CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL
Staff Report

June 5, 2018
PUBLIC HEARINGS

TO: Honorable Mayor and City Council Members

SUBMITTED BY: Sharon Friedrichsen, Director of Budget and Contracts

APPROVED BY: Chip Rerig, City Administrator

SUBJECT: Resolution No. 2018-048, Adopting the FY 2018-19 Appropriation Limit

RECOMMENDATION:
Adopt Resolution 2018-048, Adopting the Fiscal Year 2018-2019 Appropriation Limit.

BACKGROUND/SUMMARY:
Article XII IB of the State Constitution places a limit on the amount of monies that a governmental entity is able
to spend from tax revenues each year. As part of the State law, the government entity must adopt an annual
appropriations limit based upon a prescribed formula.This limit shall not exceed the appropriation limit of the
prior fiscal year, although the limit is adjusted by the change in the cost of living and the change in population.

In calculating the appropriations limit, the City Council has the option to use either the change in per capita
income or the percentage change in the local assessment roll. In addition, the Council may either use the
change in population within the City or within the County. For consistency purposes, staff recommends using the
California per capita personal income (3.67% as calculated by the Department of Finance) and the population
growth of the County (.27%), which is greater than the City's population increase (.16%). The Department of
Finance uses a formula that converts the percent change in income and population growth into a ratio and thus
the adjustment factors for calculating the GANN limit are 1.0367 for income and 1.0027 for population growth.
These adjustment factors are applied to the current fiscal year (Fiscal Year 2017-2018) GANN limit in order to
determine the appropriation limit for Fiscal Year 2018-2019.
FISCAL IMPACT:
The appropriation limit for fiscal year 2018-2019 is based upon budgeted revenues for property tax, sales tax,
transient occupancy tax, motor vehicle in lieu and business license tax. Together these revenues are budgeted
at $19,236,560. The appropriation limit is $32,327,401.

PRIOR CITY COUNCIL ACTION:

Council adopted the appropriation limit for Fiscal Year 2017-2018 on June 6, 2017.

ATTACHMENTS:
Attachment #1 Resolution No. 2018-048
Attachment #2- DOF
 Attachment 1
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL

RESOLUTION NO. 2018-048

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA ADOPTING THE FISCAL
YEAR 2018-2019 APPROPRIATIONS LIMIT

WHEREAS, under Article XIIIB of the State Constitution, public agencies are required to annually
establish maximum appropriations limits referred to as the GANN limit (Limit); and

WHEREAS, since fiscal year 1991, the City is permitted to adjust its Limit in accordance with inflation
and population adjustment factors; and

WHEREAS, the annual adjustment factors that were selected to calculate the Fiscal Year 2018-2019
Limit were the California per capita personal income adjustment factor of 1.0367 and the Monterey County
population growth factor of 1.0027; and

WHEREAS, in accordance with California Government Code Section 7910, a notice of the public
hearing was published in the Carmel Pine Cone on May 11, 2018; the documentation used in determining the
Limit has been made available to the general public for fifteen days prior to the date of the adoption; and
Council conducted a public hearing on the Limit on June 5, 2018 and;

WHEREAS, the City may not appropriate any proceeds of taxes in excess of its Limit.

NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BY-
THE-SEA DOES HEREBY:

1. Adopts the final calculation of the Appropriation Limit for Fiscal Year 2018-2019 as $32,327,401,
which is attached hereto as Exhibit A.
2. Certifies the Fiscal Year 2018-2019 Adopted Appropriation Limit of $19,236,560 does not exceed the
GANN limit, which is attached hereto as Exhibits A and B respectively.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this
5th day of June 2018, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

SIGNED: ATTEST:

__________________ ________________________
Steve G. Dallas, Mayor Thomas A. Graves, City Clerk
 Attachment 1

Exhibit A

City of Carmel-by-the-Sea
Spending Limit Calculation
Fiscal Year 2018-2019

Appropriations Subject to Limit

Fiscal Year 2018-2019 General Fund revenues $19,236,560
Less Non proceeds of Tax 0
Total appropriations subject to limits $19,236,560

Appropriations Limit
Fiscal Year 2017-2018 appropriations limit $31,098,990
Plus Change Factors
A. Cost of Living adjustment/ Per Capita Income 1.0367
B. Population Adjustment 1.0027
Total Change Factor 1.0395
Increase in appropriations limit $1,228,410

Fiscal Year 2018-2019 Appropriations Limit $32,327,401

Remaining appropriations capacity $13,097,060
Availability capacity as a percent of appropriations limit 41%
 Attachment 1

