The San Luis Obispo City Council met Tuesday night to discuss a $1.5 million budget deficit and to set goals for the upcoming year.
As the council examined the mid-year budget review, they noticed that the income generated from sales and hotel taxes had seen a major shortfall. City finance manager Debbie Malicoat said those taxes make up 40 percent of the general fund, and because it is one of the largest sources of income for the city, when that amount goes down, even by one percent, it becomes a struggle.
“This year, we’re going to have to tighten the belt around the budget,” Malicoat said.
After paying close attention to the financial report, she said manufacturing, exportation, consumption and the current economic state of the country are all intertwined factors that affect income tax.
Malicoat said she plans to speak with several economic trend specialists within the next months to discuss new proposals for improvement. She confirmed the sales tax will not go up and that consumers should see an improvement near June.
As the council examined the city’s current economic state of the 2009-10 financial plan, they began to discuss cutbacks to be made this upcoming year. Due to the deficit, the city’s total budget for 2010-11 is expected to be $99.6 million.
City manager Katie Lichtig said because of the budget cut, the hiring freeze on government positions will be continued from last year and all travel and training requests must be approved by her.
“We are monitoring all of our revenue shortages, but we are up for the challenge,” Lichtig said.
During the meeting, the council also addressed maintenance, traffic and safety as the main themes for improvement in the upcoming city projects.
The list of the city’s goals and Capital Improvement Plan (CIP) included installing new sidewalks, repaving roads and placing new curbs throughout the city. The agenda for the items hung on the meeting room and categorized the projects as under construction, under design and under study.
Malicoat said that even though the budget was tight, the completion of an interchange on Los Osos Valley road is also something the council will look into. She said the price of the land is now the cheapest they have seen and if they purchase it, despite the limited budget, it could actually be a cheaper project than if they were to do it in the future.
“We project we will need to find a million and a half dollars in solutions,” Malicoat said. “We have done this before, and we have a really good team of state employees ready to solve this problem. Unfortunately, we have been in this problem before.”
The biggest concern for downtown businesses is what can bring more people downtown to shop and possibly improve the income generated from sales tax.
The owner of Hands Gallery, Debra Feltman who opened her store 18 years ago said, “We just obviously want the downtown to keep us as great looking as can be and we just want to see the projects bring more people down here to shop.”
The city’s finance team plans to return in June with another report and new set of proposals.