CITY OF SIMI VALLEY
MEMORANDUM
June 9, 2025
TO: City Council
FROM: Department of Administrative Services
SUBJECT: ADOPTION OF A RESOLUTION ESTABLISHING THE CITY’S F ISCAL YEAR 2025-26 APPROPRIATIONS LIMIT
STAFF RECOMMENDATION
It is recommended that the City Council adopt the attached Resolution No. 2025-14 (page 5) setting the City’s Fiscal Year (FY) 2025-26 Appropriations Limit at $106,624,506.
BACKGROUND AND OVERVIEW
Each year the City is required to adopt a resolution establishing a limit on its appropriations of tax proceeds. For FY 202 5-26, the City’s appropriations limit is calculated to be $106,624,506 . Based on net proceeds of taxes subject to the limitation in the amount of $ 78,678,644 in the FY 202 5-26 Proposed Budget, the proposed City appropriations are $27,945,862 below the limit.
On November 6, 1979, California voters approved the Gann Spending Limitation Initiative (Proposition 4) establishing Article XIIIB of the State Constitution. Article XIIIB sets limits on the amount of tax revenues that the State and most local governments can appropriate within a given fiscal year. Its basic provisions are as follows:
• Each year, the State and local governments must adopt a resolution establishing an appropriations limit. FY 1978-79 appropriations serve as the base for this limit, with adjustments being made annually to reflect increases in population, the cost of living, and financial responsibility transfers.
• Only tax proceeds are subject to the limit. Charges for services, regulatory fees, grants, loans, donations, and other non- tax proceeds are not subject to the limit.
Exemptions are also made for voter -approved debt, debt that existed prior to January 1, 1979, and the cost of compliance with court or Federal government mandates.
• All tax revenues received in excess of the appropriations limit must be refunded to taxpayers within a two-year period.
• The voters may approve an increase in the appropriations limit. For the increase to remain in effect, however, it must be re-approved by voters at four-year intervals.
AGENDA ITEM NO.
Consent (13)
2 On June 5, 1990, California voters approved the Traffic Congestion Relief and Spending Limitation Act (Proposition 111), which made various amendments to Article XIIIB of the State Constitution. The major changes, which became effective July 1, 1990, are as follows:
• The change in the cost of living is defined to be either the change in California per capita personal income or the change in assessed valuation due to the addition of non-residential new construction. Previously, the change in the cost of living was defined as the lesser of the change in the U.S. Consumer Price Index or the change in California per capita personal income.
• The change in population is defined as either a change in the City’s population or a change in the County’s population.
• “Qualified capital outlay projects” were added to the items exempted from the appropriations limit. Qualified capital outlay projects must have a useful life of ten or more years and a cost that equals or exceeds $100,000.
• Tax revenues received in excess of the appropriations limit must be refunded to taxpayers only if the limit is exceeded over a two-year period.
• The annual calculation of the appropriations limit must be reviewed as part of the City’s annual financial audit.
FINDINGS AND ALTERNATIVES
The information used to calculate the City’s FY 2025-26 appropriations limit is presented in Exhibit A (page 7). The City’s appropriations limit for FY 2024 -25 was $100,103,270.
The FY 2025-26 adjustment factor allowed by Proposition 111 due to population and cost of living changes is 1.06514508. Multiplying the FY 2024-25 limit by the adjustment factor results in a FY 2025-26 appropriations limit of $106,624,506.
As indicated above, Proposition 111 provides several options for calculating increases in the appropriations limit. With respect to the change in population, the City’s calculation uses the greater of the percentage increase in either the City or the County population .
The increase in the Ventura County’s population was used since it was greater than the City’s (0.07% vs. 0.00%).
With respect to the change in the cost of living criterion, the change in California per capita personal income (6.44%) was used, as the change in non-residential assessed valuation information is not yet available from the County. The Ventura County Assessor’s Office has customarily been able to provide assessed value information in July of each year.
Staff is of the opinion that the change in non-residential assessed valuation is unlikely to reflect a change that is lower than the change in per capita personal income, which would result in a lower appropriations limit for FY 2025-26 if used in lieu of the per capita income data.
