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San Luis Obispo County, CA November 2, 2010 Election
Smart Voter

The City's Financial Situation

By Andrew Carter

Candidate for Councilmember; City of San Luis Obispo

This information is provided by the candidate
Like most government entities in California, San Luis Obispo city government is facing major revenue shortfalls and cost increases.

Last year, we closed a projected $11.3 million annual budget gap in the 2009/11 financial plan through reductions in operating programs and capital improvements, use of reserves, and modest increases in fees for service. Operating program cuts included the elimination of 27 staff positions and, thanks to employee concessions, the elimination of planned cost of living salary adjustments. This year, we made additional cuts of $3 million in the 2010/11 fiscal year.

Despite this, preliminary budget forecasts show our budget gap growing to $6 million per year over the next five years unless corrective steps are taken. The current General Fund Budget is $54 million.

The primary reason for our current budget gap is declining revenue. Sales tax and transient occupancy tax have been down since the middle of 2008 due to declining consumer spending. Development review fees are down because of declining construction activity. Investment earnings are down because of declining interest rates and use of reserves.

The key reason the projected annual gap will grow without corrective action is due to increases in employee salary and pension costs.

I doubt anyone runs for City Council because they have a driving desire to deal with the city budget. I originally ran for Council because of my interest in affordable housing and neighborhood quality. Others have run because of their interest in protecting open space, preserving our downtown, and improving our streets. But no matter why we run, all Council members inherit a fiduciary responsibility to balance the city budget and make sure city programs are delivered as effectively and efficiently as possible. Often times, this is the most important thing we do. Right now is one of those times.

So what will Council do? We'll balance the budget! Unlike federal government, we can't print money to paper over our deficits. And unlike state government, we have a track record in the city of addressing budget problems when they present themselves, not kicking the can down the road for someone else to deal with.

Balancing the budget will mean significant budget cuts because there is little opportunity to increase revenue and no desire to do so. After all, we already benefit from the Measure Y sales tax increase passed by voters in 2006.

Since 80% of City costs are staffing, future budget cuts are liable to be painful. That's why our new City Manager, Katie Lichtig, has convened a task force to advise her in formulating long-term budget recommendations. That task force includes employee representatives and community members.

Although the decisions Council will need to make about our budget will be difficult, we will as always strive to balance the needs of all residents. We will also keep in mind the promises made during the Measure Y campaign and the community priorities identified during our regular goal-setting process. I urge you to get involved and let your views be known.

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ca/slo Created from information supplied by the candidate: October 18, 2010 14:10
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