Brief

The City Administrative Officer submitted a report on September 15, 2026, regarding the appropriation limit for the 2026-27 fiscal year. This document establishes the maximum amount the City can appropriate in that fiscal year and is a routine but necessary step in the budget process. The file is currently pending review in the Budget and Finance Committee.

Full summary

California state law requires every local government to set an annual appropriations limit under the Gann Initiative, which caps how much tax revenue a city can spend in a given fiscal year. City Administrative Officer Matthew W. Szabo submitted a report recommending that the Council adopt $10,026,603,100 as Los Angeles's appropriations limit for 2026-27, up from $9,235,505,368 the prior year. Before adopting the limit, the City must make its calculation methodology publicly available for at least 15 days, and the CAO's office has also transmitted the documentation to all certified neighborhood councils. The CAO had two calculation options available. The first uses California per capita personal income growth of 4.95 percent combined with a city population decline of 0.87 percent, yielding a limit of $9,605,473,774. The second uses the change in nonresidential new construction assessed valuation, which grew 9.55 percent, yielding the higher figure of $10,026,603,100. The CAO recommends the nonresidential new construction approach because it produces a larger ceiling. Crucially, both figures comfortably exceed the $6,330,464,822 in actual 2026-27 budget appropriations subject to the limit, meaning the City is not at risk of breaching the cap under either method. The difference between the recommended limit and actual subject appropriations is approximately $3.7 billion. The limit is calculated by applying a combined annual adjustment factor of roughly 1.0859 to the prior year's limit, then subtracting a small reduction of $2,684,349 attributable to a shift in Local Public Safety Realignment financing from tax proceeds to user charges. Certain budget items are exempt from the Gann limit entirely, including debt service on general obligation bonds, federally mandated expenditures such as Medicare contributions and FLSA overtime costs for police and fire, and qualifying capital outlay projects. The CAO notes there is no fiscal impact from adopting the recommended limit. The file now sits with the Budget and Finance Committee awaiting review and a recommendation to the full Council.

Activity (2)

• 2026-09-15 City Administrative Officer document(s) referred to Budget and Finance Committee.
• 2026-09-15 Document submitted by City Administrative Officer, dated September 15, 2026.

Documents (1)

• 2026-09-15 Report from City Administrative Officer · report