Over the next two years, San Luis Obispo officials plan to spend about $16.7 million on programs and projects with money from the city’s half-percent sales tax increase.
On Tuesday, the San Luis Obispo City Council voted unanimously to approve a two-year financial plan and a 2015-16 fiscal year budget that includes the $16.7 million expenditures over the next two fiscal years. The city operates on a two-year budget process but will still bring back the 2016-17 budget for approval next June.
Council members said they were pleased with the smooth budget process, which started about 10 months ago and included three workshops in two weeks.
Money from Measure G — which extended a half-percent sales tax increase to March 31, 2023, for a total sales tax of 8 percent — will pay for bike and pedestrian improvements, traffic projects, street paving, police and fire vehicles and equipment, and open space acquisition.
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In addition, Measure G funds will go toward some specific expenditures the council directed in recent budget workshops: $22,000 to remove an elevator in the historic Jack House in San Luis Obispo; $206,000 for the Land Conservancy’s Octagon Barn Center project; and about $35,000 for another ranger pickup truck.
Last November, 70 percent of voters passed Measure G, which extended the previous Measure Y half-percent sales tax that was due to expire in March.
Because the tax increase is a general-purpose measure, the money goes directly into the city’s general fund. The council has pledged to use Measure G revenue to protect and maintain essential services and facilities such as open space preservation, flood protection, neighborhood street paving and code enforcement and senior programs.
The council took two separate actions on the budget — all but one small part was approved unanimously. The council voted 4-0 to allow staff to contract with the San Luis Obispo County Bicycle Coalition and spend up to $10,300 on education and outreach. Rivoire recused himself from that vote because he serves as the coalition’s executive director.
The city’s overall budget for the 2015-16 fiscal year, which begins July 1, is about $122.8 million. Within that budget, general fund revenues of $63.2 million and expenditures of about $65.1 million are projected. The approximately $2 million difference is one-time use of the local sales tax money carried over from last year.
In 2016-17, the overall proposed budget jumps to $211.9 million because of approximately $83 million in upgrades planned for the wastewater treatment plant on Prado Road, with most of it paid through debt financing.
General fund revenues of $65.8 million and expenditures of nearly $65.4 million are projected in 2016-17.
The city’s top three revenue sources for the general fund — sales tax, property tax and bed tax — are all projected to increase over the next two years.
In the meantime, the city is putting $1 million in onetime funds toward its pension liability and other retiree benefits, such as health care. Staff budgeted $12 million toward its unfunded pension liability over the next two years.
San Luis Obispo resident Steve Barasch, who sits on the city's Investment Oversight Committee, suggested the city pay more in future years toward its unfunded liabilities, including pension and health care.
"I've been tracking CalPERS like a hawk," he said. "Our total obligations now are approaching and exceeding $151 million when you include our unfunded health care costs."
Wayne Padilla, the city's finance director, said the latest information shows the city had about $115.6 million in unfunded pension liabilities and about $4.4 million in unfunded healthcare costs as of June 30, 2013.
Councilman Dan Carpenter agreed the unfunded liability will be an issue for the city. "I think we're going to have to address it in a level that we may not understand yet in the next four to five years," he said.