DATE: September 22, 2015
TO: Mayor and City Council
FROM: Tracy Vesely, Director of Finance
SUBJECT
Adopting a Resolution to correct the 2015 Appropriations Limit
RECOMMENDATION
That Council approves the attached resolution to correct the transposition error in the previously approved fiscal year 2015 Appropriations Limit (Resolution 14-096).
SUMMARY
State Proposition 4, commonly known as the Gann Initiative, was approved by California voters in
November 1979. Proposition 4 created Article XIIIB of the State Constitution, which places limits on the amount of revenue that can be spent by government agencies. This is referred to as the Gann
Appropriation Limit, or Gann Limit.
A subsequent related State initiative, Proposition 111, was approved by the voters in June 1990 and provided new adjustment formulas to make the Gann Limit more responsive to local growth issues and to address concerns regarding the accountability of local governments in adopting their limits.
Prior to each fiscal year, city councils must adopt by resolution the Gann Appropriation Limit for the city for the upcoming year. In addition, cities are required to conduct a review of their limits during annual financial audits.
The appropriations limitation imposed by Propositions 4 and 111 creates a restriction on the amount of revenue that can be appropriated in any fiscal year. The limit is based on actual appropriations during the 1978-79 fiscal year and is increased each year using population and inflation growth factors. Only revenues that are classified as "proceeds of taxes" are subject to the limit. The use of "non-tax proceeds" (user fees, rental income, franchise fees, Gas Tax revenue) is not restricted.
DISCUSSION
On June 23, 2014, Council approved the FY 2015 Appropriations Limit in accordance with State Proposition IV by adopting resolution 14-096 (Attachment 2). Resolution 14-096 contained a transposition error...
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