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<br />DATE: June 6, 2017 <br /> <br />TO: Honorable Mayor and City Council <br /> <br />FROM: Hue C. Quach, Administrative Services Director <br />Shannon Huang, Financial Services Manager/Treasurer <br /> <br />SUBJECT: RESOLUTION NO. 7173 ESTABLISHING AN APPROPRIATIONS LIMIT <br />FOR FISCAL YEAR 2017-18 PURSUANT TO ARTICLE XIII-B OF THE <br />CALIFORNIA CONSTITUTION <br /> Recommendation: Adopt <br /> <br />SUMMARY <br /> <br />Article XIII-B of the State Constitution imposes a limit (“the Gann Limit”) on tax proceeds <br />that can be appropriated for expenditures in any given fiscal year. Section 7910 <br />requires the City to establish the limit by resolution. As calculated, the City’s <br />expenditures subject to the limit are $45,656,400 versus a limit of $84,863,694, <br />meaning that the City of Arcadia is under the Gann Limit by $39.2 million. It is <br />recommended that the City Council adopt Resolution No. 7173 establishing the annual <br />adjustment factors and the resultant Limit for Fiscal Year 2017-18. <br /> <br />DISCUSSION <br /> <br />In November 1979, the voters of the State of California approved Proposition 4, <br />commonly known as the Gann Initiative. This proposition created Article XIII-B of the <br />State Constitution placing limits on the amount of revenue that can be spent by any city <br />government. Each government was allocated a base year Limit, which is adjusted <br />annually for inflation and population growth. The law also requires an annual review of <br />the Limit calculation. <br /> <br />Certain revenues do not count toward the annual Gann Limit, including the expenditure <br />of tax proceeds on voter-approved debt and the costs of complying with Court orders <br />and Federal mandates. Similarly, if the State specifies that funds transmitted to cities <br />are restricted in their use (e.g., State Gas Tax), they are excluded in the calculation of <br />the City’s Gann Limit. <br /> <br />To measure inflation, each City may choose the greater of the growth in the California <br />Per Capita Income or the growth in the non-residential assessed valuation due to new <br />construction within the City. At the present time, the data necessary to calculate the <br />increase in the non-residential assessed valuation is not available from the Los Angeles <br /> <br />