Did state subventions cause your city to exceed its local Gann limit?

Cities that exceed their appropriation limit for fiscal year 2026-27 must report so by Nov. 1, 2027

By Ben Triffo, legislative affairs lobbyist

Each year, Cal Cities must provide a list of state subventions for cities to include in their local appropriations limits. This is a relatively new process, but identifying your state subventions should be a familiar exercise. Here’s what you need to know for fiscal year 2026-27.

What is the Gann Limit?

The Gann Limit is a result of Proposition 13 (1978) and Proposition 4 (1979), which limit the growth of government spending. It creates a cap on local government revenue that city officials can appropriate in any given fiscal year.

There is also an appropriation limit for state expenditures. The state must spend any revenue that exceeds a certain limit — adjusted for inflation and population — on K-12 education and colleges or rebates back to taxpayers.

What was the previous requirement?

Local agencies were previously required to identify and report any new state subventions — unrestricted money received by a local agency from the state — that would cause them to exceed local appropriations limits. The Department of Finance would count those excess amounts at the state level. City officials would count state subventions within their local appropriations limit if they did not cause the city to go over its local limit.

What is the current guidance?

The Department of Finance now calculates the individual subvention amounts for each state subvention for each city. The subvention information identifies the total dollar value of all subventions that should be included within a city’s appropriations limit for the 2026-27 fiscal year.

If any portion of those values cause a city to exceed its appropriations limit, it must identify the specific, excess amount attributable to these subventions, and report that information to the Department of Finance. The state will instead include these excess amounts in its appropriations limit.

The deadline to report this information is Nov. 1, 2027. The Department of Finance will send updated subvention information for future fiscal years to Cal Cities no later than Feb. 1 of each year.

Where to find out information specific to your city

Cal Cities has created a resource page to house the spreadsheet provided by the Department of Finance. More details about the dollar value attributable to each subvention are in the “City Programs” tab of the spreadsheet.

Cities that will not exceed their appropriation limit for fiscal year 2026-27 do not need to report to the Department of Finance. No action is required if your city is not identified in the spreadsheet. Cities may submit their information via email to Susan Wekanda and Matt Westbrook at the Department of Finance.