Rancho Palos Verdes City Council
   

JUNE 1, 2004 ANNUAL APPROPRIATION LIMIT FOR FY04-05
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF FINANCE & INFORMATION TECHNOLOGY

DATE: JUNE 1, 2004

SUBJECT: ANNUAL APPROPRIATION LIMIT FOR FY04-05

Staff Coordinator: Kathryn Downs, Accounting Manager

RECOMMENDATION:

Adopt Resolution No. 2004- establishing the City's Appropriation Limit for FY04-05.

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 FY04-05 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 FY79-80. 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 FY04-05 is $17,745,609.

Based upon the proposed budget, staff has determined that $8,803,717 of projected tax revenue is subject to the appropriation limit in FY04-05. As has historically been the case, the City has a very large margin between the projected tax revenue and the appropriation limit for FY04-05.

Respectfully submitted,

Dennis McLean

Director of Finance & Information Technology

Reviewed:

Les Evans

City Manager