Title
Public Hearing to Establish the Proposition 4 (Appropriations) Limit for Fiscal Year 2020-21 and to Consider Adoption of Resolution Establishing the Appropriations Limit for Fiscal Year 2020-21. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The State of California Constitution requires each government entity to set an Appropriations Limit, a limit on the amount of tax proceeds that can be appropriated by state and local governments, each fiscal year. The City Council must adopt an Appropriations Limit resolution using available annual adjustment factors as stated in Proposition 111.
BACKGROUND
In November 1979, the voters of the State of California approved Proposition 4. The proposition created Article XIIIB of the State Constitution placing limits on the amount of revenue that can be spent by state and local governments in California (Appropriations Limit), and is also known as the Gann Limitations. Each government entity is required to set its Appropriations Limit each fiscal year, with FY 1978-1979 as the first base year for determining limits. The Appropriations Limit sets a cap on the amount of proceeds that can be received by the City of Alameda (City) from certain types of taxes. Appropriations Limit adjustments occur each subsequent year using a combination of changes in population and in per capita personal income (CPI), whichever is less.
Proposition 4 and its implementing legislation were modified by Proposition 111, which changed the annual adjustment factors beginning with the FY 1990-91 Appropriation Limit. Hereafter, on an annual basis and with FY 1986-1987 as the new base year, the government entity can select whichever is greater: the CPI or assessed valuation due to non-residential construction within the City. To determine the population factor, the entity can select the greater of population growth either within the city or the County.
Proceeds of taxes in excess of the limit, ...
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