With Tuesday’s approval of the fiscal year 2019-21 Financial Plan, the San Luis Obispo City Council has taken its biggest step to date in solidifying a multi-part plan to safeguard the city’s long-term fiscal health while funding core services and top community priorities.
“Like many California cities, we are faced with rising costs and limited resources,” City Manager Derek Johnson said. “By actively managing the City’s unfunded pension liabilities, revamping business practices and taking a very focused approach to spending, we have tackled a problem that cities are facing up and down the state.”
Johnson acknowledged the role the City Council, community, and City employees have played in ensuring the City’s fiscal health through a series of steps outlined in the City’s Fiscal Health Response Plan. The City is now projecting a balanced budget through the current five-year forecast, ending in Fiscal Year 23-24.
Johnson credits the Fiscal Health Response Plan which enabled the City to adopt a 2019-21 Financial Plan that includes a balanced budget of over two years: $200 million in the 2019-20 fiscal year and a budgeted $208 million in the 2020-21 fiscal year. The Financial Plan prioritizes projects and programs to fulfill community-driven Major City Goals:
- Housing
- Fiscal Sustainability and Responsibility
- Sustainable Transportation
- Climate Action
- Downtown Vitality
These goals were adopted by Council in February after a robust community engagement process that included an online and mailed survey and community forum. The five goals will continue progress on work begun over the past couple of years. Next steps include an update to the City’s plan to meet housing needs, beginning construction on the Prado Road Interchange, preparations to break ground on the new parking structure at the corner of Palm/Nipomo in October 2020, and an update to the City’s plan to reduce greenhouse gas emissions. The Financial Plan also puts in place resources to ensure the ongoing maintenance of City roads, the water system, parks, facilities, and other vital infrastructure.
Based on the Fiscal Health Response Plan, the 2019-21 Financial Plan allocates money that goes toward paying off the City’s unfunded pension liability of $150 million to CalPERS in 20 years while avoiding approximately $19 million in interest. A new $1 million General Fund Revenue Stabilization reserve will help offset any unanticipated market fluctuations. An investment of $13.8 million will be made in a 115 Pension Trust, a special fund that protects the City against pension rate fluctuations and enables the City to earn higher returns on funds dedicated to pension contributions.
Each year, the Financial Plan implements local revenue measure (Measure G) priorities, including money for public safety, neighborhood street paving, open space preservation and improvements to bicycle and pedestrian paths. Local Revenue Measure operating and capital expenses are budgeted for a total $7.8 million in 2019-20 and $7.9 million in 2020-21.
The 2019-21 Financial Plan is posted to the City’s website here.