City of Simi Valley
Staff Report
June 8,
2026
To: City
Council
From: D
epartment of Administrative Services,
Carolyn Johnson, Administrative Services Director
Subje
ct: A dopt a Resolution Establishing the City’s Fiscal Year 2026- 27 Appropriation Limit
Staff Re
commendation
It
is recommended that the City Council adopt the attached R esolution No. 2026 -18 (Attachment A ) setting the City’s Fiscal Year (FY) 202 6-27 Appropriations Limit at $111,141,483.
Bac
kground
Eac
h year , the City is required to adopt a resolution establishing a limit on its appropriations of tax proceeds. For FY 202 6-27, the City’s appropriations limit is calculated to be $111,141,483. Based on net proceeds of taxes subject to the limitation in the amount of $85,102,753 in the FY 2026-27 Proposed Budget, the proposed City appropriations are $26,038,730 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 revenue that the State and most local governments can appropriate within a given fiscal year. Its basic provisions are as follows:
• Eac
h 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 annual adjustments to reflect increases in population, the cost of living, and financial responsibility transfers.
• Onl
y 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 also apply to voter -approved debt, debt that existed prior to January 1, 1979, and the cost of complying with court or Federal government mandates. • Ex
cess revenues above the appropriations limit must be returned (or otherwise allocated according to law) if the limit is exceeded, generally within a two- year period after averaging.
Agenda Item No.
Consent (12)
• 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.
O
n 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:
• T
he change in the cost of living is defined as 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.
• T
he 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 10 or more years and a cost of $100,000 or more.
• T
ax revenues received in excess of the appropriations limit must be refunded to taxpayers (or otherwise allocated as permitted) if the limit is exceeded over a two- year period.
• T
he appropriations limit must be calculated annually and adopted by resolution.
The calculation is reviewed as part of the City’s annual financial audit.
Di
scussion
T
he information used to calculate the City’s FY 2026-27 appropriations limit is presented in Exhibit A to the Resolution, Computation of FY 2026-27 Appropriations Limit. The City’s appropriations limit for FY 202 5-26 was $ 106,624,506. The FY 202 6-27 adjustment factor, as allowed by Proposition 111, due to population and cost -of-living changes, is
1.04236340. Multiplying the FY 2025-26 limit by the adjustment factor results in a FY 2026-27 appropriations limit of $111,141,483.
A
s 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 Ventura County’s population was used since it was greater than the City’s (-0.68% vs. -1.00%).
W
ith respect to the change in the cost- of-living criterion, the change in California per capita personal income ( 4.95%) 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 2 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 2026-27 if used in lieu of the per capita income data.
The Ci
ty’s total revenue proceeds from all funds subject to the limit are $103,931,052, as presented in Attachment A to the Resolution. Of this amount, $ 86,496,365 is identified as coming from tax proceeds, while $17,434,687 is identified as coming from non- tax proceeds. The Calculation of Proceeds of Taxes Subject to the FY 2026- 27 Limit , attached as Attachment B to the Resolution, provides a detailed breakdown, by fund, of budgeted revenues and their classification as tax proceeds or non-tax proceeds.
The Ci
ty is entitled to make certain deductions from FY 2026-27 tax proceeds of $86,496,365 for the purpose of calculating the Net Proceeds of Taxes Subject to the Limit.
The first of these is a $828,300 deduction for qualified capital outlay projects. Attachment C to the Resolution, Identification of Qualified FY 2026- 27 Capital Outlay Projects , provides background information for this deduction, including the qualifying capital outlay projects, funding sources, and the classification of appropriations into tax and non- tax proceeds.
The Ci
ty is also entitled to deduct the cost of compliance with Federal mandates, which is $565,312 in FY 2026-27. 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 to the Resolution, Federal Mandate - Medicare/Social Security Calculation. The deduction has been limited to the portion of the total cost to be paid from tax proceeds.
