Title
Adopt a Resolution to Approve the City of San Leandro Gann Appropriation Limit for Fiscal Year 2027
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommend the City of San Leandro City Council adopt a Resolution establishing the City’s Gann Appropriation Limit for Fiscal Year 2026-2027 (FY 2027). Staff completed calculations required for determining the appropriation limit for FY 2027 at $380,809,844. Budget appropriations subject to the FY 2027 appropriation limitation total $128,411,224.
BACKGROUND
In 1979, California voters passed Proposition 4 limiting governmental expenditures and taxation. Statutes clarifying provisions of the proposition are codified in Article XIIIB of the California Constitution. This article is known as the Gann Limit.
Because the Gann Limit constrained local governments to effectively respond to demands of rapid growth in California, a legislative-business-labor coalition drafted and supported Proposition 111, adopted in 1990. Proposition 111 allows flexibility in a growing economy, while retaining limits on government spending. While the law sets limits on spending and taxation, it does allow for increases on the appropriation limit based on both population and personal income growth.
ANALYSIS
During any fiscal year, a city may not appropriate any proceeds of taxes it receives in excess of its established limit. Excess funds received in any year may be carried into the subsequent year for use if the city is below its limit for that year. Any excess funds remaining after the second year would be required to be returned to local taxpayers by reducing tax rates or fees. As an alternative, a majority of the voters may approve an "override" to increase the city's appropriations limit.
Senate Bill 1352 requires that 1) the governing body of each local jurisdiction shall, by legislative action, establish its appropriations limit at a regularly scheduled or special meeting and that the documentation used in the determination of the appropriations limit shall be made available to the public fifteen days before that meeting. Government Code Section 7910 requires that the City adopt its appropriations limit prior to the beginning of each fiscal year.
The Finance Department of the City of San Leandro compiles the data and makes calculations incident to the determination of the XIIIB appropriations limit. The proposed Resolution for City Council approval establishes the FY 2027 appropriations limit to be $380,809,844. Budget appropriations subject to the FY 2027 appropriations limitation total $128,411,224, which is $252,398,620 below the new appropriation limit.
Current City Council Policy
The Council adopts the appropriation limit annually during the final budget adoption process. City Council approved the FY 2027 Amended Budget on May 4, 2026. However, due to the timing of required information need for the calculation, the appropriation limit is presented to City Council separately from the budget adoption.
Fiscal Impact
None. Impacts to the City would only occur if the appropriation limit exceeds the proposed FY 2027 appropriation subject to limitation as described in the Analysis Section of this report. The City has never exceeded the Gann Limit.
CONCLUSION
Staff recommend City Council approve the Resolution establishing the City’s appropriation limit of $380,809,844 for FY 2027.
ATTACHMENTS
A: Resolution Approving FY 2027 Gann Limit Appropriation
o Ex A: FY 2027 Gann Appropriation Limitation Calculation
PREPARED BY: Felicia Silva, Assistant Finance Director