By what percentage can a governing body increase its appropriations cap through a cost of living adjustment ordinance?

The correct choice indicates that a governing body can increase its appropriations cap by 3.5% through a cost of living adjustment ordinance. This adjustment reflects economic factors such as inflation, allowing municipalities to maintain or enhance the quality of services they provide to residents without severely impacting their budgetary constraints. The 3.5% figure is determined based on specific statutory guidelines and fiscal policies that recognize increases in operating costs, enabling local governments to respond to rising expenses that affect their operational budgets.

Understanding this percentage is crucial for municipalities as it directly impacts their financial planning and resource allocation strategies. An adjustment of this magnitude ensures that the governing body can adjust its financial framework in alignment with the economic environment, fostering stability in municipal services while adhering to legislative mandates.