Havi
ng taken the available deductions into consideration, the FY 2026-27 Proposed Budget contains appropriations subject to the limitation of $85,102,753. This amount is $26,038,730 below the City's legal appropriations limit of $111,141,483.
Finan
cial Impact
This
action has no direct impact to the City’s General Fund. However, the appropriations limit establishes the maximum amount of tax proceeds the City may appropriate annually, thereby constraining future budgeting and expenditure levels. The City is projected to remain below its appropriations limit for the upcoming fiscal year.
City
Council Priority
This
item supports one of the City Council’s goals or pillars of excellence as outlined in the City Council priorities.
Sugges
ted Motion
I move t
o adopt Resolution No. 2026-18 establishing the City’s FY 2026-27 appropriations limit.
3 Summary
Each year, State law requires the City to establish an appropriations limit on the use of tax proceeds pursuant to Article XIIIB of the California Constitution . 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 2026- 27, the City’s appropriations limit is calculated to be $111,141,483. The City’s Proposed Budget contains appropriations subject to the limit of $85,102,753. Therefore, the portion of the FY 202 6-27 Proposed Budget subject to the limit is $26,038,730, less than the City’s FY 202 6-27 appropriations limit. Therefore, the City is projected to remain in compliance with State appropriations limit requirements for FY 2026-27.
Prepared by: Johanna Medrano, Deputy Administrative Services Director, Budget and Purchasing
Attachments:
At
tachment A – Resolution No. 2026-18
4 Attachment A
RESOL
UTION NO. 2026-18
A RESO
LUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY ESTABLISHING AN APPROPRIATIONS LIMIT
FOR FISCAL YEAR 2026-27
WHER
EAS, 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
WHER
EAS, 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
WHER
EAS, 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
WHER
EAS, 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 WHER
EAS, the required computations to determine the appropriations limit for Fiscal Year 2026-27 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
WHER
EAS, these computations are provided in Exhibit A, which is incorporated herein by reference and attached hereto.
NOW, T
HEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY
DOES RESOLVE AS FOLLOWS:
SECTI
ON 1. The Appropriations Limit for the City of Simi Valley for Fiscal Year 2026-27 is $111,141,483.
SECTI
ON 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 SECTI
ON 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 an
d ADOPTED this 8th day of June 2026.
Attest:
Lucy Blanco, City Clerk Dee Dee Cavanaugh, Mayor of the City of Simi Valley, California
Approve
d as to Form: Approved as to Content:
Algeria R. Ford, City Attorney Samantha C. Argabrite, City Manager Carolyn Johnson,
Administrative Services Director
6 Res. No. 2026-18
Exhib it A
FY 2025-26 Appropriations Limit $106,624,506
Change in Per Capita Income * 4.95%
(Change in Non-Residential Assessed Valuation Not Available) Change in Ventura County Population* -0.68%
(Change in City of Simi Valley Population = -1.00%)
Cumulative Compound Change Factor
(1.0495 X 0.9932) 1.04236340
FY 2026-27 Appropriations Limit $111,141,483
* SOURCE: State of California, Department of Finance, Price and Population Factors - May 2026 Computation of FY 2026-27 Appropriations Limit
City of Simi Valley
7 Res. No. 2026-18
At tachment A
FY 2026-27 Total Proceeds of All Funds Subject to Limit $103,931,052 (From Attachment B)
Less: Non-Tax Proceeds (From Attachment B) (17,434, 687) FY 2026-27 Proceeds of Taxes 86,496,365
