HomeMy WebLinkAboutAGENDA REPORT 1992 0617 CC REG ITEM 11ETO:
FROM:
DATE:
SUBJECT:
Overview
ITE //* 4�5*
MOORPARK
799 Moorpark Avenue Moorpark, California 93021 (8054#0&I Meetng
.CTION:
Honorable City Council
Richard Hare, Deputy City Manag r „y
June 12, 1992
Consider Correction of "Gann" Appropriation Limit
(Limit)
Staff is requesting authorization from the City Council to
conduct a study and prepare a report, reviewing the base year
appropriation limit established for the City when it
incorporated. It is recommended that this report be considered
by the City Council in a public hearing, where testimony can be
taken by all interested parties regarding the base year
appropriation for the City of Moorpark and the correction of that
limit.
Background
In 1979 the voters of the State of California approved
Proposition 4, commonly known as the Gann Initiative.
Proposition 4 prohibits the City from spending certain tax
revenues and other proceeds which exceed the City's
"appropriation limit ". Any "proceeds of taxes" received by the
City, which exceed the Limit, must be returned by revisions of
tax rates or fee schedules unless the limit is increased by vote
of the City electors. The three major components of proceeds of
taxes for Moorpark include property taxes, motor vehicle license
fees, and sales taxes. In other cities, it also includes
occupancy taxes, business license revenue and utility users
taxes.
The City of Moorpark was incorporated in 1983, and its Limit was
established by the Local Agency Formation Commission (LAFCO) as
part of the City's incorporation proceedings. Since
incorporation, the City's tax proceeds have exceeded pre -
incorporation estimates and, beginning with the 1985/86 fiscal
year (FY), began to exceed its Limit. Excess revenue for FY
1985/86 was refunded in the form of a one -time suspension of the
annual park maintenance district assessments.
On June 7, 1988, Moorpark voters approved Measure "C" which
increased the Limit for the four year period from FY 1986/87
through FY 1989/90 to the actual amount of the proceeds of taxes
received in each of those years. This allowed the City to
appropriate all of the proceeds of taxes received in those years.
The measure passed with 2,691 "yes" votes and 687 "no" votes.
PAUL W. LAWRASON JR. JOHN E. WOZNIAK SCOTT MONTGOMERY BERNARDO M. PEREZ ROY E. TALLEY JR.
Maya Mayor Pro Tern Councilmember Councilmember Councilmembet
Honorable City Council
June 12, 1992
.— Page 2
The "Gann" Fund (51)
Even though there was no special requirement to account for the
use of the revenue in excess of the established Limit, the
Council directed staff to create a separate fund, so that the
appropriation history of the "Gann" fund could be tracked. Fund
51 was created in FY 1988/89 and records the transactions using
the "Gann" revenues as well as records interest earnings and
transfers. The first exhibit provides a listing of the
expenditures and the years in which the expenditures took place.
Exhibit two provides an analysis of the fund balance each year
with interest earnings for the current year's proceeds of tax and
showing the end of year interest allocation based upon fund
balance. This exhibit has been updated since the budget workshop
held June 9, 1992.
Excess Proceeds of Taxes
The authorization to appropriate all proceeds of taxes ended in
FY 1989/90. In FY 1990/91, $173,842 of revenue above the Limit
was received. The Council with passage of the FY 1990/91 budget
in June of 1990 directed that up to $89,380 excess proceeds of
tax be applied to the operation & maintenance costs of the
Community Center thereby reducing the Parks Maintenance
Assessment for FY 1990/91. The actual operation and maintenance
costs were $73,073. This left a balance of $100,771 of excess
proceeds of taxes.
When there are excess proceeds of taxes the Council has five
options to consider as outlined by the City Manager in his recent
budget message. First, the Council can seek voter approval to
increase the "Gann" appropriation limit, as was done in 1988.
