As San Luis Obispo prepares for the stark reality that it could lose $6.5 million in annual revenue with the looming sunset of its sales tax increase, dueling opinions within the City Council on how to prepare for the revenue loss emerged on the dais Tuesday.
Measure Y, the half-cent increase, was approved by voters in 2006 and is set to expire in March 2015.
The council has directed city staff to create a contingency plan to prepare for that loss of revenue — which equates to 12 percent of the city’s $55.5 million general fund — if voters do not approve a similar tax increase in November.
Council members Kathy Smith and Dan Carpenter want staffing costs to be a key factor when considering budget cuts.
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However, the remaining council members voiced support for studying a combination of reductions, including cuts to city services as well as to staffing.
“The message being sent to the public is, ‘What services are you willing to lose?’ It is a backwards way of saying you need to renew it so that you don’t lose services,” Carpenter said at Tuesday’s meeting.
Carpenter said he supported reducing employee salaries and compensation because they would not necessarily have a direct impact on service levels.
Other council members disagreed, saying that employees should not be forced to take the brunt of the possible cuts.
“I think it is a lazy man’s approach,” Councilman John Ashbaugh said.
Existing Measure Y revenue is spent on capital improvements and operating costs.
Capital improvements, such as street paving, storm drain replacement and new bike paths, account for 60 percent of those expenditures, said Wayne Padilla, interim director of finance and information technology.
The remaining 40 percent is spent on staffing. The city pays for 17 full-time positions with Measure Y funds, including two neighborhood services specialists, parks maintenance workers, a full-time fire marshal and two new downtown daytime patrol officers.
The public will have a chance to weigh in on the possible budget cuts during a community forum in March.
That input will be used to assist the city in creating a two-part contingency plan that will pinpoint specific options for budget cuts should the sales tax measure not be renewed.
In September, the City Council appointed a 10-member advisory body to facilitate the city’s effort to renew an added half-cent sales tax.
Options include a general-purpose tax measure similar to Measure Y or a special-purpose tax that would have specific designations for what those funds can be spent on. The latter requires a two-thirds voter approval.
The advisory body is expected to make a recommendation to the City Council in March.