Tax hikes and pension problem on the agenda at SLO City Council meeting

A proposed tax to pay for new projects and ways to address a nearly $9 million annual projected budget hole caused by rising pension costs will be on the agenda in Tuesday’s San Luis Obispo City Council meeting.

The city projects it will have to bring in $418 million in new revenue over the next 20 years to pay for projects like a Mission Plaza upgrade and new police headquarters, in addition to solving the pension problem.

Both topics will discussed at the 6 p.m. meeting at City Hall, 990 Palm St.

The council will review proposed cuts of $7.5 million from the General Fund and $1.4 million from the city’s enterprise fund, which includes money for water, wastewater, parking and transit. The council is considering the cost-cutting measures for adoption in June as part of the city’s budget discussions.

And the council will review whether to move forward with asking taxpayers to approve a sales tax increase to 8.75 percent (from 7.75 percent) and new property tax increases to help pay for 73 unfunded infrastructure projects over the next two decades.

The new taxes would be part of the city’s 2019-21 fiscal cycle and would require voter approval.

The proposed sales and property taxes would raise $322 million for upgrading existing infrastructure and $96 million for new projects.

Spending toward the new Prado Road interchange project, Mission Plaza revitalization and restroom improvements and new police headquarters rank the highest among planned projects.

The city is plans 30 to 40 percent reductions in operating costs as a way to address rising pensions over a three-year period. The city is exploring new ways of doing business, including refinancing city bonds, pursuing energy efficiencies and consumption reductions, renegotiating consultant service agreements and risk management.

Employees would also pay 20 to 30 percent more into their health insurance and retirement funds.

And about 30 to 40 percent would be made up through new revenue sources, including a general-purpose tax on cannabis sales (still requiring voter approval). Hotel and a stormwater taxes also are options.

An additional $1.4 million would come specifically from the city divisions that handle sewer, water, parking and transit, through cost-cutting strategies and employee negotiations on wages, hours and working conditions.

This story was originally published April 15, 2018 at 11:23 AM with the headline "Tax hikes and pension problem on the agenda at SLO City Council meeting."