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HomeMy WebLinkAboutItem 6c - SLOCOG Presentation on Local Roads First Ballot Measure Item 6c Department: Public Works Cost Center: Click or tap here to enter text. For Agenda of: 1/20/2026 Placement: Presentation Estimated Time: 30 FROM: Aaron Floyd, Public Works & Utilities Director Prepared By: Jennifer Rice, Public Works Deputy Director for Mobility Services SUBJECT: SAN LUIS OBISPO COUNCIL OF GOVERNMENTS PRESENTATION ON LOCAL ROADS FIRST PROPOSED BALLOT MEASURE– DRAFT TRANSPORTATION EXPENDITURE PLAN RECOMMENDATION Receive and comment on a report and presentation by the San Luis Obispo Council of Governments (SLOCOG) staff regarding a potential Countywide Self -Help Sales Tax Measure and Draft Transportation Expenditure Plan. REPORT-IN-BRIEF San Luis Obispo County faces a significant transportation local funding shortfall, limiting the ability of the County and seven cities therein to maintain roads, improve safety, support transit, and leverage state and federal grants. Neighboring Central Coast counties with dedicated local transportation sales taxes, such as Santa Barbara, Santa Cruz and Monterey, have successfully used their local funds to secure state and federal grants that often match or exceed the revenue they collect. SLO County currently has no such local sales tax. The San Luis Obispo Council of Governments (SLOCOG) prepared a Draft Transportation Plan for the City Council’s review as it relates to the potential placement of a 0.5% sales tax measure on the November 2026 ballot. A 0.5% (also referred to as a “1/2-cent”) local sales tax in San Luis Obispo County could generate approximately $35 million annually, totaling roughly $700 million over 20 years (without escalations), specifically for local transportation. These funds would support local road repairs, safety and mobility improvements, and regional transportation projects while unlocking much needed additional state and federal funding, effectively doubling the total investment in the region. Adopting this measure would provide the region with a stable, predictable funding source, ensure timely delivery of critical transportation projects, and maximize the return on local investment through leveraged grant funding. SLOCOG is leading the effort to place the sales tax measure on the ballot by drafting the ordinance, which must be approved by the County Board of Supervisors. At this stage, SLOCOG is requesting input from the San Luis Obispo City Council and community on the Draft Expenditure Plan. The ordinance can move forward only if a majority of cities Page 79 of 114 Item 6c approve it and those cities collectively represent a majority of the region’s population. If approved by voters, the tax would be applied countywide, regardless of individual city support, with the earliest possible election in November 2026. POLICY CONTEXT The City’s current Legislative Action Platform, adopted by City Council Resolution No. 11554 (2025 Series), includes a number of items expressing support for additional funding sources to fund transportation infrastructure improvements, particularly opportunities to increase funding for projects that support local climate action, active transportation, and roadway maintenance priorities. Senate Bill (SB) 333, enacted in 2025, applies only to the San Luis Obispo Council of Governments (SLOCOG). The law authorizes SLOCOG to adopt an ordinance placing a new local transactions and use tax of up to 1% before voters. The tax may only take effect if approved by voters in an election held between January 1, 2026 and January 1, 2032. Most importantly, SB 333 exempts this tax from the standard 2% cap on combined local transactions and use taxes that otherwise applies within a county under California law. This means the SLOCOG tax would not count toward the existing 2% limit. A 0.5% countywide transportation sales tax, as discussed in this report, would be subject to California Public Utilities Code Section 180001(e). This section expresses the Legislature’s intent that revenues from local transportation sales taxes are to supplement, not replace, existing local transportation funding, ensuring new funding adds to, rather than subtracts from, local efforts. DISCUSSION Background On January 20, 2026, the City Council will receive a presentation from the San Luis Obispo Council of Governments (SLOCOG) representatives on the potential placement of a 0.5% sales tax measure to support countywide transportation on the November 2026 ballot. On December 10, 2025, the SLOCOG Board approved 10-1 a motion to advance a supplemental funding effort and directed staff to meet with member agencies to gather comments and input on the proposed measure, including feedback on the Draft Transportation Expenditure Plan (Attachment A). Regional transportation funding continues to fall significantly short of documented needs. The 2023 SLOCOG Regional Transportation Plan (RTP) identifies a $2.4 billion shortfall for regional projects and programs, including