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  Agenda Item   27.    
City Council Meeting
Meeting Date: 06/15/2021  
FROM: Bill Gallardo

Approval of the Fiscal Year 2021-22 Appropriations Limit
Adopt Resolution No. 2021-045 approving the Fiscal Year 2021-22 Appropriations Limit.
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the “Gann Initiative.” The Proposition created Article XIII B of the State Constitution placing various limits on the appropriations of state and local governments. The law requires the governing body of each local jurisdiction to establish annually by resolution, the Appropriations Limit for the upcoming year. In effect, the law requires that expenditures subject to the limit cannot exceed the prior year’s expenditures after adjusting for inflation and population changes.  

In June 1990, Proposition 111 was enacted which modified the formula to allow the Appropriations Limit to be more responsive to local growth issues. Prop. 111 allowed the City of Brea to modify its limit to take into consideration the change in the County or City population, whichever is greater.  

The Appropriations Limit applies to all taxes levied by and for a municipality. In addition, user fees are excluded from the formula. The Appropriations Limit also excludes the following activities: Successor Agency to the Brea Redevelopment Agency Funds, Enterprise Funds, certain Capital Improvement Funds, and funds received from special assessment districts.

Brea’s appropriations that are “subject to the limit” have traditionally been much lower than required by Article XIII B. This year’s Appropriations Limit has been calculated to be $113,935,888. Revenues subject to the Appropriations Limit are $45,784,798 resulting in a favorable gap of $68,151,090.  The Appropriation Limit calculation is provided in Exhibit A of the proposed resolution.
There is no fiscal impact associated with establishing the Appropriations Limit.
William Gallardo, City Manager
Prepared by:  Alicia Brenner, Senior Fiscal Analyst
Concurrence:  Cindy Russell, Administrative Services Director

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