to ensure that expenses don't grow greater than allowed by law.
California Constitution Article 13B, Section 1 provides that “The total annual appropriations subject to limitation of the State and each local government in the Constitution of the State of California, Article 13B Government Spending Limitation, shall not exceed the appropriations limit of the entity of government for the prior year adjusted for the change in the cost of living and the change in population, except as otherwise provided in this article.”
At its June 7, 2022 meeting, the Council set the Appropriations Limit for Fiscal Year (FY) 2023 at $31,067,240 per Resolution R-2022-044. After review, the City’s financial auditors had a difference in opinion regarding the percentage change in the California Per Capita Personal Income that was used for the “change in the cost of living” factor for FY 2023.
This percentage was recommended to be 7.55%, but only 7.23% was used. In addition, the City used the Pismo Beach population change of -1.41% as the population factor consistent with past practices. The City’s financial auditors recommended that the City use the County’s population factor in this calculation, which is a growth of 0.28%, that would help increase the Gann Limit. These two factors are included in a letter dated May 2022, from the State Department of Finance (Attachment 2) that informed all cities that the percentage change in the California Per Capita Personal Income that can be used for the “change in the cost of living” factor for FY 2023 of 7.55%, and the percent change in Pismo Beach’s and the County’s population to be used for FY 2023. Adjusting the FY 2022 Appropriations Limit by the above updated percentage changes in California Per Capita Personal Income, and in San Luis Obispo County’s population, yields an Appropriations Limit of $31,743,067 for FY 2023 (see calculations, Attachment 1.A). To be conservative, staff recommends the City follow the auditors’ recommendations. This finding does not impact the City’s spending.
The FY 2023 appropriations that are subject to this Limit amount to $28,874,106, which is below the FY 2023 Appropriations Limit of $31,743,067 by $2,868,961.
Council Agenda 2-21-2023 9.G-1
Conclusion and Recommendation
Staff recommends that Council adopt a Resolution (Attachment 1) to approve the revised Gann Limit for FY 2023.
FISCAL IMPACT:
None, as FY 2023 appropriations subject to Gann Limit are below the calculated Gann Limit.
ALTERNATIVES:
1. Propose different calculation factors, and recalculate the FY 2023 Gann Limit.
ATTACHMENTS:
1. Resolution
1.A. Exhibit A to Resolution: Appropriations Limit Calculation Worksheet
2. May 2022 Letter from State Dept of Finance Price and Population Letter Submitted by: Meeting Date: February 7, 2023
Nadia Feeser, Administrative Services Director
City Manager Approval:
Council Agenda 2-21-2023 9.G-2
RESOLUTION NO. R-2023-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA ACCEPTING A REVISED THE FISCAL YEAR 2023
APPROPRIATIONS LIMIT FOR THE CITY OF PISMO BEACH; RESCINDING RESOLUTION NO. R-2022-044
WHEREAS, Article XIII-B of the California Constitution provides that the total annual appropriations subject to limitation of each governmental entity shall not exceed the Appropriations Limit of such governmental entity for the prior year, adjusted for changes in population and inflation as mandated by Proposition 4 (commonly called the “Gann Limit”), passed in November 1979, and Proposition 111, passed in June 1990, except as otherwise provided for in said Article XIII-B and implementing State statutes; and WHEREAS, pursuant to Article XIII-B of said California Constitution, and Section 7900 et seq. of the California Government Code, the City is required to set its Appropriations Limit for each fiscal year; and
WHEREAS, the State Department of Finance has provided the required information on the change in California Per Capita Personal Income and on the change in population for the City of Pismo Beach to be used for adjusting the FY 2022 Appropriations Limit to calculate the FY 2023 Appropriations Limit; and
WHEREAS, the City has used the change in California Per Capita Personal Income and change in Pismo Beach population data provided by the State Department of Finance in May 2022 to calculate the FY 2023 Appropriations Limit, and, pursuant to Section 7910 of California Government Code, has made available to the public the documentation used to calculate the FY 2023 Appropriation Limit (provided as Exhibit A); and WHEREAS, the City’s financial auditors found an error in the California per capital personal income factor and recommended a change in the population factor from the City of Pismo Beach to the County to increase the limit.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pismo Beach that said Appropriation Limit for Fiscal Year FY 2023 shall be set in the amount of $31,743,067.
BE IT FURTHER RESOLVED by the City Council of the City of Pismo Beach that Resolution No. R-2022-044 is hereby rescinded.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 7th day of February 2023, by the following vote:
AYES:
NOES:
Council Agenda 2-21-2023 9.G-3
Attachment 1
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
Council Agenda 2-21-2023 9.G-4
Attachment 1
City of Pismo Beach
Appropriations Limit Calculation Worksheet
For
Fiscal Year 2022-2023
FY 2022 Appropriations Subject to Limit 24,629,512$
APPROPRIATION LIMIT CALCULATION
Item #
1 FY 22 Appropriation Limit 29,433,561$
2 Population Factor - Pismo Beach X 1.00275691
3 Subtotal =29,514,706$
4 California Per Capita Personal Income Factor X 1.0755000 5 Total Adjustment %X 1.0784651
6 FY 23 APPROPRIATION LIMIT (3) X (4)31,743,067$
7 Annual Adjustment in Dollars (1) X (5)2,309,506$
8 FY 2023 Appropriations Subject to Limit 28,874,106$
9 Over (Under) Limit (2,868,961)$
Council Agenda 2-21-2023 9.G-5
Attachment 1.A
Council Agenda 2-21-2023 9.G-6
Attachment 2
Council Agenda 2-21-2023 9.G-7
Attachment 2
Council Agenda 2-21-2023 9.G-8
Attachment 2
Council Agenda 2-21-2023 9.G-9
Attachment 2