Second, the Council could seek to increase the City's initial
Limit. Third, the excess proceeds of taxes can be used to reduce
or suspend other fees, assessments or taxes, thereby returning
the excess proceeds of taxes to the taxpayers. Fourth, direct
refunds could be made to the taxpayers. Finally, the Council may
appropriate the funds for a qualified capital outlay which is a
fixed asset having a useful life of 10 or more years and a value
equal to or greater than one hundred thousand dollars. The use
of proceeds of tax for a qualified capital outlay excludes the
appropriation from consideration in the calculation of
appropriations applied to the Limit.
In FY 1990/91 $37,137 was expended from Fund 51 the "Gann" Fund
for the Avenida Colonia /Nogales Street Project and the Charles
Street project. Both projects have a useful life of more than
ten years and a project value in excess of $100,000. These were
qualified capital outlays and therefore are not included when
calculating appropriations relative to the Limit. Therefore, the
$100,771 in excess proceeds of taxes is reduced to $63,638. It
is recommended that this excess proceeds of taxes be applied in
the FY 1992/93 budget in the same manner as the $73,073 was
applied in the FY 1990/91 budget to offset the Parks Maintenance
Assessment District 85 -1.
Honorable City Council
June 12, 1992
�- Page 3
It is not anticipated that there will be any excess proceeds of
taxes in FY 1991/92 or FY 1992/93, however, when the economy
rebounds the proceeds of tax revenues will again exceed the Limit
currently established. This inevitability illustrates a basic
problem with the base year Limit. There is overwhelming evidence
that the estimates used to establish this base year Limit
understated the actual costs for operating the City of Moorpark.
Within two years of the City's incorporation the required level
of appropriations exceeded the base year Limit adjusted for
population and consumer price increases. The expenditures for
police service alone now account for sixty percent of the City's
general fund budget. Necessary capital improvements were
excluded from the calculation and the replacement of fixed assets
as well as the maintenance of aging infrastructure was not
appropriately accounted for in the initial estimates. On the
surface it appears obvious that the base year appropriation level
did not adequately project the needs of the City.
Correcting the fiscal straightjacket that the City is in,
requires the review of the base year appropriation limit which
appears to understate the service levels required for this City.
_.. The City of Santa Clarita successfully corrected their base year
appropriation limit by conducting a study of the estimates which
established it.
They documented the errors in the initial calculation, held a
public hearing to review the information obtained and to provide
an opportunity to have the information examined by all interested
parties, and then took action to correct their limit. The City
of Santa Clarita went further and asked the Court to validate the
process they used. Their validation action was successful. This
process doubled their base year appropriation limit and made it
possible for them to place their fiscal affairs within a
realistic framework.
Staff proposes to follow the same process used by the City of
Santa Clarita. This will enable us to take steps to correct this
situation over the next year in anticipation of improvements in
the local economy. It is projected that this item can be
submitted to the Council by September 16, 1992.
Recommendation
Direct staff to complete a study of the base year appropriation
limit calculation performed by the County and LAFCO and to submit
their findings to the City Council by September 16, 1992.
June 12, 1992 C: \WP51 \REPORTS \GANNRPT
Gann Expenditures
PROJECT
Arroyo Vista Park
Arts Council
Chamber of Commerce 89/90
Chamber of Commerce 90/91
Chamber of Commerce 91192
City Hall
City Hall Expansion
Community Center Operations
Community Center Improvements
Computers
Disaster Services
Emergency Generator
Flags /Ribbons
H.E.L.P.
Optical disk
Paramedics
Peach Hill /Spring signal
Police Services 88/89
Police Services 89/90
Police Services 90/91
Police Services 91/92
Radio Equip.(New Request 91/92)
Senior Center
St. Imp. - Ave Colonia\Nogales
St. Imp. - Charles St Curb /Gutter
St. Imp. - General
St. lighting
Tierra Rejada Median
Transit
Truck Scales
Youth Services
Totals
Print Date: 12- Jun-92
City of Moorpark
FY FY FY FY FY Est.
