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FISCAL YEAR 2020-21 Calculation of Appropriations Limits The Town is required by the State Constitution, Article XIIIB (Proposition 4,) to annually calculate the maximum amount of appropriations subject to limitation. The calculation is intended to limit the annual growth in tax revenues used to fund governmental expenditures in California. Article XIIIB was changed with the passage of Proposition 111 on the June 1990 ballot. These changes permit greater flexibility with regard to annually calculating increases in the appropriations limit (Gann Limit) by allowing additional growth factors to be used. The factors permitting the maximum allowable increase in the appropriations limit are chosen for the calculation each fiscal year. As can be seen below, the City is substantially under its appropriations limit. The difference between the appropriations limit and the appropriations subject to limitation has grown over time as the limit has been substantially increased by the annual adjustment factors. This, combines with the comparatively slower pace of growth in proceeds of taxes over the same time period, has contributed to the amount under the appropriations limit. Fiscal Year 2019-20 Limit $7,476,088 2020 Change in Town of Los Altos Hills Population 1.0037 2020-21 Change in California Per Capita Personal Income 1.0373 Fiscal Year 2020-21 Limit $7,783,639 Fiscal Year 2020-21 Budget Amount Subject to Limitation $7,421,184 Amount Under Appropriation Limit $362,455 Resolution 28-20 Page 3