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Home My WebLink About18 - 2009-10 Appropriation Limit HearingCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. is June 9, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director (949) 644 -3123 or ddanner @city.newport- beach.ca.us SUBJECT: 2009 -10 APPROPRIATION LIMIT HEARING RECOMMENDATION: Hold a public hearing and adopt, by Resolution, the City's Appropriation (Gann) Limit for the 2009 -10 fiscal year in the amount of $143,264,238. DISCUSSION: Background: Article XIIIB of the California Constitution (Proposition 4) specifies that appropriations of government entities may increase annually only by a limited amount (primarily to allow for population increases and inflation). As in the past, SB 1352 (Government Code Section 7910) requires each local government to establish its appropriations limit by resolution each year at a regularly scheduled or noticed special meeting of the City Council. The attached resolution submitted for Council approval fulfills this requirement. As the following table shows, even without calculating authorized exclusions, the amount by which our Proceeds of Taxes will have been under the Gann Limit for a twelve year period is sufficient to provide a reasonable margin of comfort. 1995 -96 Gann Limit Margin $19,624,749 1996 -97 Gann Limit Margin $19,711,288 1997 -98 Gann Limit Margin $20,285,768 1998 -99 Gann Limit Margin $20,344,472 1999 -00 Gann Limit Margin $21,751,495 2000 -01 Gann Limit Margin $23,470,251 2001 -02 Gann Limit Margin $26,941,613 2002 -03 Gann Limit Margin 2003 -04 Gann Limit Margin 2004 -05 Gann Limit Margin 2005 -06 Gann Limit Margin 2006 -07 Gann Limit Margin 2007 -08 Gann Limit Margin 2008 -09 Gann Limit Margin 2009 -10 Gann Limit Margin Appropriation Limit Hearing June 9, 2009 Page 2 $21,883,919 $30,781,765 $27,911,157 $28,823,421 $20,785,782 $19,268,776 $19,664,455 $26,189,014 There are several factors which have a bearing on the Gann Limit, and on City expenditures subject to the Limit. However, actions by the State reducing our tax revenues, along with weak economic conditions, during the early and mid 1990's established the trend which can be seen above. The detailed population and inflation adjustment calculations are still required, but they have been reduced to a level of relative insignificance by these larger factors. The dramatic increase in the margin in 2003 -04 was primarily the result of the annexation related population adjustment. Although 2006 -07 marked a reversal of the Gann Limit's trend toward obscurity, further developments since then have had the effect of restoring the trend. The magnitude of the change for 2009 -10 is due to weakened revenues on the one hand, and a slightly larger than expected increase in the City's population (as reported by the State Department of Finance) on the other. It is probable that the City of Newport Beach is a number of years away from having a problem with the Gann Limit, if it ever does. Another factor supporting that prediction is that we have not bothered to calculate authorized exclusions for a number of years, since the City has been so far under the limit. Potential exclusions cover a wide variety of public fund uses, including certain categories of debt service, contributions to some types of reserves, federal mandates, and court orders. This part of the process is time consuming and costly. There has been no reason to institute the process so far, but if the Margin becomes small enough to warrant adding that cushion, we will do so. Environmental Review: The City Council's approval of this item does not require an environmental review. Public Notice: The Public Notice for this item was published in the Daily Pilot on May 30, 2009. Appropriation Limit Hearing June 9, 2009 Page 2 Funding Availability: City funding is not required by this action. Alternatives: Not applicable. Submitted by: D nnis Danner ` Administrative Services Director Attachment: Resolution RESOLUTION NO. 2009- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DETERMINING AND ESTABLISHING AN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2009 -10 IN ACCORDANCE WITH ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION AND GOVERNMENT CODE SECTION 7910 WHEREAS, Article XIIIB was added to the California Constitution at the special State -wide election held November 6, 1979 (commonly known as Proposition 4); and WHEREAS, Government Code Section 7910 was added to Chapter 12.05 by Statute at the Regular Session of the California Legislature; and WHEREAS, Proposition 111, which adjustment formulas for the Appropriations 1990; and among other things, provides new annual Limit, was approved