Is SLO prepared for possible loss of Measure Y money?
July 16, 2014
By JOSH FRIEDMAN
The San Luis Obispo City Council received a staff report Tuesday on a contingency plan for the loss of around $6.7 million in annual revenue from the city’s half-cent sales tax. The council responded to the report with no deliberation and moved on to talking about an entry monument at the Highland Avenue city limit.
Measure Y, the city’s half-cent sales tax, accounts for about 12 percent of San Luis Obispo’s general fund revenue, according to the staff report prepared by budget manager Joe Lamers. If a majority of San Luis Obispo voters support a renewal of the tax in November, the revenue stream will extend for another eight years.
If voters reject the tax, though, the city will stop collecting half-cent sales tax revenue on March 31, 2015.
In the case that voters reject the sales tax extension, the city plans to address the loss in general fund money largely through cuts to spending on capital improvement projects. The contingency plan presented by city staff Tuesday included three options, two of which involved cutting $4 million annually in capital improvement expenditures.
City staff claims that it spends about $4 million, or 60 percent, of annual Measure Y funds on capital improvement projects. But, staff has changed its definition of capital improvement projects multiple times and now includes routine maintenance as a form of capital improvement.
Without Measure Y money, the city would focus on covering potholes rather than paving streets, Lamers said Tuesday.
Even with Measure Y in effect, though, staffing costs account for about 80 percent of general fund expenditures. Staffing costs have more than doubled in the last 15 years, increasing from less than $18 million in 1999 to approximately $42 million currently.
The third budgeting option that Lamers presented Tuesday did involve pay cuts for most city staff. In that case, the council would strive to attain $2.2 million in employee concessions, or 5.9 percent pay cuts for all employees whose salaries come out of the general fund.
The council would have to negotiate with employee unions in order to achieve the cuts.
Regardless of how the council would go about cutting expenditures, in the case Measure Y renewal fails, it is likely that city fees would increase. Lamers mentioned in his report the possibility of city staff making up for some Measure Y money by finding new sources of revenue, such as fee increases.
“There may be options for increased user fees, fines or use of property,” Lamers wrote in the report. “Employees throughout the organization will be encouraged to surface revenue-raising options.”
After Lamers completed his presentation and two members of the public addressed the council on the matter, Mayor Jan Marx said Lamers’s report was very interesting.
“I appreciated the matrix in the back going into greater detail and really flush out the different scenarios,” Marx said.
She then moved on to the next agenda item, and no other council member chimed in.
Voters will decide on Nov. 4 whether or not the city will have to make up for approximately $6.7 million in lost annual revenue.