San Luis Obispo County’s financial woes continue

March 19, 2026

By KAREN VELIE

San Luis Obispo County revealed last week that its more than $13 million projected budget surplus could become a nearly $1 million deficit in the upcoming fiscal year, and more than $10 million in the years to follow.

While facing a more than $35 million budget deficit in the 2025-2026 fiscal year, the county cut more than 200 positions as a means to balance the budget. However, many of the positions were vacant, employees were given early retirement and only 10 people lost their jobs.

After last fall revealing a $4 million to $11 million budget gap for the 2026-2027 fiscal year, the county cut expenses in mutiple departments leading to a more than $13 million budget surplus. The county bases its status quo budgets on revenue and costs from the prior year.

However, mutiple departments have submitted add-back requests to restore prior jobs and services with a cost of over $14 million.

If all add-back requests are approved, the county faces a $902,187 deficit in the 2026-2027 fiscal year and a $11,994,421 budget gap in the 2027-2028 fiscal year.

The county is likely to require additional structural expenditure adjustments and continued fiscal discipline to balance the budget.

“As part of the county’s ongoing financial rebalancing and resiliency initiative, staff continues to advance a coordinated, multi-year effort focused on strengthening fiscal oversight, evaluating reserves and revenue practices, and reinforcing long-term structural sustainability across all departments, according to the staff report.

California provides approximately 35% of the county’s general fund’s operating revenue. Because of current fiscal challenges, the state may cut funding. Another 14% of the county’s operating revenue comes from federal funds, which may also face cuts.

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