SLO leaders face a lean budget

The first task of the newly seated San Luis Obispo City Council will be envisioning the city’s future in lean times.

That vision will materialize in a goal-setting process overshadowed by inevitable budget cuts. Next year, the council will be tasked with cutting nearly $3 million from the next two-year budget to meet a growing shortfall.

The city, like others throughout the state, continues to struggle because of the economic downturn. However, city leaders hope sales taxes, at least, will continue to increase after a more-than-two-year-decline.

The council will begin the 2011-13 budget process in January by charting the course for future spending.

The predicted shortfall of $3 million in the city’s roughly $54 million annual general fund for the fiscal year 2011-12 is up from the $2.2 million identified in October as part of the city’s five-year fiscal forecast.

The shortfall is anticipated to grow to $3.4 million in 2013-14 and projected to be $2.7 million annually over the next five years.

The rising costs of the California Public Employees’ Retirement System and the effects of the recession have been blamed as the main contributors to what officials call a structural deficit.

The city’s reserve, as mandated by council policy, remains at about $9.4 million or 20 percent of the city’s operating expenditures of $47 million.

In the past two years, the city has eliminated more than $14 million in spending and the equivalent of 26.5 positions from the budget, she said.

The public will be asked for their input regarding future goals and spending at a community forum scheduled for Jan. 11 at the Ludwick Community Center.

Those who attend will vote for their budget priorities by placing dots on a board of suggested goals. The discussion will also focus on Measure Y spending — the half-cent sales tax increase approved by voters in 2006 — and suggested expenditure cuts.

The council will then make their determinations at an all day goal-setting workshop Jan. 29 at the City/County Library Community Room.

Past City Council goals included infrastructure maintenance, economic development, traffic congestion relief, open space preservation and land use and circulation revisions.

In June, City Manager Katie Lichtig convened a 32-member budget task force to advise her on the city’s finances leading into the budget-setting process.

Key recommendations from that task force include putting binding arbitration for police and firefighters back on the ballot, reducing staff and cutting pay and benefits for city employees.

Binding arbitration refers to a mandate in the city charter that local voters approved in 2000, which entitles the unions for public safety employees to turn to a third-party arbiter if labor negotiations reach an impasse.

The charter requires the city to abide by that referee’s decision.

In June 2008, an arbiter gave sworn police officers a 30 percent raise and increased dispatchers’ and other nonsworn police staff’s pay by 37 percent.

Since that ruling, city leaders have complained that the mandate has stripped them of their budget-making authority and threatened financial ruin for the city.

Unions say arbitration is fair because they can’t go on strike.

The task force’s final report, expected soon, will be presented to the City Council and the public, Lichtig said.

“The council and the community have faced these kinds of challenges with great care in the past,” Lichtig said. “This is another opportunity to take the community input and move forward in a positive way to solve the problem that we have in front of us.”

Reach AnnMarie Cornejo at 781-7939. Stay updated by following @a_cornejo on Twitter.