Exhibit B

City of Carmel-by-the-Sea
Spending Limit Calculation
Fiscal Year 2018-2019

Revenue Source Fiscal Year 2018-2019 Budget

Property Tax $6,368,550
Sales and Use Tax $5,497,520
Transient Occupancy Tax $6,350,000
Business License Tax $548,000
Motor Vehicle in Lieu $472,490
Total Budgeted Tax Revenues $19,236,560
 Attachment 2
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OFFICE OF THE DIRECTOR

May 2018

Dear Fiscal Officer:

Subject: Price Factor and Population Information

Appropriations Limit
California Revenue and Taxation Code section 2227 requires the Department of Finance to
transmit an estimate of the percentage change in population to local governments. Each local
jurisdiction must use their percentage change in population factor for January 1, 2018, in
conjunction with a change in the cost of living, or price factor, to calculate their appropriations limit
for fiscal year 2018-19. Attachment A provides the change in California's per capita personal
income and an example for utilizing the price factor and population percentage change factor to
calculate the 2018-19 appropriations limit. Attachment B provides the city and unincorporated
county population percentage change. Attachment C provides the population percentage change
for counties and their summed incorporated areas. The population percentage change data
excludes federal and state institutionalized populations and military populations.

Population Percent Change for Special Districts

Some special districts must establish an annual appropriations limit. California Revenue and
Taxation Code section 2228 provides additional information regarding the appropriations limit.
Article XIII B, section 9(C) of the California Constitution exempts certain special districts from the
appropriations limit calculation mandate. The code section and the California Constitution can be
accessed at the following website: http://leqinfo.leqislature.ca.gov/faces/codes.xhtml.

Special districts required by law to calculate their appropriations limit must present the calculation
as part of their annual audit. Any questions special districts have on this requirement should be
directed to their county, district legal counsel, or the law itself. No state agency reviews the local
appropriations limits.

Population Certification
The population certification program applies only to cities and counties. California Revenue and
Taxation Code section 11005.6 mandates Finance to automatically certify any population
estimate that exceeds the current certified population with the State Controller's Office. Finance
will certify the higher estimate to the State Controller by June 1, 2018.

Please Note: The prior year's city population estimates may be revised.

If you have any questions regarding this data, please contact the Demographic Research Unit at
(916) 323-4086.

MICHAEL COHEN
Director
By:

AMYM. COSTA
Chief Deputy Director

Attachment
 Attachment 2

May2018
Attachment A

A. Price Factor: Article XIII B specifies that local jurisdictions select their cost of living
factor to compute their appropriation limit by a vote of their governing body. The cost
of living factor provided here is per capita personal income. If the percentage
change in per capita personal income is selected, the percentage change to be used
in setting the fiscal year 2018-19 appropriation limit is:

Per Capita Personal Income

Fiscal Year Percentage change

(FY) over prior year

2018-19 3.67

B. Following is an example using sample population change and the change in

California per capita personal income as growth factors in computing a 2018-19
appropriation limit.

2018-19:

Per Capita Cost of Living Change = 3.67 percent

Population Change= 0.78 percent

Per Capita Cost of Living converted to a ratio: 3.67 + 100 = 1.0367

100

Population converted to a ratio: 0.78 + 100 = 1.0078

100

Calculation of factor for FY 2018-19: 1.0367 X 1.0078 = 1.0448,

 Attachment 2

Fiscal Year 2018-19

Attachment B
Annual Percent Change in Population Minus Exclusions•
January 1, 2017 to January 1, 2018 and Total Population, January1, 2018
Total
County Percent Change Population Minus Exclusions Population
Cl1y 2017-2018 1-1-17 1-1-18 1-1-2018

Monterey

Cannel-By-The-Sea 0.16 3,744 3,750 3,750

Del ReyOaks -0.06 1,693 1,692 1,692
Gonzales -0.07 8,593 8,587 8,587
Greenfield -0.05 18,016 18,007 18,007
King City 0.53 14,802 14,880 14,880
Marina 1.27 22,143 22,424 22,424
Monterey -0.36 24,703 24,614 28,323
Pacific Grove -0.07 15,671 15,660 15,660
Salinas 0.16 161,521 161,784 161,784
Sand City 4.51 377 394 394
Seaside 0.28 30,173 30,258 34,270
Soledad -0.40 17,529 17,459 26,246
Unincorporated 0.55 106,114 106,702 107,264

County Total 0.27 425,079 426,211 443,281

*Exclusions include residents on federal military installations and group quarters residents in state mental institutions, state
and federal correctional institutions and veteran homes.
Attachment 2