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Appropriation Limit 2 June 6, 2011 • ANALYSIS The Appropriation Limit for prior fiscal years was predominantly based on the county population factor multiplied by the assessed valuation change factor. After the passage of Proposition 111, cities are able to use the higher of the population factors (City or county) and the higher of the California per capita personal income factor or the Non- residential property assessed valuation growth factor. This amended approach has been applied to fiscal years 1990 -91 through 2010 -11 to recalculate the ending limits. The revised calculations will continue to be applied in subsequent years. For fiscal year 2011 -12 staff is using the California per capita income growth factor (1.0251) multiplied by the county population factor (1.0079) since the county's population factor is higher than the City of San Leandro's population factor (1.0251 x 1.0079 = 1.0332). Similarly, the State's per capita income growth factor is higher than the City's non - residential assessed valuation factor. The non- residential assessed valuation factor includes significant transfer of property adjustments such as the Fremont NUMMI/Tesla transfer and large commercial assessment appeal settlements in Emeryville, Oakland, Hayward and other areas. The re- calculated 2010 -11 Appropriation Limit (previously adopted at 5127,774,811) of 5148,861,890 multiplied by the adjustment factor of 1.0332 produces the 2011 -12 Appropriation Limit of 5153,503,850 (Attachment 1). A Resolution is attached which authorizes the new Appropriation Limit for next year. The actual budget subject to the limitation excludes self - supporting funds, capital improvement funds, capital outlay grant funds and specific exclusions such as the Gas Tax Fund. The fiscal year 2011 -12 appropriations subject to the Gann Limit is 574,040,811 and is significantly below the Appropriation Limit by over 579 million. Current Citv Council Policy The Council adopts the appropriation limit during the budget adoption process. Fiscal Impact None. impacts the City only if the appropriation limit is exceeded by proposed fiscal year 2011- 12 appropriation subject to limitation. Attachments Attachment 1 — Gann Appropriation Limitation Calculation FY 2011 -12 CONCLUSION Staff recommends City Council approval of a resolution establishing the City's appropriation limit of 5153,803,850 for fiscal year 2011 -12. •