REPORT TO COUNCIL
SUBJECT
Title
Action Establishing the City's Fiscal Year 2026/27 Appropriations Limit of $753,285,224 Pursuant to Article XIIIB of the California State Constitution
Report
BACKGROUND
Annually, the City of Santa Clara (City) is required to calculate the expenditure appropriation limit from tax proceeds to determine compliance with Proposition 4 (Gann Initiative) and Proposition 111 (Spending Limitation Act of 1990). On November 6, 1979, the California electorate passed Proposition 4, which created Article XIIIB of the State Constitution, which placed limits on the amount of revenue that can be spent by governmental agencies. This constitutional amendment, also known as the Gann Initiative, placed limits on the growth of expenditures for publicly funded programs by restricting the amount of revenue that the City can appropriate in any fiscal year. Not all revenues are restricted by the limit, only those that are categorized as proceeds of taxes.
The City's limit has been based on actual appropriations during FY 1978/79, increased annually by an adjustment factor. On June 5, 1990, the California electorate approved Proposition 111, which modified the method of adjusting the annual appropriations limit. Beginning with the FY 1990/91 appropriations limit, the City may choose from the following indices when arriving at an adjustment factor:
1. The annual growth in the City's population or the annual growth in the County's population as provided by the State Department of Finance; and
2. The annual growth in the California Per Capita Income or the growth in the non-residential assessed valuation due to new construction within the City.
DISCUSSION
The City is responsible for dividing citywide revenues between tax and non-tax revenue and applying the formula to the cumulative appropriation limit. For FY 2026/27, the appropriations limit was computed using the annual population growth of the City of Santa Clara (2.93%) and the annual growth in C...
Click here for full text