UPDATE (11:45 p.m.) - The San Luis Obispo City Council voted to add the one percent sales tax to the November 2020 ballot.
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The San Luis Obispo City Council is looking at adding a one percent sales tax to help with its COVID-19 related budget deficit.
The council will discuss the issue at its Tuesday night meeting and decide whether to present it to voters through a ballot measure in November.
The current sales tax in San Luis Obispo is 7.75 percent, the same as Paso Robles, Atascadero, Pismo Beach, Grover Beach, Arroyo Grande, and Morro Bay.
The council will consider a 1 percent increase to an existing .5 percent local revenue measure first approved by voters in 2006 and scheduled to sunset in 2023.
City leaders are acting now to replace the initial tax with a 1.5 percent tax, which would bring the total sales tax to 8.75 percent in SLO and bring in an estimated $21.6 million annually to maintain essential services and facilities.
San Luis Obispo, like much of the world, is suffering the financial blow of COVID-19. According to the report produced by SLO City Manager Derek Johnson, the city is facing a revenue shortfall of $8.6 million in its 2020-2021 general fund.
Though many residents are now forced to pinch pennies too, city leaders say the majority of survey respondents back this tax.
"Most of the respondents indicated they believe the economy will have began its recovery or will have fully recovered in the next couple years and they recognize its a long term measure," Johnson said. "We did determine through the survey that depending on how severe you thought COVID would impact the economy, your support did not differ, you still recognized there's a need in SLO and you supported that need."
The city conducted surveys from December to April and then again in June to determine the priorities of SLO residents in order of highest priority.
The results concluded from the December-April survey are:
1. Address homelessness
2. Keep public areas safe and clean
3. Preserve open space and natural areas
4. Maintain police, fire/emergency response
5. Protecting long-term fiscal stability
In the June survey, which was conducted at the height of the pandemic, the results are:
1. Keep public areas safe and clean
2. Protecting long-term fiscal stability
3. Preserve open space and natural areas
4. Programs that support economic recovery
5. Maintain public safety, fire and emergency response
The survey shows support for the 1 percent sales tax increase from 63 percent of respondents in the first survey and 71 percent in the second survey.
Due to revenue shortfalls in the 2020-2021 budget, city leaders reduced the general fund by $4.7 million, nixing 16 of the originally planned 102 projects to be funded by this tax.
As part of the adopted 2020-21 Supplemental Budget, the City’s top priority is economic stability, recovery and resiliency.
City councils in Grover Beach and Pismo Beach have already approved the increase and will present it to voters in November.
The draft ballot measure reads:
City of San Luis Obispo Community Services/Investment - Shall an ordinance to provide funding to protect City of San Luis Obispo's financial stability; maintain fire/community safety, health emergency/disaster preparedness; protect creeks from pollution; address homelessness; keep public areas clean/safe; retain local businesses; maintain youth/senior services, streets, open space/natural areas, and other general services by extending voter-approved funding at a 1.5¢ rate, providing approximately $21,600,000 annually until ended by voters; requiring audits/all funds used locally, be adopted?
