A committee of the SLO financial task force has released a preliminary report suggesting tough remedies to deal with the city’s dismal finances.
To preserve the financial well-being of the city, the report suggests binding arbitration be put back on the ballot and staff compensation be reduced and linked to private sector salary levels. Furloughs and layoffs could also be pursued, the report said. It also gives conditional and guarded support for the renewal of Measure Y, a half-cent sales tax that will expire unless renewed in 2014.
The report paints a bleak picture of the city’s financial future: “Essentially, in four years city government would exist solely to pay for compensation of city staff. This has been effectively the 20-year trend in city spending.”
Since 1993, spending on city operating expenses—mostly personnel salaries and benefits—has ballooned while capital spending has stayed at roughly the same level, according to a report chart.
It suggests pursuing a two-tier pension system to reduce the long-term financial drain on the city. It also recommends reducing employee health-care benefits and finding new ways of reducing overtime costs.
The report does not have much to say about raising taxes and fees, though raising new revenue sources has been a significant part of the task force’s planned agenda.
“In general, the task force recommends against a continuing trend of raising fees, taxes, and rates as a means to secure financial sustainability for the city in the long term,” the report states.
The report’s support of Measure Y, a traditional foundation rock in the political belief system of the city’s establishment, is conditional.
“City government must demonstrate a willingness to become more streamlined and efficient in providing city services,” the report states.
The report seemed to please many who attended the last task force meeting.
“It turned out pretty well,” said a task force member who didn’t want to be named. “Hopefully this will be a wakeup call to the City Council and the rest of the city. Things need to change, or soon we’ll be paying for city employees and have no money left over for anything else.”
SLO City Manager Katie Lichtig formed the Financial Sustainability Task Force last summer to advise her in planning for the next city budget. The last financial forecast projected an annual budget gap of about $2.2 million in the 2011-12 fiscal year, growing to $3 million the following year. That gap is expected to grow to $3.5 million per year in 2013-14 because of rising pension payments.