Fewer overtime dollars for training public safety officials, reduced janitorial services for city facilities and replacing paid coaches with volunteers for teen sports are some of the changes the San Luis Obispo City Council will be asked to make Tuesday to balance the budget.
The council must eliminate $3 million from the city’s general fund before adopting the second half of the city’s 2009-11 budget and to maintain its 20 percent reserve.
Other recommended cuts include leaving several administrative positions vacant, such as a recreation manager, a maintenance worker at Damon-Garcia Sports Fields and an associate planner in the community development department. The proposed reductions would also eliminate the job of a weed abatement officer.
An annual shortfall of $3 million in the city’s roughly $54 million annual general fund is expected in the 2011-13 budget. The shortfall is expected to grow to $5 million by 2013-15. That deficit will more than double to $11 million by 2015-16 if the current half-cent sales tax known as Measure Y, which passed in 2006, is not renewed by city voters in 2014.
“The reality is that we are looking at the budget from a long-term perspective, and these are simply stop-gap measures to balance the budget and maintain the reserve in the next funding cycle,” City Manager Katie Lichtig said. “Over the long haul, we are going to have to make changes to be able to operate within our means.”
Lichtig is forming an ad hoc advisory committee composed of employees and the public to assist in deciding which cuts may have to be made.
A “steeper” and “longer” decline in sales tax revenue than anticipated contributed to the $3 million shortfall.
Sales tax revenue, which accounts for 33 percent of the city’s general fund revenue, declined again in the fourth quarter of 2009. The fourth quarter, considered the most essential because it includes holiday sales, dropped by 4.9 percent from the same quarter in 2008. Although the drop was less than those of the previous nine months, it marks more than two straight years of declining sales tax revenues.
Sales tax generates about $11.5 million in annual revenue for the city and is used to pay for a variety of expenses, such as wages and road maintenance.
The transient occupancy tax — a tax charged for stays in hotels — is down 10 percent, meaning a decrease of more than $450,000 annually compared with the prior fiscal year.
Significant increases in the city’s CalPERS retirement obligations beginning in 2012 will also contribute to the expected shortfall.
San Luis Obispo plans to save nearly $2 million in the coming year with reductions in the city’s capital improvement programs.
Embankment work at Bishop/Augusta creeks will be delayed to save $28,000, and a portion of pipe replacement for the city’s storm drains will be postponed to save $260,000.
Other savings include using the elimination of reserve funds set aside for higher-than-anticipated project costs and money gleaned from prior projects that cost less than the anticipated bid.
In February, the City Council agreed to freeze all hiring, staff training and travel to help reduce the gap between revenue and current spending.
That freeze will be lifted with a budget adoption Tuesday, but a “chill” will remain, requiring all hires to be approved by the city manager.