3 The City’s total revenue proceeds from all funds subject to the limit are $100,127,936. Of this amount, $81,379,222 is identified as coming from tax proceeds, while $ 18,748,714 is identified as coming from non-tax proceeds. Attachment B (page 9) provides a detailed breakdown, by fund, of budgeted revenues and their classification as tax proceeds or non-tax proceeds.
The City is entitled to make certain deductions from its FY 202 5-26 tax proceeds of $81,379,222 for the purpose of calculating the Net Proceeds of Taxes Subject to the Limit.
The first of these is a deduction of $2,204,300 for qualified capital outlay projects.
Attachment C (page 10) provides background information for this deduction including the capital outlay projects, funding sources, and the classification of appropriations into tax and non-tax proceeds.
The City is also entitled to deduct the cost of compliance with Federal mandates, which is $496,278 in FY 2025-26. Medicare and Social Security are two such mandates that are relatively easy to identify and calculate. Detailed information on the City’s Medicare and Social Security costs is provided in Attachment D (page 11). The deduction has been limited to the portion of the total cost to be paid from tax proceeds.
Having taken the available deductions into consideration, the FY 2025 -26 Proposed Budget contains appropriations subject to the limitation of $78,678,644. This amount is $27,945,862 below the City's legal appropriations limit of $106,624,506.
The following alternatives are available to the City Council:
1. Adopt the attached R esolution No. 2025-14 establishing the City’s FY 202 5-26 appropriations limit at $106,624,506;
2. Provide staff with other direction.
Staff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to adopt Resolution No. 2025-14 establishing the City’s FY 2025-26 appropriations limit.
4 SUMMARY
E
ach year the City is required to adopt a resolution establishing a limit on its appropriations of tax proceeds. The Traffic Congestion Relief and Spending Limitation Act (Proposition 111), approved by the voters on June 5, 1990, changed some of the factors used to calculate the limit. For FY 2025-26 , the City’s appropriations limit is calculated to be $ 106,624,506. The City’s Proposed Budget contains appropriations subject to the limit of $78,678,644. Therefore, the portion of the FY 2025-26 Proposed Budget subject to the limit is $27,945,862 less than the City’s FY 2025-26 appropriations limit.
___
________________________________
Carolyn Johnson
Administrative Services Director
P
repared by: Johanna Medrano, Deputy AS Director (Budget & Purchasing) INDEX Page
R
esolution No. 2025-14………………………………..……………………………………..5
Exhibit A – Computation of FY 2025-26 Appropriations Limit……………………………7 Attachment A – Comparison of Proposed Budget to Appropriations Limit……………..8 Attachment B – Calculation of Proceeds of Taxes Subject to FY 2025-26 Limit………9 Attachment C – Identification of Qualified FY 2025-26 Capital Outlay Projects………10 Attachment D – Federal Mandate – Medicare/Social Security Calculation……………11 Attachment E – Interest Earnings Produced by Taxes…………………………………..12 RES
OLUTION NO. 2025-14
A RE
SOLUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY ESTABLISHING AN APPROPRIATIONS LIMIT
FOR FISCAL YEAR 2025-26
WH
EREAS, the voters approved the Gann Spending Limitation Initiative (Proposition 4) on November 6, 1979, adding Article XIIIB to the Constitution of the State of California to establish and define annual appropriations limits on State and local government entities; and
WH
EREAS, Chapter 1205, Statutes of 1980 (SB 1352) provides for the implementation of Article XIIIB by defining various terms used in the Article and prescribing procedures to be used in implementing specific provisions of the Article, including the establishment by resolution each year by the governing body of each local jurisdiction of its appropriations limit; and
WH
EREAS, the voters approved the Traffic Congestion Relief and Spending Limitation Act (Proposition 111) on June 5, 1990, amending Article XIIIB of the Constitution of the State of California; and
WH
EREAS, Chapter 60, Statutes of 1990 (SB 88) provides for the implementation of Proposition 111 by defining various terms used in the Article and prescribing procedures to be used in implementing the amendments to the Article; and WH
EREAS, the required computations to determine the appropriations limit for Fiscal Year 2025-26 have been performed by the Department of Administrative Services, are on file with the Office of the City Clerk, and are available for public review; and
WH
EREAS, these computations are provided in Exhibit A, which is incorporated herein by reference and attached hereto.
