Sally Connell

The City Council is being asked Tuesday to review and act upon a recommended plan for rebalancing its budget to fill that gap.

Some proposed staff solutions are big—such as cutting city paving projects by 20 percent, or $925,000, this fiscal year. Others are small, such as saving $6,000 by keeping different styles of fire station bay door openers instead of changing to a single style.

Some fall somewhere in-between— such as a proposal to save $287,000 by deferring hiring for two newly created police officer positions to serve on a special neighborhood patrol team.

A proposal to use $700,000 from city reserves is also on the table. The city has a policy of maintain a 20 percent reserve. This would bring the city closer to that 20 percent but still above it.

Council members can tweak the proposals any way they choose, although they rarely challenge the actual numbers provided by city staff.

The $4.8 million gap does not mean that the city has collected that much less money in its $59 million general fund, said Finance Director Bill Statler. The money simply must be distributed differently that what the council originally planned, he said.

“It just means that instead of paving and some of the other things, we are going to pay officers and dispatchers,” he said.

The city’s total budget with sewer, water and other funds is $97 million.

Sales, property and hotel tax revenues are down by around $700,000 from what was expected.

Property taxes were predicted to reach $8.8 million this fiscal year, while Statler now expects they will be $8.37 million. The total tax roll did not go down: it just did not go up as high as predicted, he said.

As outlined by staff, the plans to close the gap could affect at least some of the promises made in the 2006 campaign to pass Measure Y, the half cent sales tax measure. Those priorities listed by council and staff members at that time included repairing city streets and storm drains and improving neighborhood wellness.

Revenue from Measure Y is new so it cannot be compared to prior years. It did come in $136,000 ahead of what was anticipated by Statler’s staff, for a total of $6.04 million.

General sales tax, however, was down by $143,000, because automobiles and other big ticket items counted in this tax are down considerably, Statler said.

Binding arbitration

Binding arbitration on police raises does account for the biggest financial share of the gap the staff will describe Tuesday.

The staff report restates what city officials have said in recent weeks: that a binding arbitration ruling in June will cost the city about $5.4 million this year, more than the $1.4 million the city set aside to deal with adjustments in police pay.

In addition to that $5.4 million, the city is expected to pay police department managers at least another $343,000 in retroactive and additional pay, because of an agreement to pay lieutenants, captains and others 15 percent more than those they supervise.

When this $1.4 million number has been mentioned in the past, the leadership of the San Luis Obispo Police Officers’ Association has been highly critical of the city for setting aside so little. Union President Dale Strobridge has repeatedly stated it would not have covered what the city had on the bargaining table before impasse.

Statler has said the city was bound to be criticized, even if it had put aside more money.

“The reality is: Whether we should have budgeted more, or could have, we set aside $1.4 million,” Statler said earlier this month.

City public safety employees have had the right to binding arbitration when both parties reach impasse in negotiations since city voters placed it in the city charter in 2000.

The city and its police union reached impasse in 2007, and an arbitrator’s ruling in June adopted the pay proposal that the police union put forward.

He awarded sworn staff 28 percent raises and non-sworn members 33 percent over the four-year duration of the contract.

Statler said the full costs of the awards are closer to 30 percent and 37 percent when compounded.

A major theme for City Council members speaking about the arbitration at past meetings has been that binding arbitration takes away their right as the city’s elected representatives to set budget priorities.

The only way it can be changed is with another vote by the electorate to remove it from the city charter; the council has decided to not take a leadership role in such an effort.