a $400 million gap for pavement maintenance. Early estimates for the 2027 RTP project total shortfalls exceeding $3 billion. Traditional revenue sources for regional transportation maintenance and improvements have not kept pace with rising costs, limiting the ability of local jurisdictions to maintain roadways, advance safety projects, improve mobility, and provide required local match funding for competitive state and federal grants. In response to similar funding challenges, 25 of the 58 California counties have adopted local sales taxes to specifically fund transportation needs. These taxes are referred to as Page 80 of 114 Item 6c “local transportation sales taxes” and designate those counties as “self -help counties,” meaning that state and federal funding agencies deem these counties as having dedicated funding sources from within their own communities that provide a source of matching grant funds, thereby qualifying those counties for more funding from state and federal sources. These “self-help counties” represent roughly 89% of the state’s population and benefit from a stable, locally controlled revenue source that supports timely delivery of transportation improvements and increases competitiveness for external grant funding. Adding San Luis Obispo County to this list could unlock hundreds of millions of dollars in additional funding and ensure delivery of much -needed projects throughout the region. A previous 0.5% transportation sales tax measure (Measure J) received 66.3% voter support in 2016, narrowly missing the required two-thirds threshold1 by several hundred votes. As a result, the region has foregone an estimated $270 million in local revenue since 2016—funding that could have been significantly amplified through state and federal grant opportunities. Regional transportation needs have continued to grow, while gas tax revenues face new pressures as the number of fully electric vehicles on the roads in California increases. Figure 1: Purchasing Power of Federal Gas Tax Rate and Construction Cost Inflation Rate Source: SLOCOG Local Roads First FAQs At its December 2025 meeting, the SLOCOG Board reviewed the results of community outreach, recent polling, and recommended funding distribution formulas for a potential 2026 ballot measure. The Board directed staff to share the draft expenditure plan and implementation guidelines with member agencies ’ City Councils, collect feedback, and continue refining the draft materials. Polling Results SLOCOG launched a statistically valid poll in October 2025 by consulting firm, FM3. FM3 conducted an 18-minute survey of more than 1,000 randomly selected likely voters for 1 A local transportation sales tax is considered a special tax, different from a general tax, in which the revenues must be used only for the specific purposes stated (in this case, for transportation purposes). A special tax requires a supermajority (two-thirds) voter approval under the California Constitution as it is considered a stronger commitment of public money. Page 81 of 114 Item 6c the November 2026 election in San Luis Obispo County. The survey used a dual-mode approach (online and by landline and mobile phone) and was offered in both English and Spanish. With a sample size of more than 1,000 respondents, the margin of error is ±3.1% at the 95% confidence level. The polling results show initial majority support for addressing overall transportation funding needs and for a proposed 0.5% transportation sales tax in San Luis Obispo County. Support peaked at 65% after voters were provided with additional informational outreach, and then declined to 56% when potential opposition arguments were introduced. In response to the polling feedback, the Draft Transportation Expenditure Plan was revised to reflect voter preferences. With these updates, the SLOCOG Board authorized a follow-up tracking poll in 2026 to reassess voter support for the revised Draft Transportation Expenditure Plan. Results of the follow-up poll are scheduled to be presented to the Board on April 1, 2026. Poll results are available for download on SLOCOG’s website. Self-Help Measures Impacts on the Central Coast Self-help transportation measures in other California counties demonstrate substantial benefits: they deliver more projects, more quickly, and often at lower cost. Neighboring counties—including Santa Cruz, San Benito, Monterey, and Santa Barbara —are all self- help counties and have leveraged hundreds of millions of state dollars through their voter- approved local transportation sales taxes. While all regions, including San Luis Obispo County, receive formula-based state funding, self-help counties have an advantage because they can provide the significant local matching funds needed to successfully compete for additional competitive state and federal grants. Each of these neighboring counties generate between $25 million and $50 million annually from their transportation - specific sales taxes and also qualify for certain state gas tax funds available