TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Hillary Guirola-Leon, Finance Director
DATE: May 29, 2026
SUBJECT: APPROVAL OF RESOLUTION NO. R-26-10 ESTABLISHING THE APPROPRIATIONS LIMIT FOR FISCAL YEAR 2026-27
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Fiscally Responsible and Transparent City Government
Efficient, Responsive, and Effective City Services
BACKGROUND
In 1979 and 1990, California voters approved Proposition 4 (the “Gann Initiative”) and Proposition 111, respectively. Proposition 4 placed limits on the amount of tax proceeds that can be received and appropriated by governments in the State. Proposition 111 provided an adjustment formula to allow for local growth factors. Each year, governments throughout the State adopt a resolution establishing their appropriations limit as well as their appropriations that are subject to the limit.
DISCUSSION
Each year, two change factors are combined in a single adjustment factor and applied to the prior year’s appropriations limit to arrive at the new appropriations limit for the upcoming fiscal year.
1. Local agencies are allowed to use the larger of the City’s population growth or their County’s population growth. For calendar 2026, on which the FY 2026- 27 limit is based, the State Department of Finance reports that the population of the County of Los Angeles increased while the City’s population decreased.
The City’s population increase of 0.08% was used for the City’s FY 2026-27 Tony Chou, Mayor
Calvin Lo, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Gretchen Shepherd Romey, Council Member
limit calculation this year. The County’s population change of -0.64% was smaller.
2. Agencies are allowed to use as a “cost of living” factor the larger of the change in California per capita income or the growth in non-residential assessed valuation due to new construction. The change in California per capita income, 4.95%, was used in the City’s FY 2026-27 limit calculation.
The proposed FY 2026-27 appropriations limit is $38,477,321 and the proposed budget appropriations subject to the limit are $31,390,055, or 82% of the maximum allowed.
Exhibit A to the accompanying resolution shows how the FY 2026-27 appropriations limit was calculated. Exhibit B is the narrative discussion of the Gann Appropriations Limit and its implications for the City of San Marino that is proposed to be included in the final FY 2026-27 adopted budget document along with Resolution No. R-26-10 and Exhibit A.
FISCAL IMPACT & PROCUREMENT REVIEW
Because the proposed appropriations subject to the limit are less than the appropriations limit, there is no direct fiscal impact resulting from approval of the Resolution.
This report requires no procurement review.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends adoption of the proposed FY 2026-27 appropriations limit and the appropriations subject to limitation for the City of San Marino. If the Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to approve Resolution No. R-26-10, Establishing the Appropriations Limit and Appropriations Subject to Limitation for Fiscal Year 2026-27.”
ATTACHMENTS
1. Resolution No. R-26-10
2. Resolution No. R-26-10 Exhibit A: Gann Appropriations Limit Calculation
3. Resolution No. R-26-10 Exhibit B: Implications of the Gann Appropriations Limit