PISMO BEACH CITY COUNCIL STAF REPOR
Agenda Item #9.E
Meetin Date: June 2, 2026
TITLE:
Fiscal Year 2027 Appropriations Limit (Gann Limit)
RECOMMENDATION:
Adopt a Resolution accepting the Fiscal Year 2027 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) 2026 at $36,305,160. In a letter dated May 2026, 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 2027 is 4.95%, that the percent change in Pismo Beach’s population to be used for FY 2027 shall be a -0.80% decrease (from 7,836 to 7,773), and that the percent change in San Luis Obispo County’s population to be used for FY 2027 is a 0.15% decrease. Adjusting the FY 2026 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 $38,045,195 for FY 2027 (see calculations, Attachment 1A).
The FY 2027 appropriations that are subject to this Limit amount to $28,509,273, which is below the FY 2027 Appropriations Limit of $38,045,195 by $9,535,922.
Conclusion and Recommendation
Staff recommends that the City Council adopt a Resolution (Attachment 1) to approve the Gann Limit for FY 2027.
FISCAL IMPACT:
There is no fiscal impact associated with adopting the subject Resolution, as FY 2027 appropriations subject to Gann Limit are below the calculated Gann Limit.
Council Agenda 6-2-2026 9.E-1
ATTACHMENTS:
1. Resolution
1.A. Exhibit A to Resolution: Appropriations Limit Calculation Worksheet
2. May 2026 Letter from State Department of Finance Price and Population Letter Submitted by: Nadia Feeser, Administrative Services Director City Manager Approval:
Council Agenda 6-2-2026 9.E-2
RESOLUTION NO. R-2026-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA ACCEPTING THE FISCAL YEAR 2027 APPROPRIATIONS LIMIT 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 2026 Appropriations Limit to calculate the FY 2027 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 in May 2026 to calculate the FY 2027 Appropriations Limit, and, pursuant to Section 7910 of California Government Code, has made available to the public the documentation used to calculate the FY 2027 Appropriation Limit (provided as Exhibit A).
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Pismo Beach that the Appropriation Limit for Fiscal Year FY 2027 shall be set in the amount of $35,786,957.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 2nd day of June 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
Council Agenda 6-2-2026 9.E-3
Attachment 1
IN WITNESS WHEREOF, I have hereunto set my hand and official seal of the City of Pismo Beach on _______________________.
________________________
Erica Inderlied, City Clerk
Council Agenda 6-2-2026 9.E-4
Attachment 1
City of Pismo Beach
Appropriations Limit Calculation Worksheet
FY 2026 Appropriations Subject to Limit 27,720,820$
APPROPRIATION LIMIT CALCULATION
Item #
1 FY 2026 Appropriation Limit 36,305,160$
2 Population Factor - San Luis Obispo County X 0.99850216 3 Subtotal =36,250,781$
4 California Per Capita Personal Income Factor X 1.0495000 5 Total Adjustment %X 1.0479280
6 FY 2027 APPROPRIATION LIMIT (3) X (4)38,045,195$
7 Annual Adjustment in Dollars (1) X (5)1,740,034$
8 FY 2027 Appropriations Subject to Limit 28,509,273$
9 Over (Under) Limit (9,535,922)$
Council Agenda 6-2-2026 9.E-5
Attachment 1.A
May 1, 2026
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, 2026, in conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit for fiscal year 2026–27. Attachment A provides the change in California’s per capita personal income and an example for utilizing the factors to calculate the 2026–27 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, 2026. 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 Erika Li
Attachment
Council Agenda 6-2-2026 9.E-6
Attachment 2
May 2026
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 2026–27 appropriation limit is:
Per Capita Personal Income
Fiscal Year Percentage change
(FY) over prior year
2026-27 4.95
B.Following is an example using sample population change and the change in California per capita personal income as growth factors in computing a 2026–27 appropriation limit.
2026–27:
Per Capita Cost of Living Change = 4.95 percent
Population Change = -0.14 percent
Per Capita Cost of Living converted to a ratio: 4.95 + 100 = 1.0495 100
Population converted to a ratio: -0.14 + 100 = 0.9986 100
Calculation of factor for FY 2026–27: 1.0495 x 0.9986 = 1.0480 Council Agenda 6-2-2026 9.E-7
Attachment 2
About the Data
FISCAL YEAR 2026-27
Attachment B
Annual Percent Change in Population Minus Exclusions*
January 1, 2025 to January 1, 2026, and Total Population January 1, 2026 City County
Percent Change
25-26
Population Minus
Exclusions 1-1-25
Population Minus
Exclusions 1-1-26 Total Population 1-1-26
Arroyo Grande San Luis Obispo -0.79 17,922 17,780 17,780 Atascadero San Luis Obispo -0.19 29,182 29,127 30,184 El Paso de Robles (Paso Robles)San Luis Obispo 1.20 31,151 31,525 31,525 Grover Beach San Luis Obispo -0.31 12,541 12,502 12,502 Morro Bay San Luis Obispo -0.69 10,379 10,307 10,307 Pismo Beach San Luis Obispo -0.80 7,836 7,773 7,773 San Luis Obispo San Luis Obispo 0.63 49,849 50,165 50,165 Unincorporated San Luis Obispo -0.62 117,538 116,805 119,006 Incorporated San Luis Obispo 0.20 158,860 159,179 160,236 County Total San Luis Obispo -0.15 276,398 275,984 279,242 *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 6-2-2026 9.E-8
Attachment 2