only to self - help counties. They use these local revenues to secure competitive grant awards that can exceed $100 million per project or funding cycle. SLOCOG reports2 that, over the past decade, each of these counties have raised approximately $200 million to $450 million through their transportation sales taxes (with San Benito generating less due to its smaller population). Using these local funds, they have successfully leveraged an additional $200 million to more than $750 million in state grants for the respective communities. By comparison, SLOCOG reports that San Luis Obispo County has foregone an estimated $270 million in local sales tax revenue that would have been collected had the 2016 measure passed, as well as an additional $330 million to $430 million in likely grant funding that could have been secured with that local match. In total, the region has missed out on approximately $600 million to $700 million in transportation investment over the past nine years. This funding could have supported highway and interchange improvements, transit and mobility programs, Safe Routes to School projects, safety enhancements, road maintenance, and other critical needs. A voter-approved 0.5% transportation sales tax in San Luis Obispo County would generate an estimated $35 million annually and provide substantial leveraging power for 2 Reference: SLOCOG Board of Directors December 10, 2025 Item F-2 Staff Report “Supplemental Funding Update: Polling Results, Draft Expenditure Plan, Implementation Guidelines, and Next Steps” Page 82 of 114 Item 6c state and federal funding opportunities. Based on the experience of other self-help counties, this approach could return more than $1 billion in additional transportation investment to the region over a 20-year period. Details of Draft Transportation Expenditure Plan To define how revenues would be distributed and spent, SLOCOG has prepared a draft Transportation Expenditure Plan (the “Plan”) for a potential 2026 measure. The Plan would ultimately be implemented through an ordinance, the legal mechanism required to place a transportation sales tax measure on the ballot. Once approved by voters, any changes to the Plan would require a two-thirds majority vote. To ensure a fair and equitable distribution of revenues, SLOCOG staff evaluated multiple data metrics and allocation scenarios and discussed them with the region’s City Managers in October 2025. The goal was to identify an approach that is transparent, equitable, and easy for the public to understand , leading to a population-based distribution that is included in the current proposed Plan. Accordingly, the following allocations are based on 2020 Census population data and will be updated with each decennial census. In its current form, the proposed 0.5% transportation sales tax measure would include the following distributions and premises:  Sunset: 30-year duration.  Estimated Revenues: $35 million annually, or $1 billion over 30 years (not accounting for escalation).  Leverage Potential: Potential to return an additional $900 million to the region over 20 years in competitive State and Federal Grants.  Proposed Distribution of Revenue: 1. 55% – Local Road Repairs, Safety, and Improvements (Local Agency/Jurisdiction-Determined) o Funds distributed to each jurisdiction based on population share. o Provides flexibility and local (city) control to address community-specific transportation needs and priorities. o Ensures opportunities for public input as each jurisdiction sets its priorities. o Eligible uses include:  Road and bridge repairs, maintenance, and rehabilitation  Safety and congestion relief projects  Pedestrian, bicycle, sidewalk, crosswalk, multiuse path, and Safe Routes to School improvements  Community enhancements  Signal upgrades and synchronization  Local transit or trolley services  Other local transportation priorities Relevance to City of San Luis Obispo: The City would receive a population- based share of the 55% allocation, estimated at just over $3.2 million per year. The Page 83 of 114 Item 6c use of these funds would be fully at the City’s discretion, provided they are used to supplement transportation-related projects and programs. Potential uses include expanded roadway maintenance, funding capital improvements such as Prado Road Interchange and creek bridge widening, the Foothill, Broad, and Higuera Complete Streets projects, neighborhood traffic calming efforts, Vision Zero efforts, or implementation of the Short-Range Transit Plan. 2. 