San Luis Obispo officials are beginning to prepare for the potential loss of 12 percent of the city’s general fund budget.
On Jan. 21, city councilmembers voted unanimously in favor of a staff proposal to prepare three slates of options for a contingency plan in the event that Measure Y—the one-half percent sales tax enacted by voters in 2006—fails to win over voters again when it goes on the ballot this November.
Without the Measure Y funds, Interim Director of Finance and Information Technology Wayne Padilla said the city will “be rethinking how we do business.”
Currently, Measure Y fills city coffers with $6.5 million each year. According to a city staff report, 60 percent of the funds have been directed toward capital improvements, while the remaining 40 percent have gone toward operating expenses. If SLO voters shoot down its renewal, the most immediate impacts would be felt in the last quarter of the 2014-15 fiscal year, when it’s expected that the city will lose $2.8 million.
City staffers have proposed a multi-phase contingency plan to first address the immediate shortfall, followed by long-term options to shore up the budget.
While the City Council was unanimous in giving staff the go ahead to prepare the options, they split when the discussion turned to reducing employee compensation and positions. Councilman Dan Carpenter led the charge to direct staff to include compensation reductions as a portion of the long-term options. Along with Kathy Smith, Carpenter was able to convince Carlyn Christianson to agree to the possibility of compensation reductions.
Mayor Jan Marx and John Ashbaugh, however, said talks of such reductions were both premature—as the city hasn’t yet begun negotiations with its employee bargaining units—and misplaced since the city will soon be setting its financial plans for the coming fiscal years.
“I think it would be the lazy man’s way out,” Ashbaugh said of plans to backfill the Measure Y loss solely with employee compensation reductions.
One short-term possibility to compensate for the loss of Measure Y—if it is voted down—could come from an estimated $7.4 million surplus in city reserves. City staffers said they would take a closer look at that possibility during a meeting scheduled for Feb. 18. City officials plan to hold a “Measure Y Community Forum” in March.