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BACKGROUND In 1979, the voters passed Proposition 4 ("Prop 4") with the intent of limiting government spending. Prop 4 accomplishes this by limiting an agency's ability to keep and spend its tax revenue based on its base year FY 1978/79 spending, adjusted annually by an inflation factor and the agency's increase in population. DISCUSSION The factors used to compute the Prop 4 limits are: (1) either the percentage change in California per capita personal income or the percentage change in the local assessment roll from the preceding year due to the addition of local nonresidential construction in the City, and (2) either the City's own population growth or the population growth of the entire County. The State of California Department of Finance annually provides the California per capita personal income change percentage for purposes of calculating the Prop 4 Spending Limit. For the FY 2016/17, California per capita personal income increased by 5.37% that exceeds the 3.77% percentage change in Pleasanton's local assessment roll provided by the County Assessor's office. The City's population growth of 1.63% exceeds Alameda County's population growth of 1.06%. Therefore, the calculation for the FY 2016/17 appropriations limit is based on the percentage change in California per capita personal income and the City's population growth. Attachment 2 details the calculation of the Prop 4 appropriations limit for the FY 2016/17 of $565,533,264. Submitt d by: Approved by: A,,,A Ali Tina Olson Nelson Fialho Director of Finance City Manager Attachments: 1. Resolution 2. FY 2016/17 Appropriations Limit Calculation Page 2 of 2