NOW
, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES RESOLVE AS FOLLOWS:
SECTION 1. The Appropriations Limit for the City of Simi Valley for Fiscal Year 2025-26 is $106,624,506.
SECTION 2. The adjustment factors for the City’s Appropriations Limit are the increase in the County of Ventura’s population and the change in California's per capita personal income.
5 RES. NO. 2025-14
S ECTION 3. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the Office of the City Clerk.
PASSED
and ADOPTED this 9th day of June 2025.
A
ttest:
Lucy Blanco, City Clerk Dee Dee Cavanaugh, Mayor of the City of Simi Valley, California
A
pproved as to Form: Approved as to Content:
Algeria R. Ford, City Attorney Samantha C. Argabrite, City Manager Carolyn Johnson,
Administrative Services Director
6 EXHIBIT A
FY 2024-25 Appropriations Limit $100,103,270
Change in Per Capita Income * 6.44%
(Change in Non-Residential Assessed Valuation Not Available) Change in Ventura County Population* 0.07%
(Change in City of Simi Valley Population = 0.00%)
Cumulative Compound Change Factor
(1.0644 X 1.0007) 1.06514508
FY 2025-26 Appropriations Limit $106,624,506
* SOURCE: State of California, Department of Finance, Price and Population Factors - May 2025 COMPUTATION OF FY 2025-26 APPROPRIATIONS LIMIT
CITY OF SIMI VALLEY
7 ATTACHMENT A
FY 2025-26 Total Proceeds of All Funds Subject to Limit $100,127,936 (From Attachment B)
Less: Non-Tax Proceeds (From Attachment B) (18,748, 714) FY 2025-26 Proceeds of Taxes 81,379,222
Less: Qualified Capital Outlay Projects (From Attachment C) (2,204,300) Less: Federal Mandates (From Attachment D) (496,278)
FY 2025-26 Net Proceeds of Taxes Subject to the Limit 78,678,644 Less: FY 2025-26 Appropriations Limit (From Exhibit A) 106,624,506 Budget Appropriations Over/(Under) the Limit ($27,945,862)
CITY OF SIMI VALLEY
COMPARISON OF PROPOSED BUDGET
TO APPROPRIATIONS LIMIT
8 ATTACHMENT B
Tax Percent Non-Tax Percent
Total Proceeds Of Total Proceeds Of Total Notes
GENERAL FUND:
Taxes and Franchises 77,703,810$ 72,203,810$ $5,500,000 1 Licenses and Permits 3,539,000 0 3,539,000
Fines and Forfeitures 333,300 0 333,300
Leases and Rentals 717,251 0 717,251
From Other Governments 471,729 250,000 221,729 2
Grants 589,500 0 589,500
Service Charges 3,363,700 0 3,363,700
Other Revenues 3,878,410 0 3,878,410
Transfers In 4,653,647 4,583,647 70,000
Subtotal 95,250,347 77,037,457 80.88% 18,212,890 19.12% Interest (from Attachment E) 1,800,000 1,404,800 395,200 3 Total General Fund 97,050,347 78,442,257 18,608,090
LIBRARY FUND:
Taxes and Franchises 2,889,264$ 2,889,264$ - $
Licenses and Permits - - -
Fines and Forfeitures 3,500 - 3,500
Leases and Rentals 3,000 - 3,000
From Other Governments 66,325 - 66,325
Grants - - -
Service Charges 4,000 - 4,000
Other Revenues 61,500 - 61,500
Transfers In - - -
Subtotal 3,027,589$ 2,889,264$ 95% 138,325$ 5%
Interest (from Attachment E) 50,000 47,701 2,299 3
Total Library Fund 3,077,589$ 2,936,965$ 140,624$
TOTAL ALL FUNDS SUBJECT
TO THE LIMIT $100,127,936 $81,379,222 $18,748,714
Notes:
2 3
1 All tax revenues have been classified as proceeds of taxes with the exception of Franchise Fees, which the courts have held to be a user fee.
Interest Earnings have been prorated between tax and non-tax proceeds based on the relative share that total tax and non-tax revenues bear to total fund revenues.
