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Home My WebLink AboutPublic Hearing to consider adopting Resolution No. 2019-42 e �,y !/'I f1iW✓E7) b-D- l City of Huntington Beach File #: 19-661 MEETING DATE: 6/17/2019 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Dave Kiff, Interim City Manager PREPARED BY: Carol Molina-Espinoza, Acting Chief Financial Officer (CFO) Subiect: Public Hearing to consider adopting Resolution No. 2019-42 establishing the Gann Appropriation Limit for Fiscal Year 2019/20 Statement of Issue: Section 7910 of the State Government Code requires the City of Huntington Beach to adopt its appropriations limit, pursuant to Article XIIIB of the State of California Constitution. The Government Code requires adoption of the appropriation limit by June 30, 2019, for following Fiscal Year 2019/20. Financial Impact: None Recommended Action: Adopt Resolution No. 2019-42, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2019/20" of$964,662,284. Alternative Action(s): Do not approve the recommended action and direct staff accordingly. Analysis: In November 1979, the California voters approved Proposition 4, which created Article XIIIB of the State Constitution, a state law that requires the state and local governments to adopt an annual appropriation limit. This limit, also referred to as the "Gann Limit," establishes a limit on the proceeds of taxes that may be appropriated for spending in a given fiscal year. The limit allows the City's spending of tax proceeds to increase only by population growth and cost-of-living 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 City of Huntington Beach Page 1 of 2 Printed on 6/12/2019 po✓✓ere384 Legistar`'` File #: 19-661 MEETING DATE: 6/17/2019 (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 non-residential new construction (whichever is greater). The proposed appropriation limit for Fiscal Year 2019/20 is calculated as follows: FY 2018/19 Appropriation Limit $ 921,344,622 Multiplied by percentage growth in State Per Capita Personal Income 1.0385 Multiplied by change in County Population 1.0082 Proposed FY 2019/20 Appropriation Limit $964,662,284 Appropriations of revenues controlled by the Gann Limit are primarily in the General Fund. The General Fund proposed appropriation for FY 2019/20 of $231.8 million is significantly below this 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. Environmental Status: Not applicable. Strategic Plan Goal: Strengthen long-term financial and economic sustainability Attachment(s): 1. Public Hearing Notice 2. Resolution Number 2019-42, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2019/2020" City of Huntington Beach Page 2 of 2 Printed on 6/12/2019 powerE33LJ Legistar"O PUBLIC HEARING CITY OF HUNTINGTON BEACH Notice of Public Hearing on the Proposed City GANN Appropriation Limit for Fiscal Year 2019/2020 Notice is hereby given that a public hearing will be held by the City Council of the City of Huntington Beach, in the Council Chambers of the Civic Center, Huntington Beach located at 2000 Main Street, at the hour of 6:00 PM, or as soon as possible thereafter on Monday, the 17th day of June 2019, for the purpose of considering the GANN Appropriation Limit for Fiscal Year 2019/2020. The GANN Appropriation Limit for Fiscal Year 2019/2020 totals $964,662,284.The complete GANN Appropriation Limit for Fiscal Year 2019/2020 may be reviewed by the public from 8:00 AM to 5:00 PM, Monday through Friday in the City Clerk's Office at City Hall, 2000 Main Street, second floor; The public may obtain copies of the GANN Appropriation Limit for Fiscal Year 2019/2020 from the City's website at http://www.huntingtonbeachca.gov. All interested persons are invited to attend to express their opinions for, or against, the proposed Limit with written or oral comments. Written communications to the City Council should be mailed to the Office of the City Clerk at the address below. Further information may be obtained from the Finance Department, 2000 Main Street, Huntington Beach, CA, 92648-2702 or by telephone (714) 536-5630. The City of Huntington Beach endeavors to accommodate persons of handicapped status in the admission or access to, or treatment or employment in, city programs or activities. The City of Huntington Beach is an equal opportunity employer. Dated: June 2, 2019 City of Huntington Beach By: Robin Estanislau, City Clerk 2000 Main Street Huntington Beach, CA 92648-2702 Telephone: (714) 536-5405 Published: The Orange County Register June 2, 201911277112 RESOLUTION NO. 2019-42 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ESTABLISHING THE GANN APPROPRIATION LIMIT FOR FISCAL YEAR 2019/2020 WHEREAS, Article 13B of the California Constitution imposes upon state agencies and local governments the obligation to limit each fiscal year's appropriation 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 provisions of Article 13B of the California Constitution and the formula set out therein, there is hereby established an appropriation limit of$964,662,284 for the fiscal year 2019/20. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 17th day of June , 2019. Mayor REVIEWED AND APPROVED: APPROVED AS TO FORM: City Manager i ttorney ITIATED AND APPROVED: Chief Financial Officer Exhibit A— Gann Limit Calculation 19-7672/204806 EXHIBIT A GANN LIMIT CALCULATION FISCAL YEAR 2019-2020 Under Proposition 111,there are two options available for each of the major adjustment factors. The values of these factors for the purpose of calculating the Fiscal Year 2019-2020 adjustment are as follows: Price Factor: (A) Percent growth in State per Capita Personal Income: 3.85% (Source:Dept of Finance,California) (B) Percent change in Assessed Valuation due to new non-residential construction: -1.52% (Source:Orange County Assessor Prop 11 I Report) Population Factor: (C) Percent growth in County Population: 0.29% (Source:Dept of Finance,California) (D) Percent growth in City Population: 0.82% (Source:Dept of Finance,California) Annual Adjustment Factor: Based on the actual data,the four alternative adjustment factors are as follows: (A x C) 1.0385 x 1.0029 = 1.04151165 (A x D) 1.0385 x 1.0082 = 1.0470157 (B x C) 0.9848 x 1.0029 = 0.98765592 (B x D) 0.9848 x 1.0082 = 0.99287536 Calculation of the Fiscal Year 2019-2020 Limit FY 18/19 Limit $921,344,622 Recommended Adjustment Factor(Largest Allowable Increase) 1.0470157 FY 19/20 Limit $964,662,284 Res. No. 2019-42 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, ROBIN ESTANISLAU, 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 17, 2019 by the following vote: AYES: Carr, Semeta, Peterson, Posey, Delgleize, Hardy NOES: None ABSENT: Brenden RECUSE: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California City of Huntington Beach Gann Appropriation Limit FY 2019/20 a U June 17, 2019 Presented by the Finance Department Gann Appropriation Limit State Government Code section 7910 requires adoption of appropriation limit annually before the start of a fiscal year, pursuant to Article 13B of the State of California Constitution ( November 1979) Gann Limit establishes a limit on the proceeds of taxes that may be appropriated for spending in a fiscal year Limit may increase annually in two ways: Per Capita Personal Income in California or Assessment Roll of Local Non-Residential New Construction (whichever is greater) County or City Population (whichever is greater) z CalculationGann Limit Description Am FY 2018/19 Appropriation Limit $921,344,622 Multiplied by percentage growth in State Per Capita 1.0385 Personal Income Multiplied by change in City Population 1.0082 Proposed FY 2019/20 Appropriation Limit $964,662,284 General Fund appropriation for FY 2019/20 is $231 .8 million which is significantlybelow the Recommended Action • Adopt Resolution No. 2019-42, a Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2019/2020 4