Less: Qualified Capital Outlay Projects (From Attachment C) (828,300) Less: Federal Mandates (From Attachment D) (565,312)
FY 2026-27 Net Proceeds of Taxes Subject to the Limit 85,102,753 Less: FY 2026-27 Appropriations Limit (From Exhibit A) 111,141,483 Budget Appropriations Over/(Under) the Limit ($26,038,730) City of Simi Valley
Comparison of Proposed Budget
To Appropriations Limit
8 Res. No. 2026-18
At tachment B
Tax Percent Non-Tax Percent
Total Proceeds Of Total Proceeds Of Total Notes
GENERAL FUND:
Taxes and Franchises 81,373,107$ 75,373,107$ $6,000,000 1 Licenses and Permits 3,451,000 0 3,451,000
Fines and Forfeitures 370,000 0 370,000
Leases and Rentals 730,521 0 730,521
From Other Governments 586,300 350,000 236,300 2
Grants 590,000 0 590,000
Service Charges 3,679,275 0 3,679,275
Other Revenues 1,564,535 0 1,564,535
Transfers In 4,968,872 4,875,389 93,483
Subtotal 97,313,610 80,598,496 82.82% 16,715,114 17.18% Interest (from Attachment E) 3,470,000 2,824,300 645,700 3 Total General Fund 100,783,610 83,422,796 17,360,814
LIBRARY FUND:
Taxes and Franchises 2,975,942$ 2,975,942$ - $
Licenses and Permits - - -
Fines and Forfeitures 3,500 - 3,500
Leases and Rentals 3,000 - 3,000
From Other Governments - - -
Grants - - -
Service Charges 4,000 - 4,000
Other Revenues 61,000 - 61,000
Transfers In - - -
Subtotal 3,047,442$ 2,975,942$ 98% 71,500$ 2%
Interest (from Attachment E) 100,000 97,627 2,373 3
Total Library Fund 3,147,442$ 3,073,569$ 73,873$
TOTAL ALL FUNDS SUBJECT
TO THE LIMIT $103,931,052 $86,496,365 $17,434,687
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 the FY 2026-27 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 Res. No. 2026-18
At tachment 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
Major Streets Rehabilitation 250,000 207,100 42,900
Minor Street Overlay Program 450,000 372,700 77,300
Sidewalk Assessment and Repair 300,000 248,500 51,500 Total Streets & Roads Projects 1,000,000 828,300 171,700 Total Qualified Capital 1,000,000 828,300 171,700
Outlay Projects
Notes:
City of Simi Valley
Identification of Qualified FY 2026-27 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 2026-27 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 (82.82% to 17.18%), exclusive of interest earnings. 10 Res. No. 2026-18
A ttachment D
Total Tax Non-Tax
Medicare/SS Proceeds Proceeds
General Fund $681,625 $564,500 $117,125
Workers Compensation 1,252 - 1,252
Library Fund 832 812 20
Total $683,709 $565,312 $118,397
Notes:
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 Res. No. 2026-18
A ttachment E
GENERAL FUND
1. Non-Interest Tax Proceeds (from Attachment B) $80,598,496
2. Less Exclusions:
Capital Projects (from Attachment C) (828,300)
Federal Mandates (from Attachment D) (564,500)
3. Net Invested Taxes (Item 1 - Item 2) 79,205,696
4. Total Non-Interest Budget (from Attachment B) 97,313,610
5. Tax Proceeds as Percent of Budget (Item 3 / Item 4)) 81.39%
6. Interest Earnings (Budgeted Amount) 3,470,000
7. Amount of Interest Earned From Taxes (Item 5 x Item 6) 2,824,300
8. Amount of Interest Earned from Non-Taxes (Item 6 - Item 7) 645,700
LIBRARY FUND
1. Non-Interest Tax Proceeds (from Attachment B) 2,975,942$
2. Less Exclusions:
Federal Mandates (from Attachment D) (812)
3. Net Invested Taxes (Item 1 - Item 2) 2,975,130
4. Total Non-Interest Budget (from Attachment B) 3,047,442
5. Tax Proceeds as Percent of Budget (Item 3 / Item 4)) 98%
6. Interest Earnings (Budgeted Amount) 100,000
7. Amount of Interest Earned From Taxes (Item 5 x Item 6) 97,627
8. Amount of Interest Earned from Non-Taxes (Item 6 - Item 7) 2,373
CITY OF SIMI VALLEY
INTEREST EARNINGS PRODUCED BY TAXES
12 Res. No. 2026-18