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Home My WebLink AboutFY 2010-2011 Annual Appropriation Limit - Resolution 2010-43 C-r Council/Agency Meeting Held: Deferred/Continued to: LAp d ❑ Conditionally Approved ❑ Denied e , CI r s Signatu' rov Council Meeting Date: June 21, 2010 Department ID Number: FN 10-017 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Fred A. Wilson, City Administrator PREPARED BY: Bob Wingenroth, Director of Finance SUBJECT: Adopt Resolution No. 2010-43 Establishing an Annual Appropriation Limit for Fiscal Year 2010/2011 Statement of Issue: Article 13B of the State of California Constitution (the Gann Appropriation Limit) imposes upon state agencies and local government the obligation to limit each fiscal year's appropriations and requires the City of Huntington Beach to annually adopt a tax proceeds appropriation limit. Financial Impact: Not applicable Recommended Action: Motion to: Adopt Resolution No. 2010-43, "A Resolution of the City Council of the City of Huntington Beach Establishing the Appropriation Limit for Fiscal Year 2010/2011" of$902,730,066. Alternative Action(s): A. Do not adopt an appropriation limit in which case the prior year limit applies. B. Adopt the limit with different factors. Analysis: In November 1979, the California voters approved Article 13B of the State of California Constitution, which allows the city's spending of tax proceeds to increase only by factors from the base year of 1978/1979. In June 1990, Proposition 111 was passed which changed the way the limit is calculated and is outlined as follows. The city may increase its limit annually in two ways: • By a percentage equal to the increase from the preceding year in county or city population (whichever is greater). • By an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local nonresidential new construction (whichever is greater). -267- Item 17. m Page 1 REQUEST FOR COUNCIL ACTION MEETING DATE: 6/21/2010 DEPARTMENT ID NUMBER: FN 10-017 For this year's calculation, the 1.01 percent increase in County population was greater than the increase in the city's population of 0.62 percent. The 38.27 percent increase in the assessment roll from the addition of local, nonresidential construction was greater than 2.54 percent decrease in per capita personal income. The proposed appropriation limit for Fiscal Year 2010/2011 was calculated as follows: Fiscal Year 2009/2010 Adopted Appropriation Limit $646,330,684 Multiplied by change in assessment roll from addition of local, nonresidential construction 1.3827 Multiplied by change in county population 1.0101 Proposed Fiscal Year 2009/2010 Appropriation Limit $902,730,066 Appropriations of revenues controlled by the Gann Limit are primarily in the General Fund. General Fund appropriations for Fiscal Year 2010/2011 are expected to be significantly below the amount set as the city's appropriation limit. Examples of proceeds of taxes governed by the Gann Appropriation limit are: property taxes, sales taxes, utility taxes, state subventions, fines, forfeitures, interest revenue on regulatory licenses, user charges, and user fees to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service. Appropriation Limit Report for Fiscal Year 2009/2010 Attached is the Appropriation Limit Report for fiscal year 2009/2010 prepared by our auditors, Diehl, Evans and Company. Agreed-upon procedures were applied to the City's prior year appropriation limit worksheet to verify the City's compliance with Section 1.5 of Article 13B of the California Constitution. No exceptions were noted in the report. Environmental Status: Not applicable Strategic Plan Goal: Maintain financial viability and our reserves Attachment(s): ® Detdtiffbii 1 Adopt Resolution No. 2010-43, "A Resolution of the City Council of the City of Huntington Beach Establishing the Appropriation Limit for Fiscal Year 2010/2011" of$902,730,066. 2 Appropriation Limit Worksheet No. 6 with Independent Accountant's Report on Agreed- Upon Procedures Applied to Appropriation Limit Worksheet for Fiscal Year 2009/2010 Item 17. - Page 2 -268- ATTACHMENT # 1 RESOLUTION NO. 2010-43 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING THE APPROPRIATION LIMIT FOR FISCAL YEAR 2010-2011 WHEREAS, Article 13B of the California Constitution imposes upon state agencies and local governments the obligation to limit each fiscal year's appropriations of the proceeds from taxes to the amount of such appropriations in fiscal year 1978/1979, adjusted for changes as prescribed under the law, NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: In compliance with the provisions of Article 13B of the California Constitution and the formula set out therein,there is hereby established an appropriation limit of$902,730,066 for the fiscal year 2010-2011. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 21st day of June ,2010. CA -jfMa or REVI AND APPROVED: INITIAT D AND APPROVE : Cit Ad inistrator Finance Director APPROVED AS TO FORM: UCty Attorney 5t�'f�io 10-2519/47336 Res. No. 2010-43 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on June 21, 2010 by the following vote: AYES: Carchio, Coerper, Hardy, Green, Bohr, Dwyer, Hansen NOES: None ABSENT: None ABSTAIN: None 14 and ex-officit7clerk of the City Council of the City of Huntington Beach, California ATTACHMENT #2 CITY OF HUNTINGTON BEACH APPROPRIATIONS LIMIT WORKSHEET NO. 6 WITH INDEPENDENT ACCOUNTANTS'REPORT ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET FOR THE YEAR ENDED SEPTEMBER 30,2009 DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS 6T CONSULTANTS MICHAEI.R.LUDIN,CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKER,CPA NITIN P.PATEL,CPA ROBERT J.CALLANAN,CPA *PHILIP H.HOLTKAMP,CPA 5 CORPORATE PARK,SUITE 100 *THOMAS M.PERLOWSKI,CPA IRVINE,CALIFORNIA 92606-5165 *HARVEY J.SCHROEDER,CPA (949)399-0600 u FAX(949)399-0610 KENNETH R.AMES,CPA www.dielilevans.com *WILLIAM C.PENTZ,CPA March 15,2010 *A PROFESSIONAL CORPORATION INDEPENDENT ACCOUNTANTS'REPORT ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET To the Honorable Mayor and Members of City Council City of Huntington Beach Huntington Beach, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Worksheet No. 6 of the City of Huntington Beach, California for the year ended September 30, 2009. These procedures, which were agreed to by the City of Huntington Beach, California and the League of California Cities (as presented in the League publication entitled "Article XIII-B Appropriations Limit Uniform Guidelines") were performed solely to assist the City of Huntington Beach, California in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. The City of Huntington Beach's management is responsible for the Appropriations Limit Worksheet No. 6, This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained the completed Worksheet No. 6 for the year ended September 30, 2009, and compared the limit and annual adjustment factors included in that worksheet to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheet to those that were selected by a recorded vote of the City Council. No exceptions were noted as a result of this procedure. - 1 - OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SUITE 33C CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORNIA 92025-2598 (760)729-2343•FAX(760)729-2234 (760)741-3141.FAX(760)741-9890 2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the total adjustments, and compared the resulting amount to this year's limit. We also recalculated the adjustment factor and the adjustment for inflation and population, and compared the results to the amounts on Worksheet No. 6. No exceptions were noted as a result of this procedure. 3. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the prior year. No exceptions were noted as a result of our performing this procedure. We were not engaged to, and did not,perform an audit, the objective of which would be the expression of an opinion on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled "Article XIIIB Appropriations Limitation Uniform Guidelines". This report is intended solely for the information and use of the City Council and management of the City of Huntington Beach, California and is not intended to be, and should not be, used by anyone other than these specified parties. -2 - CITY OF HUNTINGTON BEACH APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the year ended September 30,2009 Appropriations limit for fiscal year ended September 30,2008 (see Note 2) $ 565,300,579 Adjustment factors for the fiscal year ended September 30, 2009 (see Note 2): Inflation Population Factor Factor Combined (Note 3) (Note 4) Factor 1.05560000 1.01030000 1.06647268 x .06647268 Adjustment for inflation and population 37,577,044 Other adjustments (Note 5) - Total adjustments 37,577,044 Appropriations limit for fiscal year ended September 30, 2009 S602,877,623 Unaudited; see accompanying independent accountants' report on agreed-upon procedures applied to appropriations limit worksheet and accompanying notes. - 3 - CITY OF HUNTINGTON BEACH NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the year ended September 30, 2009 1. PURPOSE OF LIMITED PROCEDURES REVIEW: Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures review in connection with the annual audit. 2. METHOD OF CALCULATION: Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed at Notes 3 and 4 below. 3. INFLATION FACTORS: A California governmental agency may adjust its appropriations limit by either the annual percentage change in the 4th quarter per capita personal income (which percentages are supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Huntington Beach for the fiscal year 2008-2009 represents the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. 4. POPULATION FACTORS: A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction's own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City of Huntington Beach for fiscal year 2008-2009 represents the annual percentage change in population for the County of Orange. 5. OTHER ADJUSTMENTS: A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City of Huntington Beach had no such adjustments for the year ended September 30, 2009. Unaudited; see accompanying independent accountants' report on agreed-upon procedures applied to appropriations limit worksheet. - 4 -