SR-201-004 (8)
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Counc~l Meeting:
California
June 26, 1984
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JUN 2 6 114
STAFF REPORT
To:
Mayor and C~ty Council
From:
City Staff
SubJect:
Revis10n of FY 1983-84 Gann Lim1t
ThlS is to request that the Council adopt the attached resolutlon
which revises the C~ty's total FY 1983-84 Gann Llm~t from
$32,032,350 to $26,882,949.
On October l1, 1983 the Counc1l set the C1ty'S current FY 1983-84
Gann L1m1t at $32,032,350.
However, during FY 1983-84 several
factors were rev1ewed by Clty staff Wh1Ch 1ndlcated that lt was
appropriate that the City's FY 1983-84 Gann L1m~t be revised to
$26,882,949.
The fo11ow1ng 1S an explanation of these factors
and how the Gann Limit was revised.
Dur1ng 1982, the State Supreme Court determ1ned ln Carmen v.
Alvord that an overr1de of the Proposition 13 (now Article XIIIA
of the State Constitution) 1% property tax llffi1tat1on was
permitted for employee retlrement contr1but1ons provided the
C1ty'S partic1patlon in lts ret~rement program was voter approved
prior to July 1, 1978.
In short, the Court found that retirement
system contr1butlons const~tuted
"bonded indebtedness" under the
provisions of Proposit~on 13.
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Subsequently, on May 16, 1983,
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the Los Angeles County Counsel's
office stated that in their oplnlon the Carmen decision
essentJ.ally required Cl t1es to pass property tax overrJ.des for
bonded
indebtedness,
includ1ng
partlc~pation
~n
ret1rement
systems, approved by the voters prlor to July l, 1978.
Further,
the County Counsel ma1ntalned that those cities (including Santa
Monica) which had not passed property tax oVerr~des had therefore
recelved too great a property tax allocatlon for the perlod FY
1978-79 through FY 1982-83 which they should pay back, and
beg~nnlng ~n FY 1983-84 should rece1ve less of a property tax
allocation.
After a great deal of State level negotiat~on, the
State Legislature (vJ.a AB 377) delayed resolution of the Carmen
related property tax allocatlon issue until FY 1985-86 and
forgave any m1sallocation WhlCh allegedly occurred or will occur
for the period FY 1978-79 through FY 1984-85.
As a result of these two events and subsequent 1nvestJ.gation by
City staff which determined that the Clty'S part1c1pat1on 1n PERS
was voter approved (election of November 5, 1946 when the current
City Charter was adopted), City staff determ~ned that:
a) the
City's base year Gann Lim1t was too h1gh by that portion of FY
1978-79 appropriations subJect to lim~tatlon Wh1Ch f1nanced
non-enterprlse contr1but1ons to PERS, b) the Clty's FY 1983-84
Gann Lim1t should also, therefore, be reduced by the amount of FY
1978-79 non-enterpr1se contributlons to PERS, lnflated (accord1ng
to allowable Gaun inflat10n factors) to FY 1983-84, and c) FY
1983-84 appropriatlons subJect to the Gann Llmit should also be
reduced
by
that
portion
representing
non-enterprise
PERS
payments. In effect, "bonded ludebtedness" (i.e., non-enterpr1se
PERS contributlonS), as defined under Propos1tion 13, should be
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excluded from Gann~it calculat10ns as permi~d by Proposit1on
4.
Th~s determinat10n is quite slgn~f~cant for the C1ty because, as
was learned from further analysis, the C1ty'S non-enterpr1se PERS
contribut1ons have 1ncreased 89.1% for the period FY 1978-79
through FY 1983-84 (est. act.) whereas for the same period the
cumulative allowable Gann Lim1t increase was only 48.0%. Thus,
to the degree that the C1 ty' s non-enterprise PERS contribut1on
appropriat~ons were and continue to be included ~n Gann Lim1 t
calculat1ons, City service levels would eventually have to be
curtailed (by reducing appropriat~ons) to accommodate the
d~fference 1n these two rates of change. This seems part~cularly
unreasonable since the rate of 1ncrease in PERS payments is
entirely beyond City control.
F1nally, in conjunction with input from the City Attorney's
off1ce, C1 ty staff determ1ned that the pn.or classificat1.on of
franchise payments and rentdl income as "proceeds of taxes" (the
appropr1ation of which therefore 1S subJect to llmi tation) was
incorrect.
These revenues are in fact exempt revenues under the
proviS1ons of PrOpOS1.t1on 4. Hence, these revenues should also
be excluded from our annual calculation of the City's Gann L1m1.t
and our annual calculat10n of appropriat~ons subJect to
Ilmitation.
