San Luis Obispo adopts $111 million budget
June 18, 2013
The San Luis Obispo City Council adopted a $111 million budget for the upcoming fiscal year Tuesday night.
Ten years ago, the council adopted a $72 million budget for 2003-2004. In that past ten years, the population of San Luis Obispo has increased by 2.6 percent from 44,359 to 45,525, yet the budget has increased by 54 percent, or nearly $40 million.
The council voted 3-1 Tuesday in favor of the 2013-2015 financial plan, which includes a $129 million budget for fiscal year 2014-2015.
The city plans to increase capital improvement spending by $17 million in 2014-2015, which accounts for most of the $18 million increase in the overall budget from 2013-2014.
In the last financial plan, the council budgeted $99.9 million for 2011-2012 and $99.6 million for 2012-2013. The city spent a total of $101.6 million in 2011-2012 and has yet to finalize spending for 2012-2013.
The current financial plan also includes a $57.4 million general fund for 2013-2014 and a $56.7 million general fund for 2014-2015.
The general fund in 2003-2004 was $33.2 million.
Councilman Dan Carpenter cast the lone dissenting vote, saying the budget did not adequately address the long-term fiscal health of the city.
“You cannot just pass a budget to pass a budget because we’re up against the cliff again,” Carpenter said.
Carpenter said the current budget did not do enough to address the city’s unfunded pension liability, possible loss of Measure Y revenue and upcoming contract negotiations with its employees.
At the conclusion of 2010-2011, San Luis Obispo had accumulated $107 million in unfunded pension liabilities, which the California Public Employees Retirement System (CalPERS) expects the city to pay off over the next 30 years.
During the budget process, city management proposed a self-imposed 1 percent increase in the city’s total payment to CalPERS in 2014-2015, followed by a 2 percent increase in 2015-2016. Likewise, interim finance director Wayne Padilla said the city is considering issuing a pension obligation bond to cover the long-term liability.
Measure Y, the city’s half-cent sales tax that generates about $6.5 million annually, will expire on April 1, 2015 if voters do not renew it. The current budget has a contingency plan for a potential loss of Measure Y revenue over the final three months of the financial plan, but the council has yet to determine how it would proceed beyond 2014-2015 if voters do not renew the tax.
In its last round of employee negotiations, the city received $3.1 million in compensation concessions. Carpenter said that, at the time, the council majority intended to negotiate more concessions in salaries and benefits in the next round of negotiations.
The current council, which temporarily has four members, has not made any plans to negotiate more employee concessions. The next round of negotiations will begin during the upcoming budget cycle.
Mayor Jan Marx said the council approved a “very conservative, very well crafted budget” but said Carpenter raised very serious issues. Marx proposed a council study session to discuss Carpenter’s financial concerns.
The council spent much of its budget deliberation Tuesday night debating whether or not to add an additional police officer to the downtown area. After about two hours of debate, the council chose to add the extra officer and take money out of street, parking lot and traffic sign maintenance to do so.
The adoption of the budget finalizes water and sewer rate increases for most San Luis Obispo residents, which will take effect July 1.
CORRECTION: The budget increased by 54 percent, not 35 percent over the last decade.