Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF FINANCE & INFORMATION TECHNOLOGY

DATE: JUNE 17, 2003

SUBJECT: ANNUAL APPROPRIATION LIMIT FOR FY 2003-2004

Staff Coordinator: Jane Lin, Accountant

RECOMMENDATION:

Adopt Resolution No. 2003- establishing the City's Appropriation Limit for FY 2003-2004.

BACKGROUND:

The Gann Initiative of 1979 amended the State Constitution to require cities to adopt an annual limit on the amount of tax revenue that can be appropriated for spending each fiscal year. The City follows statewide guidelines in preparing the Gann appropriation limit calculation in coordination with the adoption of the annual budget. The calculation of the appropriation limit for FY 2003-2004 will be reviewed by the City's independent auditors in conjunction with the performance of the annual audit.

The appropriation limit establishes a ceiling on the amount of tax revenue the City can receive and appropriate for spending each year. The appropriation limit is computed using a base year amount calculated for FY1979-1980. The base amount is then adjusted each year using inflationary and population growth statistics provided by the State Department of Finance. The appropriation limit calculated for FY 2003-2004 is $17,015,289.

Based upon the proposed budget, staff has determined that $8,603,316 of projected tax revenue is subject to the appropriation limit in FY 2003-2004. As has historically been the case, the City has a very large margin between the projected tax revenue and the appropriation limit for FY 2003-2004.

Respectfully submitted,
Dennis McLean
Director of Finance & Information Technology

Reviewed:
Les Evans
City Manager