In l1ght of these procedural and substantive changes, the C1ty's
Gann Lim1t and appropr1ations subJect to 11mitations (based on
the City's adopted FY 1983-84 budget) were recalculated for FY
1983-84. This is shown graphically at Attachment I and is
summarized in the following table:
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Ado~ted Budget for FY 1983-84
(Init~a1 Gann Calculations)
Ongoing
Component +
Overr1de
Component
Total
=
GanD L~m1t
$28,636,396
$3,395,954
$32,032,350
Approprlations
SubJect to
L1mitat~on
28,423,422
2,353,992
30,777,414
Difference
$
212,974
$1,041,962
$ 1,254,936
Adopted Budget for FY 1983-84
(Revised Gann Ca1culatlons)
Gann Limit
$23,486,995
$3,395,954
$26,882,949
Appropriatlons
SubJect to
Limitat10n
22,021,411
2,353,992
24,375,403*
Dlfference
$ 1,465,584
$l,041,962
$ 2,507,546
*
$30,777,414 (or1ginal calcu1at1on of appropriations subject
to lim1tatlon) - $588,738 (due to franch1se and rental 1ncome
reclassif1cation) - $5,813,273 (PERS).
Recorrunendat1on:
In llght of the above explanatlon, it is recommended the Councll
adopt the attached resolution ~h1Ch revises the Clty'S total FY
1983-84 Gann L1mit from $32,032,350 to $26,882,949.
Prepared by: Mike Denn~s, D1rector of Finance
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DISTRIBUTION OF RESOLUTION #
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ORDINA\'CE #
Council Meetlng Date . 5 -(~ iJ~
Ag~nda Item # ~-~
Introduced:
Adopted:
Was it amended?
lALAl * ALW.4.YS PFBLISH Prof'TED ORDIN.4c\J"CES
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VOTE:
Afflrmative:
Negative:
Abstain"
Absent:
DISTRIBUTION:
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ORIGINAL to be slgned, sealed and filed ln Vault.
NEWSPAPER PUBLICATION (Date:
Depa rtmen t orlglna t ing s taf f report L.h--1'(~:::--- - /Jr'--l',,{. {i: -<-h"J
~anaaement Serv~ces Lynne Barrette -urdinances only
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4
Agency menti0ned ln document or staff report
(certlfied?)
Subject flle (agenda packet)
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Counter file
Others:
Alrport Parking Auth.
Auditorum Personnel
Building Dept. Plannlng
Environ. Servo Police (en-
forcement?)
Finance
Purchasing .
Fire
Recr/Parks
General Servo
Transportatlon
Llbrary
Treasurer
Manager
SE~D FOUR COPIES OF ALL ORDINANCES TO:
CODED SYSTEMS, Attn Peter Maclearle
120'~fain _C::tr<:.'et
AVQq1 ~~w Jersey_07717 _
SEND F0UR COPIES OF A T.T. ORDTNA;\rr?s,-to ~
PRESIDIKG JUDGE
SA~TA MO~ICA MUNICIPAL COURT
1725 MAIN STREET
SANTA MONfCA, CA 90401
TOTAL COPIES
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Counil Meeting:
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June 26, 1984
Santa Mon1ca, Callfornia
RESOLUTION NO.
6878(CC5)
(City council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SANTA MONICA REVISING THE APPROPRIATION
LIMIT FOR THE FISCAL YEAR 1983-84
WHEREAS, the City Council may under the provisions of
Government Code Section 7910 and Article XIIIB of the California
Constitution revise its appropriatlon llrnlt by resolution: and
WHEREAS, documentation used in the determlnatlon of the
appropriation limit has been available to the publlC for f1fteen
days prior to this meetlng as requ1red by Government Code Sect10n
7910,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA
MONICA DOES RESOLVE AS FOLLOWS:
SECTION 1.
For purposes of Article XIIIB of the
California Constitution, the City of Santa Monica appropriation
limit for the fiscal year 1983-84 is revised to be $26,882,949.
SECTION 2. The City clerk shall certlfy to the adopt1on
of the Resolution, and thenceforth and thereafter the same shall
be 10 full force and effect.
APPROVED AS TO FO&~:
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ROBERT M. MYERS
City Attorney
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Adopted and approved this 26th day of June, 1984.
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Mayor
I hereby certify that the foregoing Resolution No. 6878(CCS)
was duly adopted by the City Council of the City of Santa Monica
at a meeting thereof held on June 26,
1984 by the following
Council vote:
Ayes:
Councilmembers: Conn, Epstein, Jennings, Press,
Reed, Zane and Mayor Edwards
Noes:
Councilmembers: None
Absent:
Councilmernbers: None
Abstain:
Councilmembers: None
ATTEST:
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City Clerk
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~S-2: GANN LIMIT OVERRIDE: Presented was
provid 1 ng in format ion on the Cl ty' s Gann Limi t
need for and nature of possible overr~de
Discussion was held.
CITY COUNCIL !'IINUTES
JUNE 26, 2.984
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a staff report
status and the
conslderations.
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