CITY OF SIMI VALLEY
CALCULATION OF PROCEEDS OF TAXES SUBJECT TO FY 2025-26 LIMIT All Funds From Other Governments have been classified as tax proceeds with the exception of Peace Officers Standardized Training (P.O.S.T.) and Unfunded Mandates (SB 90) 9 ATTACHMENT C
Total Appropriation Appropriation
General Fund of Tax of Non-Tax
Appropriations Proceeds Proceeds
PUBLIC FACILITY IMPROVEMENT FUND
- - -
- - -
Total Public Facility Improvement Projects - - -
STREETS & ROADS FUND
Arroyo Simi Greenway 245,500 198,600 46,900
Battery Backup System for Traffic Signals 400,000 323,500 76,500 Civic Center Parking Lots Rehabilitation 300,000 242,600 57,400 Crack Seal 200,000 161,800 38,200
Curb, Gutter, Asphalt and Sidewalk Repair 200,000 161,800 38,200 Electric Vehicle Charging 262,000 211,900 50,100
Highway Safety Improvement Program - Cycle 12 109,860 88,900 20,960 Los Angeles Avenue from Church St to Blackstock Ave 238,000 192,500 45,500 Sign Repair Replacement 50,000 40,400 9,600
Street Striping 120,000 97,100 22,900
Traffic Signal Yellow Lamp Changeout 175,000 141,500 33,500 Tree Removal / Stump Grinding Funding 50,000 40,400 9,600 Walnut Street Widening 375,000 303,300 71,700
Total Streets & Roads Projects 2,725,360 2,204,300 521,060 TOTAL QUALIFIED CAPITAL 2,725,360 2,204,300 521,060
OUTLAY PROJECTS
Notes:
CITY OF SIMI VALLEY
IDENTIFICATION OF QUALIFIED FY 2025-26 CAPITAL OUTLAY PROJECTS All identified projects have a total project cost in excess of $100,000 and an expected useful life of over ten years. In some cases, FY 2025-26 appropriations reflect annual rather than total project costs. Revenues have been allocated based on the relationship between tax and non-tax proceeds for total General Fund revenues (80.88% to 19.12%), exclusive of interest earnings. 10 ATTACHMENT D
Total Tax Non-Tax
Medicare/SS Proceeds Proceeds
General Fund $612,498 $495,400 $117,098
Workers Compensation 1,527 - 1,527
Library Fund 920 878 42
Total $614,945 $496,278 $118,667
N
otes:
CITY OF SIMI VALLEY
FEDERAL MANDATE - MEDICARE/SOCIAL SECURITY CALCULATION
Medicare/Social Security appropriations have been allocated based on the relationship between tax and non-tax proceeds for total General Fund and Library Fund Revenues, exclusive of interest earnings.
0% of the Transit Fund's personnel costs are paid for by the City's General Fund. Therefore, 0% of Transit's Medicare/Social Security costs have been allocated in the same manner as discussed above.
11 ATTACHMENT E
GENERAL FUND
1. Non-Interest Tax Proceeds (from Attachment B) $77,037,457
2. Less Exclusions:
Capital Projects (from Attachment C) (2,204,300)
Federal Mandates (from Attachment D) (495,400)
3. Net Invested Taxes (Item 1 - Item 2) 74,337,757
4. Total Non-Interest Budget (from Attachment B) 95,250,347
5. Tax Proceeds as Percent of Budget (Item 3 / Item 4)) 78.04%
6. Interest Earnings (Budgeted Amount) 1,800,000
7. Amount of Interest Earned From Taxes (Item 5 x Item 6) 1,404,800
8. Amount of Interest Earned from Non-Taxes (Item 6 - Item 7) 395,200
LIBRARY FUND
1. Non-Interest Tax Proceeds (from Attachment B) 2,889,264$
2. Less Exclusions:
Federal Mandates (from Attachment D) (878)
3. Net Invested Taxes (Item 1 - Item 2) 2,888,386
4. Total Non-Interest Budget (from Attachment B) 3,027,589
5. Tax Proceeds as Percent of Budget (Item 3 / Item 4)) 95%
6. Interest Earnings (Budgeted Amount) 50,000
7. Amount of Interest Earned From Taxes (Item 5 x Item 6) 47,701
8. Amount of Interest Earned from Non-Taxes (Item 6 - Item 7) 2,299
CITY OF SIMI VALLEY
INTEREST EARNINGS PRODUCED BY TAXES
12