1986/87 1987/88 1988/89 1989/90 1990/91 FY91/92
0
555
1,500 1,500
6;471
111,067
31,144
74,703
22,532
41,236
68,126 1
- -- - - - - -- -- - - - - -- -- - - - - --
0 158,774 176,668 174,507
0
0
70,000
0
150,000
3,800
85,635
0
568,400
Proposed FY 92/93
FY 92/93 Est. Total
0
1,500
2,000
14,500
9,000
50,000
0
67,992
250,843
14,246
0
23,000 23,000
555
3,000
70,000
0
6,471
111,067
31,144
74,703
150,000
3,800
0
68,126
134,500 220,135
22,532
0
0
41,236
0
20,000 20,000
177,500 1,255,849
EXHIBIT 1
35
(35)
1,500
2;000
14,500
9,000
500D00
67,992
843
250,000
14,246
555
1,500 1,500
6;471
111,067
31,144
74,703
22,532
41,236
68,126 1
- -- - - - - -- -- - - - - -- -- - - - - --
0 158,774 176,668 174,507
0
0
70,000
0
150,000
3,800
85,635
0
568,400
Proposed FY 92/93
FY 92/93 Est. Total
0
1,500
2,000
14,500
9,000
50,000
0
67,992
250,843
14,246
0
23,000 23,000
555
3,000
70,000
0
6,471
111,067
31,144
74,703
150,000
3,800
0
68,126
134,500 220,135
22,532
0
0
41,236
0
20,000 20,000
177,500 1,255,849
EXHIBIT 1
1986 /87 RECOMPUTATION
1987 /88 RECOMPUTATION
1988 /89 RECOMPUTATION
1989 /90 RECOMPUTATION
1990 /91 RECOMPUTATION
Beginning Gann Fund balance
Proceeds of tax non interest)
Proceeds of tax (interest)
Total proceeds of tax
Gann limit
Excess proceeds of tax
Fund 51 interest
Expenditures
Restricted balance expended
Ending Gann Fund balance - AVAILABLE
GANN FUND
1983184 - 1991/92
1983 / 84 1984 / 85 1985 / 86 1986 / 87 1987 / 88 1988 / 89 1989 / 90 1990 / 91 1991 / 92
-- - -- --- - - - - -- --- - - - - -- --- - - ---- --- - - - - -- -- - - - - -- --- - - - - -- --- - - ---- --- - - - - --
0 --- - - - - -0 53,379 0 245,377 812,489 965,762 1,197,1% 1,101,129
- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - --
397,440 1,071,771 1,386,164
-- 65,384 136,315
397,440 1,137,155 1,522,479
900,000 1,083,776 1,320,501
- - - - - -- --- - - - - -- --- - - - - --
0 53,379 201,978
1,768,451
- - -- -305
1,768,756
1,523,379
245,377
2,286,7%
- -- 12,470
2,299,266
1,751,146
548,120
2,581,951 3,023,085 3,104,434 3,040,250
4,490 1,382 10,008 1,170
- -- --- - - - - -- --- - - - - -- --- - - - - --
2,586,441 3,024,467 3,114,442 3,041,420
2,337,201 2,707,050 2,940,628 3,142,910
- - - -- --- - - - - -- --- - - - - -- --- - - - - --
249,240 317,417 173,814 0
0 18,992 62,805 90,685 78,441 33,988
0 0 (255,357) 0 0 (158,773) (176,668) (174,507) (568,400)(estimatej
(73,043)
--- - - - - -- --- -- - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - --
0 53,379 0
Ending Gann Fund balance - RESERVED
Arroyo Vista Park
Paramedics
Charles street improvements
Youth Services
Disaster services
Emergency generator
Total Gann Funds - RESERVED
Ending Gann Fund balance - UNRESERVED
Ending Gann Fund balance - RESTRICTED
245,377 812,489 965,762 1,197,196 1,101,129 566,717
100,000
75,000
48,865
40,000
35,000
23,000
321,865
244,852
100,771 107,200
EXHIBIT 2 '