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xN <br />City of San Leandro <br />Meeting Date: June 4, 2012 <br />Staff Report <br />File Number: 12 -276 <br />TO: City Council <br />FROM: Chris Zapata <br />City Manager <br />BY: David Baum <br />Finance Director <br />FINANCE REVIEW: David Baum <br />Finance Director <br />Agenda Section: PUBLIC HEARINGS — CITY <br />COUNCIL <br />Agenda Number: 3.B. <br />TITLE: Staff Report for the Resolution Establishing the City's Appropriation Limit for <br />Fiscal Year 2012 -13 <br />SUMMARY AND RECOMMENDATION <br />Staff recommends City Council approval of a resolution establishing the City's appropriation <br />limit for fiscal year 2012 -13. Staff has completed the calculations required for determining the <br />City's appropriation limit for 2012 -13, which is $161,166,358. Budget appropriations that are <br />subject to the 2012 -13 limitation total $66,449,150, which is $94,717,208 below the limit. <br />BACKGROUND <br />On November 6, 1979, California voters passed Proposition 4. Statutes clarifying certain <br />provisions of the proposition are now codified in article XIIIB of the California Constitution. <br />This Article is commonly known as the "Gann Initiative." The Initiative established <br />constitutional spending limits allowable for California governmental agencies based on the <br />Consumer Price Index and population growth. Concurrent with Proposition 4, the Revenue <br />and Taxation Code, Section 7910, requires each local governmental unit to establish its <br />appropriations limit by the beginning of each fiscal year. <br />Due to Gann's constraint on State and local governments to respond effectively to the <br />demands of rapid growth around California, a legislative- business -labor coalition drafted and <br />supported Proposition 111, which was adopted June 5, 1990. Proposition 111 makes crucial <br />adjustments to the Gann Initiative by allowing it the flexibility to operate in a growing economy <br />while retaining its purpose in placing a limit on government spending. The following are the <br />changes Proposition 111 made to the Gann Initiative. <br />Prior law required spending limits to be tied to the Consumer Price Index or California Per <br />Capita Personal Income growth factor, whichever was lower The new provisions allow an <br />agency to select the California Per Capita Personal Income growth factor or the <br />City of San Leandro Page 1 Printed on 512912012 <br />