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City of San Luis Obispo works to close projected $8.9 million budget gap

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(KSBY File Photo) (KSBY File Photo)

The City of San Luis Obispo is working to close its multimillion dollar budget gap.

The San Luis Obispo City Council on Tuesday directed staff to take a balanced approach to address the city's projected $8.9 million budget gap.

The gap is from increased pension costs mandated by the California Public Employees' Retirement System.
 
The balanced approach includes operating reductions and new ways of doing business, new revenues, and employee concessions, while minimizing impacts on the community. 

The recommendations total $7.5 million from the General Fund and $1.4 million from the City's Enterprise Funds, including water, waste water, transit and parking. 
 
The plan includes a three-pronged approach:

1. 30-40% through operating reductions and new ways of doing business 

2. 20-30% through employee concessions 


In keeping with the City Council's adopted compensation and financial responsibility philosophies and labor relations objectives that include cost sharing of employee benefits such as health insurance and retirement, the recommendation assumes approximately $1.7 million will be achieved through employee concessions. 

3. 30-40% through new revenue sources 

Two areas that would generate additional revenue would be: 

a. Cannabis taxation: $500,000 growing to $3 million annually by 2020-21 

b. Storm water parcel tax: $1.5 million 
Would require two-thirds voter approval with the first revenue collection realized in fiscal year 2020-21.  

To manage future fiscal uncertainty, another key component of the staff recommendations is for the city to establish a Section 115 Pension Trust Fund.

Following Tuesday's meeting, city staff will work through details of the Fiscal Health Response Plan, including additional community and staff engagement, and present a final plan to council for adoption in April 2018. 

The FHRP will be applied to the city's 2018-19 Supplemental Budget, to be adopted in June 2018. 

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