Appropriation Limit Calculation (Gann Limit)

Fiscal year 2023/24 - 2024/25

Article XIIIB of the California State Constitution, more commonly referred to as the Gann Initiative or Gann Limit, was approved by California voters in November 1979 and placed limits on the amount of proceeds of taxes that state and local governmental agencies can receive and spend in one year.

The appropriations limit was originally based on actual appropriations for fiscal year 1978/79, and it is recalculated each year based on growth in population (using either the growth in the City or County population) and the rate of inflation (using either the growth in per capita income or new non-residential construction). The growth factors utilized in the calculation are provided by the State Department of Finance and the County of Orange. It is in the City’s best interest to choose between the population and rate of inflation factors based on which factor in each category will generate the largest increase to the appropriations limit.

The factors used for the fiscal year 2023/24 calculation were the change in the City’s population of (-0.32%) and the California per capita personal income growth factor of (4.44%). For fiscal year 2023/24, the limit is calculated at $82.7 million with budgeted tax receipts of $43.3 million. The $39.4 million difference is the City’s margin for allowable growth in tax receipts.