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City Council Staff Report Agenda Item No. 4
June 14, 2011
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Tracy McCraner, Administrative Services Director/Treasurer
949 - 644 -3123, tmccraner @newportbeachca.gov
PREPARED BY: Susan Giangrande, Budget Manager
APPROVED: tL-\A
TITLE: Adoption of Fiscal Year 2011 -12 Appropriations Limit
ABSTRACT:
As a governmental entity, the City is subject to the Gann Spending Limitation Initiative,
which limits the amount of annual appropriations of tax proceeds. The limitation is
based upon the prior fiscal year amount, adjusted for changes in population combined
with the change in California per capita personal income and must be adopted by
Resolution.
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Adopt, by Resolution 2011 -_, the City's Appropriations (Gann) Limit for Fiscal Year
2011 -12 in the amount of $144,448,989.
FUNDING REQUIREMENTS:
There is no fiscal impact related to this item.
DISCUSSION:
Article XIIIB of the California Constitution specifies that appropriations of government
entities may increase annually only by a limited amount, primarily to allow for population
increases and inflation. Each local government is required 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.
The calculation of the City's Appropriation Limit for Fiscal Year 2011 -12 is
1
Adoption of Fiscal Year 2011 -12 Appropriations Limit
June 14, 2011
Page 2
FY 2010 -11 Appropriations Limit
$140,588,741
Inflation Adjustment Factor'
0.0251
Population Adjustment Factor'
0.0023
FY 2011 -12 Appropriations Limit
$ 144,448,989
' Based on California per capita income increases as provided by the California Department of Finance,
May 2011.
2 Based on Newport Beach population growth as provided by the California Department of Finance, May
2011.
The City of Newport Beach proceeds of taxes for Fiscal Year 2011 -12 is estimated to be
$115,000,875 which means that our appropriations will be under the Appropriations
Limit by $29,448,114, a significant margin of comfort. Calculation of proceeds of taxes
can exclude certain public fund uses, including categories of debt service, contribution
to some types of reserves, and federal mandates. The exclusion calculation can be time
consuming and costly, so we have not included that as part of our process since our
appropriations are significantly below the Appropriations Limit.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will
not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it
has no potential for resulting in physical change to the environment, directly or
indirectly.
NOTICING:
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). The Public Notice for this
item was published in the Daily Pilot on May 28, 2011.
Submitted by:
Tracy McCrbner
Administrative Services Director /Treasurer
Attachments: Resolution 2011-
2
RESOLUTION NO. 2011-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH DETERMINING AND ESTABLISHING AN
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2011 -12 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, among other things, provides new annual
adjustment formulas for the Appropriations Limit, was approved by the voters in June, 1990,
and
WHEREAS, 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
2011 for the City of Newport Beach is $144,448,989. The computation of appropriations for
the 2011 -12 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 2011 -12 fiscal year.
ATTEST:
ADOPTED this 14th day of June, 2011.
City Clerk
Mayor
3
COMPUTATION OF APPROPRIATION LIMIT FOR
FISCAL YEAR ENDING 30 JUNE 20123
AS PER ARTICLE XIIIB, CALIFORNIA STATE CONSTITUTION
FISCAL YEAR
2009 -10
PRIOR YEAR
LIMIT
$140,588,741
INFLATION POPULATION
ADJUST. (1) ADJUST. (2)
Iexl)t&l�ixoAYFtI
note (1): Based on California per capita income increases
note (2): Based on Orange Newport Beach population growth
NEW APPROP.
LIMIT
$144,448,989
CALCULATION OF ESTIMATED PROCEEDS OF TAXES FOR
FISCAL YEAR ENDING 30 JUNE 2012,
Total Estimated Proceeds of Taxes $115,000,875
Less Authorized Exclusions
Net Proceeds of Taxes
note (3) $0
$115,000,875
note (3): Since 2010 -11 estimated proceeds are substantially less than the
Appropriations Limit, exclusions were not calculated.
AMOUNT UNDER APPROPRIATIONS LIMIT $29,448,114
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