A divided San Luis Obispo City Council on Tuesday directed city staff to draft a ballot measure to renew a half-percent sales tax, but the council could have a difficult time getting the measure on the November ballot.
The decision was 3-2, with Councilman Dan Carpenter and Councilwoman Kathy Smith casting the dissenting votes.
The ballot language will return for City Council approval in July. In order to put it on the ballot, four council members must vote to do so.
The ballot measure would seek to extend an existing half-percent sales tax that city voters approved in 2006 with Measure Y. That tax is due to expire in March 2015. If voters approve an extension, sales tax in San Luis Obispo would remain at 8 percent.
Carpenter said he will not support the measure, which he said amounts to a sales tax increase because the half-percent tax is due to expire. Smith said she would vote only for a special-purpose tax that dedicates all of the money to capital improvement projects.
“If I had more faith and trust in the leadership and transparency of the dollars, I could support it,” Smith said. “Absent of that, I would support putting a half-cent special-purpose tax on the ballot that was 100 percent aimed at capital improvement projects.”
Mayor Jan Marx, who called Carpenter and Smith obstructionists, encouraged the public to start a voter initiative to get a sales tax measure on the ballot should the council fail to do so.
In March, the city’s Local Revenue Measure Advisory Committee concluded that a measure to renew San Luis Obispo’s half-cent-per-dollar sales tax should be put on the November ballot. The committee also recommended the measure extend the tax for eight years and retain it as a general-purpose tax.
The committee recommended against a special-purpose tax that designates how funds can be spent and requires a two-thirds voter approval. A general-purpose tax only needs a majority approval to pass.
John Fowler was one of two people on the appointed 10-member advisory committee who did not vote in favor of seeking renewal.
Fowler outlined his concerns, including that the council has not been spending enough of the half-percent sales tax on capital improvement projects, in a letter sent to the council Friday.
“This is going to be a tough measure to put forth, as it is clear we have not invested in CIP (capital improvement projects) as we promised voters we would,” wrote Fowler, who also sits on the city’s Planning Commission. “Of course, it’s a general tax and no laws were broken — only the public trust, as we continued to hear at all public hearings.”
Fowler contends that the city’s gross revenue has continued to grow, even during the recession and without calculating the influx of Measure Y funds.
“This reality explains why CIP didn’t increase with the passing of Measure Y as we needed it to cover the large growth in salaries,” Fowler wrote.
However, others encouraged the council to pursue extension of the sales tax.
Former City Manager Ken Hampian advocated for a general tax, not a specific tax, in an email to the council. He said that tracking how the half-percent tax is spent could be helpful.
“Accounting for funds differently to enhance tracking and communication might be a good idea — as long as this option is carefully investigated to assure that it will not lead to a special-purpose designation,” Hampian wrote.
Existing Measure Y revenue, expected to be $6.5 million in this year’s budget, equates to 12 percent of the city's $55.5 million general fund.
Capital improvements such as street paving, storm drain replacement and new bike paths, account for 60 percent of Measure Y expenditures, said Wayne Padilla, the city's director of finance and information technology.
The remaining 40 percent 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.
In January the council directed city staff to prepare a contingency plan for the potential loss of that revenue should voters not renew the sales tax measure.
Council members have expressed dueling opinions on how the potential $6.5 million loss in revenue should be addressed.
Smith and Carpenter have said they want staffing costs to be a key factor when considering budget cuts. The remaining council members voiced support for studying a combination of reductions, including cuts to city services as well as to staffing.
At a recent public forum, attendees were given a list of 17 possible options for cutbacks. Attendees listed their top choices for reductions as downtown improvement programs, open-space acquisition and staff salaries.