40% – Regional Corridor Improvements (SLOCOG-Determined) o Funds distributed by formula to support regional priorities, based on population share within the four subregions described below (see Figure 2 on following pages for a map of the four subregions). o Ensures equitable and guaranteed distribution across four subregions:  North County  North Coast  Central County  South County o Allows flexibility to meet varying needs in each subregion. o Provides opportunities for public input when SLOCOG sets regional priorities. o Eligible uses include:  Highway, arterial, interchange, and bridge improvements  Vanpool/carpool programs  Regional trail corridors  Safety and congestion relief projects  Regional transit investments Relevance to City of San Luis Obispo: The City of San Luis Obispo is part of the “Central Region,” which also includes nearby unincorporated areas such as Avila Beach (see Figure 2). The Central Region is estimated to receive just over $3 million annually for regional transportation projects. These funds would be distributed through a SLOCOG-led funding cycle, including a competitive call for projects. Under this structure, the City of San Luis Obispo would compete only within the Central Region. Examples of eligible regional projects include the Prado Road Interchange, a new regional transit center, or implementation of County Corridor Plans such as Highway 227 and Buckley Road. 3. 4% – Senior, Disabled, and Veterans Mobility Improvements (SLOCOG - Determined) o Uses a public process, aligned with existing procedures, to identify and address mobility needs for individuals with mobility challenges. o Ensures public input when SLOCOG determines funding priorities. Relevance to City of San Luis Obispo: This 4% funding allocation, estimated at approximately $1.4 million per year, is intended to support new programs focused specifically on mobility for seniors, people with disabilities, and veterans. Potential uses include providing free transit services for these populations or implementing a microtransit program tailored to their needs. Funding could be pursued by Page 84 of 114 Item 6c individual agencies, such as SLO Transit, or through partnerships. 4. 1% – Administration of Measure Funds o Covers required administrative functions, including:  Development of Implementation Plans  Project prioritization  Annual financial audits  Outreach and communication  Revenue distribution to jurisdictions  Support for Measure-related committees  Technical assistance Relevance to City of San Luis Obispo: This allocation up to 1% of total revenues and estimated at approximately $350,000 annually, would be used exclusively to support SLOCOG’s administrative responsibilities, including planning, oversight, and program development necessary to successfully implement the measure. The City of San Luis Obispo would not receive any direct portion of this. Table 1: 1-Year Distribution of $35M Population*%Distribution Arroyo Grande 18,441 6.5%1,256,955$ Atascadero 29,773 10.5%2,029,354$ Grover Beach 12,701 4.5%865,712$ Morro Bay 10,757 3.8%733,207$ Paso Robles 31,490 11.2%2,146,387$ Pismo Beach 8,072 2.9%550,195$ San Luis Obispo 47,063 16.7%3,207,856$ Unincorporated 124,123 43.9%8,460,335$ 282,420 100.0%19,250,000$ North County 99,329 35.2%4,923,893$ South County 80,716 28.6%4,001,218$ Central County 40,125 14.2%3,085,830$ North Coast 62,250 22.0%1,989,059$ 282,420 100.0%14,000,000$ 1,400,000$ 350,000$ 35,000,000$ *Based on 2020 Census Total Total 4% for Senior/Disabled/Veterans' Mobility Improvements 1% Administration Costs (Maximum) TOTAL 55% for Local Control: Local Road Repair, Safety and Improvements 40% for Regional Corridor Improvements Page 85 of 114 Item 6c Figure 2: Subregions within SLO County SLOCOG’s Draft Transportation Expenditure Plan includes a comprehensive set of accountability, transparency, and performance requirements designed to protect local interests and ensure Measure funds are used effectively. Several provisions are especially important for cities: Maintenance of Effort (MOE): The Plan includes an MOE3 requirement to ensure jurisdictions cannot replace existing General Fund transportation spending with Measure funds. Each local agency must maintain, at a minimum, the same level of discretionary General Fund revenues that were spent on average for Fiscal Years 2024, 2025, and 2026 for transportation purposes. If the measure is approved, SLOCOG staff will work with City staff to establish this baseline by reviewing transportation budgets and funding sources from that period. Certain funding sources are excluded from the MOE calculation, even if they are accounted for within the General Fund, including grants, and other special revenues such as gas tax funds or assessment district fees. 3 Maintenance of Effort (MOE) is a requirement that obligates jurisdictions to continue funding transportation at or above established baseline levels after the adoption of a new revenue source. This ensures that new transportation sales tax revenues are used to enhance overall transportation investment and are not used to supplant existing local transportation funds. Page 86 of 114 Item 6c Eligibility Requirements: To receive Measure funding, jurisdictions must maintain certain programs, including a Mitigation Fee Program, Circulation Element, Capital Improvement Program, Pavement Maintenance Plan, and annual Expenditure Report. The City of San Luis Obispo already maintains these programs. SLOCOG’s role is limited to verifying that these plans have been