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Home My WebLink AboutItem 11 - Adopt a Resolution Establishing the Appropriations Limit FY 24/25Finance and Management Services www.santa-ana.org/finance Item # 11 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report June 18, 2024 TOPIC: Adopt a resolution establishing the appropriations limit for 2024-25 AGENDA TITLE Adopt a Resolution Establishing the Appropriations Limit of the City of Santa Ana for FY 2024-25 RECOMMENDED ACTION Adopt a resolution establishing the appropriations limit of the City of Santa Ana for FY 2024-25, as required by state law. RESOLUTION NO. 2024-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA ESTABLISHING THE APPROPRIATION LIMIT OF THE Cy��'��]�•y_V��_�_1V_\Y�7:\�[•YN_1�'1�_1:i��yZ�b��Y� GOVERNMENT CODE §84308 APPLIES: No DISCUSSION The State of California Constitution imposes a limit ("the GANN Limit") on tax proceeds to be appropriated for expenditures by a local government in any given fiscal year and requires the cities to establish this limit by resolution. Adoption of the subject resolution is necessary for compliance with the California Constitution for the fiscal year ending June 30, 2025. Furthermore, Section 13-90 of the Santa Ana Municipal Code requires the creation of a Reserve Fund for Excess Proceeds of Taxes (Reserve Fund), as a separate accounting of taxes received in a fiscal year prior to the period of expenditure. The City appropriates the expenditure of tax revenue in the same fiscal year of receipt, and therefore creation of the Reserve Fund is not necessary for the fiscal year 2024-25. In fiscal year 2022-23, the Proceeds of Taxes were $323,170,905 and the actual General Fund expenditures were $374,898,249. Using the formula provided by the state, staff calculated the spending limitation from "Proceeds of Taxes" as $1,427,985,554 (Exhibit 1) for fiscal year 2024-25, which is the FY 2022-23 limit increased by 3.94%. The funds constrained by the appropriations limit include the General Fund, the Capital Outlay Fund, and Special Revenue Funds. Adopt a resolution establishing the appropriations limit for 2024-25 June 18, 2024 Page 2 Exhibit 1 identifies the factors used to determine the allowable inflationary increase from the prior year. Exhibit 2 categorizes FY 2024-25 anticipated revenues from "Proceeds of Taxes" and "Non -Proceeds of Taxes." Exhibit 3 computes the FY 2024-25 appropriations subject to this limitation, and identifies the difference between the limit and the budgeted appropriation. As demonstrated in Exhibit 3, the City's anticipated fiscal year 2024-25 appropriations subject to limitation is $318,718,831, which is $1,109,266,723 less than the allowable GANN Limit. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBIT(S) 1. Computation of Appropriation Limit 2. Schedule to Categorize Anticipated Revenues 3. Appropriation Subject to Limitation 4. Resolution Submitted By: Kathryn Downs, Finance and Management Services Agency Executive Director Approved By: Alvaro Nunez, Acting City Manager EXHIBIT 1 COMPUTATION OF APPROPRIATION LIMIT FOR FISCAL YEAR ENDING JUNE 30, 2025 Fiscal Year 2023-24 Appropriations Limit $ 1,373,855,642 California Per Capita Personal Income: 3.620% * Converted into a Factor 1.0362 Population Growth: 0.31 % * Converted into a Factor: 1.0031 Calculation of factor for fiscal year 2024-25 (1.0362 x 1.00310): 1.0394 Fiscal Year 2023-24 Appropriations Limit $ 1,427,985,554 * Source: State of California, Department of Finance, Price and Population Information - FY 2024-25 EXHIBIT 2 SCHEDULE TO CATEGORIZE ANTICIPATED REVENUES FOR FISCAL YEAR ENDING JUNE 30, 2025 PROCEEDS OF NON -PROCEEDS OF REVENUE TAXES TAXES TOTALS TAXES: Property Tax $ 106,069,320 $ - $ 106,069,320 Sales Tax 150,115,560 - 150,115,560 Hotel Visitors' Tax 9,500,000 - 9,500,000 Business Tax 16,200,000 - 16,200,000 Documentary Stamp Tax 800,000 - 800,000 Utility Users' Tax 27,300,000 - 27,300,000 Medical Marijuana/Cannabis Tax 14,530,000 - 14,530,000 Total Taxes 324,514,880 - 324,514,880 FROM STATE: State Motor Vehicle License 300,000 - 300,000 Homeowner Prop Tax Subvention 182,000 - 182,000 State Gas Tax - 16,491,850 16,491,850 SB90 Reimbursements - 85,000 85,000 State Grants - 3,356,730 3,356,730 Standards Training for Corrections Reimbursemei - 55,620 55,620 Total State 482,000 19,989,200 20,471,200 OTHER GOVERNMENT: Community Development (CDBG) - 5,419,820 5,419,820 Urban Area Security Initiative Grant - 521,000 521,000 Social Services Agency Grant - 838,960 838,960 Housing (Section 8) - 65,272,310 65,272,310 Workforce Investment Act - 2,565,240 2,565,240 Measure M, Street Grants - 6,962,060 6,962,060 Civic Center and Park - 4,133,240 4,133,240 Program Income - 1,125,570 1,125,570 Other Federal Grants - 3,295,900 3,295,900 