The San Luis Obispo City Council set its budget goals for the next fiscal year at a special Jan. 30 meeting. For the first time, it also voted on a direction for future fiscal cuts. Among the choices advocated by the council was re-visiting a ballot effort to eliminate binding arbitration, which brings in a third party to make a final decision on police and firefighters’ benefits and pay.

Though the votes on cuts were non-binding and only set a general direction for city staff to know where the council wants to go, City Manager Katie Lichtig said the council members’ choices may have revealed a new majority willing to make difficult cuts.

Voters passed binding arbitration for firefighters and the police in 2000. Since then, binding arbitration has been used only once: In 2008, an arbitrator awarded city police a 30 percent raise.

Council members Kathy Smith, Dan Carpenter, and Andrew Carter voted for binding arbitration to be modified and/or put on the ballot. The three voted as a solid block on many cuts, with Mayor Jan Marx sometimes joining in.

Smith said she voted for nearly all the cutting ideas because, in this time of financial difficulty, the city “should look at everything.”

“We should always look to how we can reduce costs,” Smith said. “Why not? We need to get our finances under control.”

She added that getting binding arbitration repealed would require a lot of public support.

Though only Councilman Carter campaigned on the issue of binding arbitration, other councilmembers have said they thought it took away the city’s ability to deal with a growing budget.

The city’s fiscal future looks rocky, with $3 million annual shortfall and rising pension costs.

In the morning, the council voted economic development, traffic congestion relief, planning, and neighborhood wellness as their high-priority goals for the next fiscal year. In the afternoon, the council voted on what type of cuts each member felt was acceptable.

The council voted unanimously that pension costs be reduced, a two-tier pension system be introduced, and overtime procedures be studied.

A majority of the council also supported reducing city staff, increasing the retirement age, sharing pension costs with employees, and linking cost-of-living pay increases with the Consumer Price Index.