formally adopted; once adopted, the eligibility requirement is met. Local Discretion and Reporting: The City’s local allocation does not require prior approval from SLOCOG or its Board before funds are spent. Spending decisions remain entirely at the City’s discretion. However, the City must submit an annual report documenting how discretionary funds were used, which SLOCOG will review for consistency with eligibility requirements. The City already performs similar reporting for SB 1 gas tax compliance, however, this measure would require preparation of a new, separate report. Regional Fund Time Limits: The regional allocation will be distributed through a call- for-projects process. Agencies awarded funding, similar to grant agreements, will agree to time limits for when funds must be spent. Planning and Performance Evaluation: To support long-range planning and continuous improvement, the Plan requires regular update s and evaluations led by SLOCOG staff. These include biennial implementation plans, three-year performance assessments, and a ten-year comprehensive review to assess changing needs, costs, and conditions. Citizens’ Oversight Committee: The Plan establishes a Citizens’ Oversight Committee to ensure transparency and accountability. The Committee of 12 members would be made up of one resident representative appointed by each incorporated city (Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, P ismo Beach, San Luis Obispo) and one member from each of the County’s Supervisorial District’s within the unincorporated areas. The SLOCOG Policy Board will approve the appointments to the Committee. The Committee will review expenditure plans and reportin g and will make recommendations and findings to the SLOCOG Policy Board. Plan Updates and Excess Revenue: The Plan also outlines processes for future updates, amendments, and allocation of any excess revenues. Together, these provisions create a framework emphasizing transparency, local control, financial responsibility, and accountability, which are critical for City Councils evaluating whether the proposed measure aligns with community priorities and governance expectations. Additional details are provided in the Draft Transportation Expenditure Plan (Attachment A) and the December 10, 2025 SLOCOG Board Staff Report (Attachment B). Schedule and Next Steps SLOCOG is leading the effort to initiate the transportation sales tax by drafting the ordinance. The County Board of Supervisors must approve the ordinance in order for the measure to be placed before voters. Page 87 of 114 Item 6c Following SLOCOG Board direction in December 2025, SLOCOG staff have been presenting the Draft Transportation Expenditure Plan to the seven City Councils to gather input for potential revisions. Recommendations from these meetings will be evaluated for incorporation into the Final Expenditure Plan. The SLOCOG Board is scheduled to review and consider approval of the Final Expenditure Plan and introduce the associated Ordinance at its February 4, 2026, meeting. After SLOCOG Board action, the Final Expenditure Plan will be returned to each city and the County for approval. To move forward, the ordinance must be approved by a majority of the cities, and those approving cities must collectively represent a majority of the region’s population. If this majority approval is reached, the SLOCOG Board may take final action to submit the measure to the County Board of Supervisors for placement on a future ballot—the earliest option being November 2026. If voters approve the tax, it would be applied countywide, regardless of whether an individual city supported t he measure. Key Milestones and Timeline • Summer–Fall 2025: Engagement activities, focus groups, workshops, and polling. • November 2025: Development of the Draft Transportation Expenditure Plan and continued engagement. • December 10, 2025 – SLOCOG Board Meeting: Review and comment on the Draft Plan; release the Draft Plan to cities and the County for review. • December 2025–January 2026: Local agency review and comment period. o January 20, 2026: City of San Luis Obispo Council consideration. • February 4, 2026 – SLOCOG Board Meeting: Address local agency comments; approve the Final Expenditure Plan; introduce the Ordinance; transmit Final Plan to cities and the County for formal approval. • February–March 2026: City and County approval of the Final Expenditure Plan. o March 3, 2026: City of San Luis Obispo Council consideration. • April 1, 2026 – SLOCOG Board Meeting: Consider adoption of the Ordinance and Measure materials. Previous Council or Advisory Body Action On June 21, 2016, the City Council adopted a resolution approving the 2016 San Luis Obispo County Self-Help Transportation Investment Plan. As mentioned above, this Page 88 of 114 Item 6c previous sales tax measure (Measure J) was ultimately unsuccessful at the November 2016 General Election. On March 5, 2024, the City Council received a presentation on a Draft Transportation Investment Plan and formed an ad hoc