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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 to a level determined by its base year 1978-79 spending, adjusted annually by an inflation factor and the agency's increase in population. The factors used to compute the Prop 4 limits are: (1) either the percentage change of the 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. DISCUSSION The State of California Department of Finance recently provided the California per capita personal income change percentage, computed as 4.42%. This percentage change exceeds the percentage change in Pleasanton's local assessment roll due to non-residential construction as detailed by the County Assessor's office. In addition, the city's population growth of 1.30% exceeds the Alameda County population growth of 1.07%. Therefore, the calculation will utilize the two growth factors of the change in California per capita personal income and the City population growth to calculate the 2007-08 appropriation limit. The attached Exhibit A details the calculation for the Prop 4 appropriations limit. The appropriations limit for fiscal year 2007-08 is $336,349,156. Submitted by: \ r David P. Culver ~'` Director of Finance Attachments: 1. Resolution 2. 2007-08 Appropriations Limit Approved by: Nelson Fialho City Manager Page 2 of 2