Page 80 - Yucaipa Valley Water District

Workshop Memorandum 17-075

Date: May 30, 2017

From: Allison M. Edmisten, Chief Financial Officer

Subject: Review of Draft Resolution No. 2017-xx Establishing the Appropriation Limit for
Fiscal Year 2017-18

In 1979, Proposition 4 (the Gann Initiative) was approved adding Article XIII B to the State
Constitution. The provisions of this article place limits on the amount of revenue that can be
appropriated by all entities of government. This initiative was designed to constrain government
expenditures by placing an annual limit on revenue and appropriation growth.

In June 1990, Proposition 111 amended Article XIII B, making changes in the base year upon
which the appropriations limit is based, establishing new cost of living factors and new population
factors for use by local governments, and increasing appropriations not subject to the limit
(primarily qualified capital outlay projects). The financial constraints of Article XIII B apply to State,
all cities, counties, special districts and all other political subdivisions.

The Yucaipa Valley Water District has completed the computation associated with the
appropriation limitation for fiscal year 2017-18 ("FY 2018"). Based on the attached calculation,
the proposed adjustment to the District's appropriation limit includes an increase of 1.98% for the
increase in non-residential assessed valuation of new construction and a weighted average
increase of 1.43% for population change. These percentages have been used to calculate an
increase in the appropriation limit from $70,350,762 in FY 2017 to $73,987,896 in FY 2018. This
represents an overall increase of 5.17% to the appropriation limit. The District’s annual
appropriations are well below this limit.

Yucaipa Valley Water District - May 30, 2017 - Page 80 of 138