by the voters in June, WHEREAS, The League of California Cities and the State of California Department of Finance have published population and per capita income growth indexes, as well as guidelines for the uniform application of Proposition 111; and WHEREAS, Government Code Section 7910 requires the governing body of each local jurisdiction to adopt, by resolution, its appropriations limit; and WHEREAS, said appropriations limit must be adhered to in preparing and adopting this City's annual budget. NOW, THEREFORE, the City Council of the City of Newport Beach does hereby resolve as follows: Section 1: In accordance with Article XIIIB of the California Constitution and Government Code Section 7910, the appropriations limit for fiscal year commencing 1 July 2009 for the City of Newport Beach is $143,264,238. The computation of appropriations for the 2009 -10 fiscal year are set forth in detail in the attachment hereto, which is incorporated as though fully set forth herein. Section 2: Said appropriations limit shall be adhered to in the City of Newport Beach budget for the 2009 -10 fiscal year. ATTEST: ADOPTED this 9th day of June, 2009. City Clerk Mayor CITY OF NEWPORT BEACH COMPUTATION OF APPROPRIATION LIMIT FOR FISCAL YEAR ENDING 30 JUNE 20107 AS PER ARTICLE X11113, CALIFORNIA STATE CONSTITUTION FISCAL YEAR 2008 -09 note (1): note (2): PRIOR YEAR LIMIT $139,044,407 INFLATION ADJUST. (1) 0.0062 POPULATION ADJUST. (2) 0.024 Based on California per capita income increases Based on Orange Newport Beach population growth NEW APPROP. LIMIT $143,2642 238 CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR FISCAL YEAR ENDING 30 JUNE 2010 Total Estimated Proceeds of Taxes $117,075,223 Less Authorized Exclusions Net Proceeds of Taxes note (3) $0 $117,075,223 note (3): Since 2009 -10 estimated gross proceeds were substantially less than appropriations limit, exclusions were not calculated. AMOUNT UNDER APPROPRIATIONS LIMIT $26,1899 014 CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 9 May 26, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director 949 -644 -3123 ddanner@city.newport-beach.ca.us SUBJECT: 2009 -10 PROPOSED BUDGET HEARING 2009 -10 APPROPRIATION LIMIT HEARING It is respectfully City's Proposed , and direct the City DISCUSSION: Background: Council schedule a mrs, 3300 Newport Blvd . a notice dt saio , c- rings. on of the Pursuant to Section 1102 of the Newport Beach City Charter, the City Council is required to hold a public hearing on the City's proposed budget for the 2009 -10 fiscal year. As per Article 13B of the State Constitution, the City Council is required to hold a public hearing on the City's Appropriation Limit (Gann Limit) for the 2009 -10 fiscal year. As per the Budget Calendar, both of these public hearings are scheduled for the City Council meeting of June 9, 2009. Thereafter, the City Council is scheduled to adopt, by resolution, the City's Proposed Budget (including Checklist Items) and Appropriation Limit for the 2009 -10 fiscal year at the City Council meeting of June 23, 2009. Environmental Review: The City Council's approval of this item does not require an environmental review. Public Notice: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). 2009 -10 Budget Hearings May 26, 2009 Page 2 Funding Availability: No City funding is required by this action. Alternative: Not applicable. Submitted by: 4 � Z""� � Dennis C. Danner Administrative Services Director Attachment: Public Notice May 26, 2009 CITY OF NEWPORT BEACH DENNIS DANNER (949) 644 -3123 LEGAL NOTICE NOTICE IS HEREBY GIVEN THAT the City Council of the City of Newport Beach will hold a joint public hearing regarding: (1) Proposed Budget for the 2009 -10 Fiscal Year, pursuant to Section 1102 of the Newport Beach City Charter, and (2) the City's Appropriation Limit for the 2009 -10 Fiscal Year, pursuant to Article 13B of the State Constitution. NOTICE IS HEREBY GIVEN THAT said public hearing will be held on the 9h day of June, 2009, at the hour of 7:00 p.m. in the City Council Chambers, 3300 Newport Boulevard, Newport Beach, CA 92663, at which time and place interested persons may appear and be heard thereon. NOTICE IS HEREBY FURTHER GIVEN THAT copies of the proposed budget are available for inspection by the public in the City Clerk's office. TOTAL BUDGET ALL FUNDS - INCLUDING CAPITAL IMPROVEMENTS: Salaries and Benefits $125,722,910 Maintenance and Operations 60,891,237 Capital Outlay 4,954,094 Capital Improvements 30,526,600 Debt Service 3,785,044 Total Budget 5225.879.885 APPROPRIATION LIMIT: Article 13B Appropriation for 2009 -10 Fiscal Year $143,264,238 Total Appropriations Subject to Limit 117,075,223 Amount Under Limit SJ6JV&L4