Just as signs touting Measure G are popping up around San Luis Obispo, so, too, is the debate heating up on whether to extend a half-percent sales tax increase in the city for eight more years.
Sixty-five percent of city voters approved the sales tax increase in 2006 through Measure Y. That tax, which has raised about $42.9 million since it was passed, is due to expire in March.
If voters approve the extension, the city’s sales tax would remain at 8 percent until March 31, 2023. Otherwise, it would drop to 7.5 percent in April.
The measure needs 50 percent plus one additional vote to pass.
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Many of the arguments over the merits of Measure G are based on how supporters and critics perceive the city used past funds from Measure Y.
Advocates of extending the sales tax increase say revenue from Measure Y has been used wisely by the city to hire additional police officers, increase and improve bike lanes, resurface streets and acquire open space — and say that the city will continue to spend it wisely.
Those against it say that the city put too few dollars into capital improvements and instead used the additional revenue on payroll and pensions — something they fear the city will do again.
Because the tax increase is a general purpose measure, the money goes directly into the city’s general fund and can be used for anything.
The City Council has pledged to use Measure G revenue to protect and maintain essential services and facilities such as open space preservation, flood protection, neighborhood street paving and code enforcement, and senior programs.
The ballot measure also requires that a citizen’s committee be formed to make spending recommendations to the City Council — something that was not in place for Measure Y.
San Luis Obispo has a population of about 45,000 residents but provides daily services for up to 90,000 people during business hours when commuters and visitors are included, according to a benchmark study done earlier this year by the city.
A study by Strategic Economics, commissioned by the city, found that 72 percent of the sales tax revenue raised in the city comes from nonresidents — a point that Measure G supporters are using in favor of passing it.
If Measure G fails, the impact is not yet clear.
The council has begun discussing a contingency plan — such as reducing all city departments that receive Measure Y funding or slashing the money spent on capital improvements by 33 percent — should voters not approve Measure G, but so far the council has not adopted a specific course of action.
In essence, the City Council would have to eliminate about $6.7 million in the first year of the two-year 2015-17 budget and then carry those cuts into the second year.
Concerns about accountability and transparency about how the money was spent in the past have been expressed by people on both sides of the issue — triggering a requirement that the money be tracked separately in the budget.
The ballot measure also requires that a citizen’s committee be formed to make spending recommendations to the City Council.
Opponents say that isn’t enough.
“I find no comfort in those measures,” said Keith Gurnee, chair of the No on G committee. “The appointment of a committee is a smokescreen. All the committee can do is make recommendations — it is the council who makes the decisions.”
Gurnee said that he initially supported the passage of Measure Y but was disappointed in how the money was spent — leading to his efforts to fight its renewal.
“I thought they would have spent more money than they have to get on top of more community improvements,” he said. “But instead, it has been a shell game, shifting money from one pot to the other.”
The 2014-15 budget includes $6.7 million in expected Measure Y revenue, about 12 percent of the general fund.
The measure brought an additional $36.2 million into the general fund through the end of fiscal year 2012-13 and is expected to bring an additional $6.7 million through the end of the 2013-14 fiscal year. The figures for fiscal year 2013-14 are still being finalized.
The city says that of that amount, about $18 million, or nearly 50 percent, was spent on capital improvements and about $13 million, or 36 percent, on operating programs between 2007 and 2013. The $4 million in unspent funds remained available for future use.
Wayne Padilla, the city’s finance director, said that in the years before Measure Y the city spent an average of about $3 million from the general fund on capital improvements.
That annual spending — with additional Measure Y funds — grew to an average of $5 million after the sales tax increase was passed, he said.
According to those figures, spending on capital improvements from the general fund grew on average by about $2 million annually during the lifespan of Measure Y.
“The spending of Measure Y funds has been but a fraction of what was promised,” said Gurnee, who counters that the city’s gross revenues have grown in the last eight years — so spending on community improvements should have grown as well.
“Basically, I think the city is being somewhat dishonest with voters,” he said.
The city’s general fund, independent of Measure Y revenue, grew by 18 percent from 2005-06 to 2012-13, said Padilla. The general fund grew by 33 percent that time period with Measure Y revenue.
Clint Pearce, president of Madonna Enterprises and co-chair of the SLO Citizens for Measure G, sees things differently.
“In general, those dollars have been spent for things voters had in mind when voters voted Measure Y in,” said Pearce. “If Measure Y hadn’t gone through, especially with recession, there wouldn’t be hardly anything spent on those items.”
In the midst of the eight-year span of Measure Y, the council directed city staff to negotiate a 6.8 percent cut in total compensation for all employees, which resulted in a more than $3 million savings.
San Luis Obispo voters also passed two ballot measures in 2011 that allowed the city to overturn binding arbitration and create a tiered pension program to reduce the amount of retirement benefits offered to new employees.
The city has appealed that decision; the outcome is still unknown.
Foes of Measure G say the money will be used for salaries and pensions — expecting that employees will now bargain hard for pay increases.
Employee contracts will start to expire at the end of the year, and negotiations for pay and benefits will begin for the first time since salaries and benefits were cut.
The contract with the city’s largest employee union, the San Luis Obispo City Employees Association, expires Dec. 31, 2014, followed by the Police Staff Officers Association in June 2015, and fire union and the remaining police employees in December 2015.
Lauren Brown, a longtime resident and entrepreneur, was actively involved in the 2011 campaign to overturn binding arbitration and create tiered pensions. He is now advocating for Measure G.
“I see them as two complementary measures,” said Brown. “On the one hand, let’s give the City Council the tools they need to control spending, and on the other, let’s give the council and the city the funding they need to provide the level of service and the environment that most of the citizens of San Luis Obispo really desire.”
At its peak in 2009-10, staffing costs accounted for 80 percent of the city’s general fund. The savings gained during the 2011 negotiations will ultimately reduce staffing costs to 74 percent of the general fund — the lowest level since 2003-04.
In 2012-13 the city had 355 full and part-time employees at a cost of $39.8 million, paid from the $52.3 million general fund.
A portion of Measure Y funding is spent on 17 full-time staff positions, including two neighborhood services specialists, parks maintenance workers, a full-time fire marshal and two new downtown daytime patrol officers.
It is not clear what will happen to those positions if the measure is not renewed.