Item Number: 1
City Council / Board of Directors
Public Hearing(s)
Meeting of: September 16, 2025
Submitted By:
Carmen Cun, Finance Director / City Treasurer
Subject:
City of Victorville Annual Appropriations Limit Revision and Adoption Recommendation:
That the Honorable City Council:
(1) Open and conduct a Public Hearing;
(2) Close the Public Hearing; and
(3) Adopt Resolution No. 25-067, a Resolution of the City Council of the City of Victorville amending and superseding Resolution No. 25-041 to revise, establish and adopt the Annual Appropriations Limit for fiscal year 2025-2026.
Fiscal Impact:
There is no fiscal impact associated with this item.
Strategic Plan Goal:
This item aligns with Strategic Goal A: Financial Sustainability which aims to foster fiscal health through disciplined long-term planning, cost control, increased revenues, and cost recovery. An Appropriations Limit, also known as the Gann Limit, is a state-level cap on the amount of money governments in California can spend from tax proceeds. The limit allows for annual adjustments based on population growth and the rate of inflation, with the goal of keeping real (inflation-adjusted) per-person government spending at or below 1978–79 levels.
If a government entity spends more than its limit, the excess tax revenue must be returned to taxpayers and/or used for school and community college spending. By establishing the City’s Appropriation Limit as required, the City can adhere to proper levels of spending.
Background:
The adoption of the Gann Spending Limitation Initiative (Proposition 4) in 1979, later amended by Proposition 111 in 1990, established Article XIIIB of the State Constitution, 4 3
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the requirement and procedure for establishing an appropriations limit for local agencies.
Each year, the State and local governments must adopt a resolution establishing an appropriations limit. The annual calculation of the appropriations limit must be reviewed as part of the City’s annual financial audit.
In brief, the amount of tax revenue the City is annually authorized to appropriate is limited by factors relating to changes in population and the economy. The population factor selected may either be the rate of change in population for the City or for the County. The economic factor selected may either be the percentage change in California’s per capita personal income or the percentage change in non-residential assessed property valuation due to new construction; however, the change in non-residential assessed property valuation is not available from the County of San Bernardino Assessor’s Office until after fiscal year end and after the adoption of the budget. The City’s auditors and management prefer the appropriations limit to be calculated in a timely manner and in correlation with the annual budget; therefore, the change in per capita personal income is used for this factor. The changes in population and the changes in per capita personal income are provided by the California Department of Finance in April or May of each year (Attachment B).
The formula works as follows:
(% change in population (City or County) + 100)
100
X (multiplied by)
(% change in California per capita personal income + 100) 100
The value determined by the formula set forth above is then applied to the previous year’s limit to yield the new appropriations limit for the fiscal year.
Discussion:
In May 2025, staff was engaged in the preparation of materials for the annual budget workshop, the development of the FY 2025–2026 budget book, and the calculation of the annual Appropriations Limit. In the course of these efforts, the calculation was inadvertently performed using the percentages applicable to FY 2024–2025 rather than the updated figures for FY 2025–2026. This discrepancy was not identified until after the adoption of Resolution No. 25-041, which, as a result, reflects an incorrect Appropriations Limit.
The revised calculation for FY 2025-2026 reflects the percentage increase in City population growth since it was greater than the County’s (0.49% vs. 0.44%). With respect to the economy criterion, the percentage change in California’s per capita personal income is 6.44%. Therefore, the appropriations limit for FY 2025-2026 may be set at $1,595,764,741 (1.0049 x 1.0644 x FY 2024-2025 Appropriations Limit of 4 3
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$1,491,904,943). For the complete calculation, please see Attachment A (Resolution 25- 067 with Attachments 1, 2 and 3). Based on tax proceeds budgeted for FY 2025-2026 in the amount of $87,469,522, the City appropriations are $1,508,295,219 below the limit.
Therefore, it is staff’s recommendation that the Honorable City Council adopt Resolution No. 25-067 to revise the annual Appropriations Limit for FY 2025-2026.
Staff remains available for any questions the Council may have.
Prepared By:
Carmen Cun, Director of Finance
Attachments: A. Resolution No. 25-067
B. California Department of Finance Price Factor and Population Information