Yesterday the San Luis Obispo City Council adopted a two-year financial plan that lays out the path toward continuing core public services, making major infrastructure improvements, and aiding in the community’s COVID-19 recovery.
The city is also planning to dramatically ramp up infrastructure improvements citywide over the next five years with an investment of about $126 million, with additional funding coming from Measure G‐20. These include improvements to bike and pedestrian infrastructure, major traffic corridors, sidewalks, downtown and Mission Plaza, local parks and playgrounds, and more.
“We are in a solid position to make meaningful progress on those things most important to our community,” said City Manager Derek Johnson. “Continued focus, discipline and adaptability will be critical to navigating through these next two years and the challenges ahead.” Mayor Harmon said, “The Council is excited to advance a budget that addresses the biggest challenges facing our community and the investments to address climate crisis, homelessness, housing, transportation, and economic recovery are essential and is particularly grateful to be leading a city that is doing everything through the interconnected lenses of climate action and equity”.
The general fund is budgeted at $98.7 million for fiscal year 2021-22, which starts on July 1, and $103.6 million for fiscal year 2022-23. This will allow the City to continue 68 existing core services and further the city’s four major goals toward economic revitalization, housing and homelessness, environmental sustainability, and creating a more welcoming community.
Investing in Major City Goals
The two-year financial plan includes major investments in City Council goals, which are long-term initiatives focused on the community’s most important priorities:
Economic Recovery, Resiliency, & Fiscal Sustainability: About $29 million has been set aside to support economic recovery for all from the COVID-19 pandemic and support a thriving local economy.
Diversity, Equity, & Inclusion: About $2 million will be dedicated to making San Luis Obispo a more welcoming and inclusive city for all.
Housing and Homelessness: A total of $38 million has been allocated over the next two years to expanding housing options for all, with an emphasis on affordable and workforce housing, and to bridge the homeless services gap currently affecting the entire SLO County region.
Climate Action, Open Space, & Sustainable Transportation: The city will invest $30 million to proactively address the climate crisis, which includes preserving and enhancing open space and the urban forest, and alternative and sustainable transportation options.
Behind the Budget
Projected general fund revenues are $99.8 million for fiscal year 2021-22 and $103.7 million for fiscal year 2022-23. The city’s general fund revenues come primarily from the city’s share of property taxes, sales tax and the tax visitors pay when they stay in local hotels. Most day-to-day city services rely on the city’s general fund.
Johnson credits the city’s strict adherence to its Fiscal Health Response Plan over the past three years for its ability to project a balanced budget in spite of the economic effects of the COVID-19 pandemic. When the plan was first developed in 2018, cities throughout California were projecting significant deficits due to rising pension costs. The proposed budget and forecast provides for $10 million of pre-payments to pension liabilities.
Since then, City of San Luis Obispo employees agreed to new contracts, all city departments found new ways to reduce spending and additional revenues are available from the City’s cannabis business tax. The Fiscal Health Response Plan enabled the city to make one pre-payment towards unfunded pension liabilities. In order to conserve cash flow, the city did not make its planned pre-payments in 2019-20 and 2020-21 but plans to use the next five years to catch up on Fiscal Health Response Plan pre-payment goals as the economic forecast becomes more clear.
During all of the challenges over the last year with COVID-19, the city maintained its AA+ bond rating and 20% of the city’s annual operating budget in a reserve account to be used in case of emergency.
The city’s two-year financial plan is available on the city’s website and includes detailed breakdowns for each of the City Council’s goals as well as each department’s planned spending, projected revenues and major upcoming projects.