The San Luis Obispo City Council spent more than three hours Tuesday night deliberating the city’s grim fiscal future and weighing the impacts of proposed budget cuts that will eliminate jobs and lessen services.
Community members, union representatives and employees sat pensively in the council chambers to listen to the continued debate about how to eliminate more than $4 million from the city’s upcoming two-year budget.
At stake are 13 positions, most vacant or expected to be because of retirement or a shift to another position, including two police officers, at a savings of $1 million.
Also proposed is saving $2.1 million by negotiating with employee groups for lower salary and compensation.
Some council members expressed a need to cut even more. For example, Councilman Andrew Carter said, “I don’t believe staff has been aggressive enough.” He proposed cutting an additional million from employee pay and benefits.
An additional $1 million will be cut from operating programs, and $1.6 million will be used from excess reserves for one-time project expenses.
For the first time, the city implemented a five-year capital improvement plan — incorporating costs for projects deemed necessary into the budget to prevent unexpected costs in the future.
Three major projects did not make the list because of the coming years’ less-than- rosy financial outlook: dredging Laguna Lake, landscaping the South Street medians and replacing the steps leading up to City Hall.
The city faces a $4.4 million shortfall in its $54 million annual general fund for the fiscal year 2011-12 that begins July 1.
That shortfall will grow to $5 million in 2013-14 and is projected to be $4.7 million annually for each of the next five years.
Employees will be asked to make concessions to account for about half of the anticipated shortfall by paying more toward their retirement and health insurance and working for less pay.
The city is also considering the creation of a two-tier pension system for new employees.
The city must negotiate all of those options with employee groups before any changes are made.
“I anticipate that every employee will be impacted by this decision,” said City Manager Katie Lichtig.
Lichtig, who makes $308,048 in total compensation, said she will lead the way by taking cuts to her own earnings.
“I plan on taking a leadership role and contributing more than any other employee to the solution,” Lichtig said.
Other top paid employees such as department heads will also be asked to make concessions, Lichtig said.
The budget discussion will come back to the City Council for several public hearings with final adoption of the 2011-13 budget expected June 21.