SLO considers 1 percent sales tax increase to pay for new police station, bike paths

View of San Luis Obispo from Terrace Hill.
View of San Luis Obispo from Terrace Hill. jjohnston@thetribunenews.com

The San Luis Obispo City Council may soon ask the public to consider a 1 percent sales tax increase — as well as new property taxes — to pay for an estimated 100 planned new infrastructure projects, including improvements to Mission Plaza, bicycle corridors and a new police station.

About $400 million in additional revenue is needed over the next two decades to fully deliver on projects that will “provide the services and experiences SLO residents desire,” said Daryl Grigsby, the city’s director of Public Works.

“This is really looking to the future and the types of projects articulated in all of our planning documents,” Grisby said. “In my mind, everything we’re talking about is to provide the level and service of infrastructure that we don’t have right now.”

The tax proposal could go on a ballot measure as early as November, which the City Council could set into motion at its April 17 meeting.

Grigsby said the projects are already adopted through various long-range policies and plans — with the understanding that the funding doesn’t yet exist for them.

Details on the larger projects include:

▪ a redesigned amphitheater, restored restroom, new café and extensive safety provisions at Mission Plaza;

▪ extending cross-town bicycle corridors and separated bike paths (such as the Prado Road extension, Tank Farm Road widening and completion of the Bob Jones and Railroad Safety trails);

▪ upgrading or building new public safety facilities, such as a police station and emergency operations center.

The tax would raise about $15 million per year, city officials say. The duration of a proposed tax has yet to be determined, and the City Council could opt for a smaller tax, of 0.5 percent, Grisby said.

A 2014 city study showed that about 70 percent of sales tax generated in San Luis Obispo is paid by visitors.

Property tax increases could include a Community Facilities District (assessed to taxpayers in established boundaries, possibly citywide) and a general obligation bond. Both property tax mechanisms would require voter approval; the debt would be repaid by an assessment of a parcel tax.

Revenue from Measure G, an eight-year .5 percent local sales tax increase passed by voters in November 2014, funds the maintenance of existing facilities, Grisby said.

Grisby said that the city’s pension shortfalls are a separate issue. No sales or property tax increases for infrastructure would go toward pensions, he said.

The city’s pensions costs have risen in recent years, creating a projected budget gap of $8.9 million annually over the next few years. The city’s outstanding unfunded pension liability is about $148 million.

The city is taking steps to budget for its rising pension costs, including proposed increases to employee payments toward pensions and generating new revenues, possibly through cannabis industry taxation.

“We’ve had this need for infrastructure before the pension issue existed,” Grigsby said. “Those two things are separate. The problems are separate, and the solutions are separate.”

The community has an opportunity to review and weigh in on proposed funding mechanisms through an Open City Hall survey at https://www.peakdemocracy.com/portals/189/Issue_6046.

The city also is planning an informational session in mid-March. The City Council will review community input and provide direction on this issue at its April 17 meeting.

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