Total Other Government - 90,134,100 90,134,100 Exhibit 2 Continued LOCALLY RAISED: Licenses and Permits Franchise Fees Fines and Forfeitures Charges for Services From Use of Property Others Others - Inter -Agency Total Locally Raised OTHER MISCELLANEOUS: Donation Expense Reimbursements Indirect Cost Recovery Interfund Transfers Opioid Settlements Total Other Miscellaneous FROM USE OF MONEY: Earnings on Investment PROCEEDS OF TAXES 1,487,969 NON -PROCEEDS - TA- 8,315,400 12,617,830 5,663,100 29,917,740 16,152,690 225,000 4,537,900 77,429,660 196,920 2,148,540 9,733,920 21,387,080 781,700 34,248,160 1.076.611 TOTALS 8,315,400 12,617,830 5,663,100 29,917,740 16,152,690 225,000 4,537,900 77,429,660 196,920 2,148,540 9,733,920 21,387,080 781,700 34,248,160 2,564,580 TOTAL REVENUES $ 326,484,849 $ 222,877,731 $ 549,362,580 EXHIBIT 3 APPROPRIATION SUBJECT TO LIMITATION FOR FISCAL YEAR ENDING JUNE 30, 2025 Proceeds of taxes Less: Exclusions Appropriation subject to limitation Current year limit Over(under) limit $ 326,484,849 (7,766,018) $ 318,718,831 1,427,985,554 $ (1,109,266,723) EXHIBIT 4 RESOLUTION NO. 2024-XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA ESTABLISHING THE APPROPRIATION LIMIT OF THE CITY OF SANTA ANA FOR FISCAL YEAR 2024-2025 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. Article XIIIB of the Constitution of the State of California, adopted by the voters of the State of California in 1979, imposes upon State and local government the obligation to limit each fiscal year's appropriations to those established in fiscal year 1978-79 as adjusted for by inflation and population, together with other specified changes required or permitted. B. In June of 1990, the voters of the State of California approved Proposition 111, which amended Article XIIIB to establish the limit originally calculated for fiscal year 1986-87 as a new adjustment base, and to change the definition of the cost of living to be either the percentage change in California per capita personal income from the preceding year or the percentage change in the local assessment roll from the preceding year for the jurisdiction due to the addition of local non-residential new construction. C. Proposition 111 further modified Article XIIIB requirements by making certain capital outlay, debt service, emergency and court ordered expenditures not subject to the limit, and by allowing expenditures in excess of one year's limit to be offset by under expenditures in an immediately following year. D. The City of Santa Ana has opted to use as the inflation adjustment factor the percentage change in the California per capita personal income from the preceding year. E. The City of Santa Ana has opted to use as the population adjustment factor the County's percentage change in population from the preceding year. F. Section 7910 of the Government Code of the State of California requires the governing body of each local jurisdiction each year to, by resolution, establish its appropriations limit and make other necessary determinations for the following fiscal year pursuant to Article XIIIB of the California Constitution at a regularly scheduled meeting or noticed special meeting. Fifteen days prior to the meeting, documentation used in the determination of the appropriations limit and other necessary determinations shall be available to the public. G. This matter came before the City Council at its regularly scheduled meeting of June 18, 2024. H. The Executive Director of the Finance and Management Services Agency of the City of Santa Ana has determined the City's appropriation limit for fiscal year 2024-2025 in accordance with said provisions of the Constitution and laws of the State of California, and the documentation used in the determination has been available to the public since not later than June 3, 2024, in the office of the Executive Director of the Finance and Management Services Agency. Section 2. Based upon the above referenced facts, and all facts specified in the accompanying Request for Council Action and its attachments, and each of them, the appropriation limit of the City of Santa Ana for fiscal year 2024-2025 is hereby found and determined to be $1,427,985,554. Section 3. This Resolution shall take effect thirty (30) days after its adoption by the City Council, and the City Clerk shall attest to and certify the vote adopting this Resolution. ADOPTED this day of 12024. Valerie Amezcua Mayor APPROVED AS TO FORM: Sonia R. Carvalho City Attorney By: 4AZ44L u -� Andrea Garcia -Miller Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Jennifer Hall, City Clerk, do No. 2024- to be the original Santa Ana on June 18, 2024. Date: hereby attest to and certify the attached Resolution resolution adopted by the City Council of the City of City Clerk City of Santa Ana