Finance and Management Services
www.santa-ana.org/finance
Item # 18
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 16, 2026
TOPIC: Resolution Establishing the Appropriations Limit for FY2026-27
AGENDA TITLE
Resolution Establishing the Appropriations Limit for FY2026-27
RECOMMENDED ACTION
Adopt a resolution establishing the City of Santa Ana's appropriations limit for FY2026- 27, as required by state law.
RESOLUTION NO. 2026-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA ESTABLISHING THE APPROPRIATION LIMIT OF THE CITY OF SANTA ANA FOR FISCAL YEAR 2026-2027
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
Article XIII B of the California Constitution, commonly referred to as the “Gann Limit,” was approved by California voters in 1979 through Proposition 4. The Gann Limit establishes a constitutional restriction on the amount of tax proceeds that state and local governments may appropriate each fiscal year. The limit is adjusted annually based on changes in population and the cost of living to allow government spending capacity to grow in line with economic and demographic conditions.
Pursuant to California Government Code Section 7910, the City is required to establish its annual appropriations limit by resolution. Adoption of the proposed resolution will establish the City’s appropriations limit for Fiscal Year 2026-27 (FY26-27), and ensure compliance with State constitutional requirements.
The appropriations limit calculation for FY26-27 was prepared using the growth factors provided by the California Department of Finance. Consistent with prior years, staff used the change in California per capita personal income as the cost-of-living factor and Orange County population growth as the population factor.
Resolution Establishing the Appropriations Limit for FY2026-27 June 16, 2026
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Using the formula provided by the state, staff calculated the spending limitation from the “Proceeds of Taxes” at $1,591,945,027 (Exhibit 1) for FY26-27, a 4.6% increase over Fiscal Year 2025-26. Funds governed by the appropriations limit include the General Fund, the Capital Outlay Fund, and Special Revenue Funds. Exhibit 1 identifies the factors used to determine the inflationary increases from the prior year. Exhibit 2 categorizes the FY26-27 anticipated revenues under “Proceeds of Taxes” and “Non- Proceeds of Taxes.” Exhibit 3 computes the FY26-27 appropriations subject to this limitation and identifies the difference between the limit and the budgeted appropriation.
As demonstrated in Exhibit 3, the City’s anticipated appropriations subject to limitation in FY26-27 are $328,803,299, which is approximately $1,263,141,728 or 79% below the calculated limit. This substantial margin demonstrates that the City’s budgeted appropriations remain well within the constitutional spending limitation.
The Gann Limit serves as an important fiscal safeguard by ensuring that growth in government spending supported by tax revenues remains aligned with changes in population and economic conditions. The City’s appropriations are significantly below the allowable limit, indicating that the City has considerable capacity under the constitutional threshold and remains fully compliant with Article XIII B of the California Constitution.
The proposed resolution has been prepared in accordance with applicable constitutional and statutory requirements.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact associated with this action.
EXHIBIT(S)
1. Computation of Appropriation Limit
2. Schedule to Categorize Anticipated Revenues
3. Appropriation Subject to Limitation
4. Resolution
Submitted By: Alexander Trinidad, Executive Director, Finance and Management Services Agency
Approved By: Alvaro Nuñez, City Manager