SLO County could see $11 million budget gap next year — but’s there’s uncertainty
San Luis Obispo County is once again projected to have a multi-million budget deficit next year, but given recent political influences, the exact gap is harder to predict than usual.
Under the county’s current status-quo spending habits, the funding gap next year is estimated to be around $7.5 million — but it could range from as low as $4 million to as high as $11 million, according to the county’s fiscal year 2026-27 and multi-year financial forecast, presented at Tuesday’s SLO County Board of Supervisors meeting.
“Due to anticipated changes in the county’s budget development practices for the upcoming fiscal year as well as recent changes at the state and federal level, this forecast should be viewed as having a higher level of uncertainty than in prior years,” the forecast staff report said.
On top of currently dealing with one of the longest federal government shutdowns in history, the state budget cut all funding to homelessness services this budget year, and the Trump administration’s One Big Beautiful Bill caused major reductions in Medicaid and SNAP funding. Some of that funding will come back in fiscal year 2026-27, including a $500 million state homelessness budget.
“I just want to caution everybody, too, because the federal budget, what’s going on there, we’re going to be dealing with some other things that are not expected right now,” Supervisor John Peschong said at Tuesday’s meeting, noting that $40 million in federal road funds could be held up. “... Just remember that this is a work in progress.”
What is the projected budget gap in future years?
If not fixed now, the county’s funding gap would grow in future years. Without budget corrections, the county estimated a $14.8 million deficit in fiscal year 2027-28, a $16.7 million deficit in 2028-29 and an $18.7 million deficit by the end of the decade.
These figures are still comparatively better than last year’s multi-year forecast which predicted a $67 million funding gap by 2029, which the county corrected by slashing over $32 million from the current budget and cutting 155 jobs last year.
SLO County Human Resources Director Jamie Russell said Tuesday that it was the first significant countywide layoff in the 13 years she has been at the county.
How will SLO County address the potential budget gap?
Small changes over the coming years could still have massive impacts on the budget, according to the staff report, which outlines some hypothetical scenarios.
Adding 22 county jobs annually would increase the deficit to $36.9 million by 2029-30, for example. A growth in inflation of more than 1% for salaries, benefits, services and supply costs could result in close to a $30 million deficit by 2029-30.
Even a mild recession could cause a $58.3 million deficit by the end of the decade.
“Expenses are just outpacing” revenues, SLO County budget director Lisa Howe said at Tuesday’s meeting.
Potential one-time savings ranging between an estimated $7 and $12 million “could be used as one-time funding to reduce that gap, but not a structural reduction,” Howe said.
Alternatively, that money could be put toward another board-directed, one-time project, she said.
The county will have a better idea for what the deficit will actually be by its mid-year report around January, SLO County Chief Executive Officer Matt Pontes told The Tribune.
This story was originally published November 5, 2025 at 9:00 AM.
