PISMO BEACH CITY COUNCIL STAFF REPORT
Agenda Item #9.D
Meeting Date: June 4, 2024
TITLE:
Fiscal Year 2025 Appropriations Limit (Gann Limit)
RECOMMENDATION:
Adopt a Resolution accepting the Fiscal Year 2025 Appropriations Limit for the City of Pismo Beach.
DISCUSSION:
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.”
The Council set the Appropriations Limit for Fiscal Year (FY) 2024 at $32,985,168. In a letter dated April 30, 2024, the State Department of Finance (Attachment 2) 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 2025 is 3.62%, that the percent change in Pismo Beach’s population to be used for FY 2025 shall be a -0.29% decrease (from 7,869 to 7,846), and that the percent change in San Luis Obispo County’s population to be used for FY 2025 is a 1.06% increase. Adjusting the FY 2024 Appropriations Limit by the above percentage changes in California Per Capita Personal Income, and in the San Luis Obispo County population, yields an Appropriations Limit of $34,542,433 for FY 2025 (see calculations, Attachment 1A).
The FY 2025 appropriations that are subject to this Limit amount to $28,290,177, which is below the FY 2025 Appropriations Limit of $34,542,433 by $6,252,256.
Conclusion and Recommendation
Staff recommends that the City Council adopt a Resolution (Attachment 1) to approve the Gann Limit for FY 2025.
FISCAL IMPACT:
None, as FY 2025 appropriations subject to Gann Limit are below the calculated Gann Limit.
Council Agenda 6-4-2024 9.D-1
ATTACHMENTS:
1. Resolution
1.A. Exhibit A to Resolution: Appropriations Limit Calculation Worksheet
2. April 30, 2024 Letter from State Dept of Finance Price and Population Letter Submitted by: Nadia Feeser, Administrative Services Director City Manager Approval:
Council Agenda 6-4-2024 9.D-2
RESOLUTION NO. R-2024-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA ACCEPTING THE FISCAL YEAR 2025 APPROPRIATIONS LIMIT FOR
THE CITY OF PISMO BEACH
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 County of San Luis Obispo to be used for adjusting the FY 2024 Appropriations Limit to calculate the FY 2025 Appropriations Limit; and
WHEREAS, the City has used the change in California Per Capita Personal Income and change in San Luis Obispo County population data provided by the State Department of Finance on April 30, 2024 to calculate the FY 2025 Appropriations Limit, and, pursuant to Section 7910 of California Government Code, has made available to the public the documentation used to calculate the FY 2025 Appropriation Limit (provided as Exhibit A).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pismo Beach that said Appropriation Limit for Fiscal Year FY 2025 shall be set in the amount of $34,542,433.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 4th day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Council Agenda 6-4-2024 9.D-3
Attachment 1
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pismo Beach, California, on _______________________. ________________________
Erica Inderlied, City Clerk
Council Agenda 6-4-2024 9.D-4
Attachment 1
City of Pismo Beach
Appropriations Limit Calculation Worksheet
For
Fiscal Year 2024-2025
FY 2024 Appropriations Subject to Limit 27,800,754$
APPROPRIATION LIMIT CALCULATION
Item #
1 FY 2024 Appropriation Limit 32,985,168$
2 Population Factor - San Luis Obispo County X 1.010626368 3 Subtotal =33,335,681$
4 California Per Capita Personal Income Factor X 1.0362000 5 Total Adjustment %X 1.0472110
6 FY 2025 APPROPRIATION LIMIT (3) X (4)34,542,433$
7 Annual Adjustment in Dollars (1) X (5)1,557,264$
8 FY 2025 Appropriations Subject to Limit 28,290,177$
9 Over (Under) Limit (6,252,256)$
Council Agenda 6-4-2024 9.D-5
Attachment 1.A
April 30, 2024
Dear Fiscal Officer:
Price Factor and Population Information
Appropriations Limit
California Revenue and Taxation Code section 2227 requires the Department of Finance to transmit an estimate of the percentage change in population to local governments.
Each local jurisdiction must use their percentage change in population factor for January 1, 2024, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2024-25. Attachment A provides the change in California’s per capita personal income and an example for utilizing the factors to calculate the 2024-25 appropriations limit. Attachment B provides the city and unincorporated county population percentage change. Attachment C provides the population percentage change for counties and their summed incorporated areas. The population percentage change data excludes federal and state institutionalized populations and military populations.
Population Percent Change for Special Districts
Some special districts must establish an annual appropriations limit. California Revenue and Taxation Code section 2228 provides additional information regarding the appropriations limit. Article XIII B, section 9(C) of the California Constitution exempts certain special districts from the appropriations limit calculation mandate. Special districts required by law to calculate their appropriations limit must present the calculation as part of their annual audit. Any questions special districts have on this requirement should be directed to their county, district legal counsel, or the law itself. No state agency reviews the local appropriations limits.
Population Certification
The population certification program applies only to cities and counties. California Revenue and Taxation Code section 11005.6 mandates Finance to automatically certify any population estimate that exceeds the current certified population with the State Controller’s Office. Finance will certify the higher estimate to the State Controller by June 1, 2024. Please note: The prior year’s city population estimates may be revised. The per capita personal income change is based on historical data.
If you have any questions regarding this data, please contact the Demographic Research Unit at (916) 323-4086.
/s Richard Gillihan
RICHARD GILLIHAN
Chief Operating Officer
Attachment
Council Agenda 6-4-2024 9.D-6
Attachment 2
May 2024
Attachment A
A.Price Factor: Article XIII B specifies that local jurisdictions select their cost of living factor to compute their appropriation limit by a vote of their governing body. The cost of living factor provided here is per capita personal income. If the percentage change in per capita personal income is selected, the percentage change to be used in setting the fiscal year 2024-25 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2024-25 3.62
B.Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2024-25 appropriation limit.
2024-25:
Per Capita Cost of Living Change = 3.62 percent
Population Change = 0.17 percent
Per Capita Cost of Living converted to a ratio: 3.62 + 100 = 1.0362 100
Population converted to a ratio: 0.17 + 100 = 1.0017
100
Calculation of factor for FY 2024-25: 1.0362 x 1.0017 = 1.0379 Council Agenda 6-4-2024 9.D-7
Attachment 2
Fiscal Year 2024-25
Attachment B
Annual Percent Change in Population Minus Exclusions*
January 1, 2023 to January 1, 2024 and Total Population, January 1, 2024 County
City
Percent Change
23-24
---Population Minus Exclusions ---
1-1-23 1-1-24
Total
Population
1-1-24
San Luis Obispo
Arroyo Grande
Atascadero
El Paso De Robles
Grover Beach
Morro Bay
Pismo Beach
San Luis Obispo
Unincorporated
-0.54
-0.15
0.37 -0.49
-0.52
-0.29
0.90 -0.42
18,039
29,278
30,792
12,542
10,315
7,869
48,249
118,457
17,941
29,233
30,907
12,481
10,261
7,846
48,684
117,954
17,941
30,279
30,907
12,481
10,261
7,846
48,684
120,070
County Total -0.08 275,541 275,307 278,469
*Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state and federal correctional institutions and veteran homes.
Council Agenda 6-4-2024 9.D-8
Attachment 2