AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 21-000315
MEETING DATE:	06/22/21
legal entity taking action:	Board of Supervisors and Orange County Flood Control District
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	Auditor-Controller (Approved)
Department contact person(s):	Frank Davies (714) 834-2457
	Salvador Lopez (714) 834-2470

Subject: Establishment of FY 2021-22 Appropriations Limit

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Consent Calendar

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: No

Prior Board Action: 05/25/2021 #1, 06/23/2020 #2

RECOMMENDED ACTION(S):

Acting in the capacity of the Orange County Board of Supervisors, adopt the attached resolution establishing the appropriations limit, cost of living factor and population factor for FY 2021-22 for County Funds.

Acting in the capacity of the Orange County Flood Control District Board, adopt the attached resolution establishing the appropriations limit, cost of living factor and population factor for FY 2021-22 for the Orange County Flood Control District.

SUMMARY:

Establishment of the appropriations limit for FY 2021-22 for County Funds and for the Orange County Flood Control District, as required by Article 13B of the California Constitution, enables the County to fulfill its annual requirement.

BACKGROUND INFORMATION:

Proposition 4, approved by the voters in November 1979, added Article 13B to the California Constitution. Article 13B places a limit on appropriations of revenue identified as proceeds of taxes. This limit is commonly referred to as the Gann Limit. The Gann Limit as originally approved by voters set the 1978-79 expenditure level as the base spending limit. This limit was adjusted annually for population growth and inflation (using the lower of the percentage growth of the U.S. Consumer Price Index or California's per capita personal income).

Proposition 111, passed by the voters on June 5, 1990, amended Article 13B to allow local agencies to choose between two different cost of living increase factors to calculate the appropriations limit: (1) the percentage change in California per capita personal income from the preceding year; or (2) the percentage change in the local assessment roll from the preceding year resulting from the addition of local nonresidential new construction.

Government Code Section 7901, which implements Proposition 111, provides three different population increase factors for counties to use in computing the appropriations limit: (1) the change in countywide population; (2) the countywide change in population combined with the change in population within all counties having borders contiguous to the county; and (3) the change in population within the incorporated portion of the county. Special districts such as the Orange County Flood Control District continue to use only the countywide population increase.

Government Code Section 7910 requires the Board of Supervisors (Board) to establish, by resolution, the appropriations limit for the following fiscal year for entities under its authority. Attachments A and B display the computation of the appropriations limit for FY 2021-22 for the two entities for which the Board must establish limits, the County Funds entity and the Orange County Flood Control District. The County Funds entity includes the County General Fund, Library Fund, Fire Joint Powers Authority, OC Parks Fund, Parking Facilities Fund and the County Service Areas.

The Auditor-Controller has received from the California Department of Finance the population and cost of living factors allowed by Proposition 111 and has also received from the County Assessor the nonresidential new construction assessed valuation data for Roll Year 2020-21 for use in computing the FY 2021-22 appropriations limit. The detailed calculations for the County Funds and the Orange County Flood Control District appropriations limit for FY 2021-22, as provided under Proposition 111 and its enabling legislation, are shown on Attachments A (County Funds) and B (Flood Control District).

The appropriations of tax proceeds in the FY 2021-22 recommended budget for both the County Funds and Orange County Flood Control District entities are less than their appropriations limit for FY 2021-22.

Following is an estimate of appropriations subject to the Gann Limits for FY 2021-22.

County Funds
FY 2021-22 Appropriations Limit	$14,070,273,613
FY 2021-22 Estimated Appropriations subject to limitation*	$ 1,225,785,421
Estimated amount under limit	$12,844,488,192

Flood Control District
FY 2021-22 Appropriations Limit	$1,641,297,590
FY 2021-22 Estimated Appropriations subject to limitation*	$ 70,694,903
Estimated amount under limit	$1,570,602,687

* Only appropriations financed by tax proceeds as defined by Article 13B of the Constitution.

Prior Board Actions:

On May 25, 2021, the Board set the Gann Annual Appropriations Limit Hearing. The purpose of the hearing was to direct the Auditor-Controller to provide notice that the FY 2021-22 appropriations limits would be considered at the Board meeting of June 22, 2021, and the documentation used in the determination of the appropriations limit would be available commencing June 1, 2021.

On June 23, 2020, the Board approved the FY 2020-21 appropriations limit for the County Funds and the Orange County Flood Control District entities.

FINANCIAL IMPACT:

This is a non-financial Agenda Staff Report as the estimated amounts are below the appropriation limits.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - County Funds Computation of Appropriations Limit FY 2021-22
Attachment B - Flood Control District Computation of Appropriations Limit FY 2021-22
Attachment C - Draft Resolution - County of Orange
Attachment D - Draft Resolution - Orange County Flood Control District
Attachment E - California Constitution Article 13B Government Spending Limitation
Attachment F - California Government Code Sections 7901 and 7910 Expenditure Limitation