subcommittee to review it; however, the proposed measure ultimately was not advanced to the ballot. This item is the first formal presentation to the City Council on the 2026 Countywide Self -Help Transportation Sales Tax Measure proposal. Public Engagement This item is scheduled for the City Council meeting on January 20, 2026. Staff will complete all required postings and notifications. The public will have the opportunity to provide comments at or before the meeting. If the SLOCOG Board elects to continue advancing the transportation sales tax measure, the item is expected to return to the City Council on March 3, 2026, for additional discussion. To inform development of the Draft Transportation Expenditure Plan, SLOCOG staff and consultant teams engaged with the community throughout 2025. Outreach included meetings with community groups and organizations, responses to media inquiries, and a dedicated project website with information and a public survey. Four focus groups were conducted in August 2025, and seven workshops (six in person and one virtual) were held in Fall 2025 throughout the County. Polling was also completed during Fall 2025. Since June 1, 2025, SLOCOG has presented at nearly 70 public and community meetings across the region. The following is a list of those specifically relevant to , and with representation from, City of San Luis Obispo community members:  Safe Routes to School (SRTS) Taskforce on April 10, 2025  SLO Morning Kiwanis Club on June 17, 2025  SLO Chamber Joint Government and Legislative Committee on July 10, 2025 , and December 10, 2025  SLO & Santa Barbara Counties Construction Trades on July 10, 2025  Democrats of San Luis Obispo Club on August 11, 2025  SLOCOG lead focus group (1 of 4 countywide) on August 20, 2025  SLO Commission on Aging on September 24, 2025  COLAB on October 14, 2025  American Council of Engineering Companies, SLO Chapter on October 15, 2025  REACH - BDC Event on November 12, 2025  American Society of Civil Engineers, SLO Chapter on December 4, 2025 Outreach efforts were promoted by SLOCOG through public Board meetings, County Advisory Committee newsletters, coordination with city and county staff and managers, press releases, media outreach, and a dedicated SLOCOG e-blast. Staff continue to coordinate with City Managers, the County Executive Officer, transit operators, and other partners to gather insights on key issues and needs. Page 89 of 114 Item 6c Public input remains encouraged through the Local Roads First website and survey at www.localroadsfirst.com. CONCURRENCE This staff report was reviewed and approved by the City Public Works and Utilities Department, Finance Department, City Attorney and City Administration. ENVIRONMENTAL REVIEW The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report because the action does not constitute a “Project” under CEQA Guidelines Section 15378. All projects funded with potential future transportation sales tax funds will be required to complete appropriate CEQA analysis and other environmental review as required. FISCAL IMPACT Budgeted: N/A Budget Year: N/A Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ N/A $0 $0 $0 State Federal Fees Other: Total $N/A $0 $0 $0 There are no immediate fiscal impacts to the City by supporting the Draft Transportation Expenditure Plan, or in supporting the potential addition of a transportation sales tax measure on the ballot in November. If the 0.5% sales tax measure is passed, this would increase the City of San Luis Obispo’s current sales tax level from 8.75% to 9.25%. SLOCOG estimates4 that for individuals earning a salary of $60,000, the increase of 0.5% sales tax would cost $2.31 per week. The measure is projected to generate approximately $35 million per year countywide, or about $1 billion over 30 years, assuming no cost escalation. Of this total, revenues would be split between local and regional projects. The City of San Luis Obispo is estimated to 4 Source: SLOCOG Local Roads First FAQs Page 90 of 114 Item 6c receive approximately $3.2 million per year directly. Over the 30 -year life of the measure, this would total about $96 million to support eligible local projects such as road maintenance, congestion relief, active transportation, and safety improvements. Additionally, the City would capture and benefit from millions of dollars from the Central County Regional investments for regional road safety, public transportation, and active transportation projects and improvements. If the measure moves forward and is pa ssed by voters, to be eligible to receive funding per the Draft Transportation Expenditure Plan Maintenance of Effort section, the City would be required to maintain, at a minimum, the same level of local General Fund revenues that were expended on average for Fiscal Years 2024, 2025, and 2026 for transportation purposes. (Note that this average is General Fund revenue only and does not include revenue from additional taxes or revenues, such as grants, gas tax or the City of San Luis Obispo’s Local Revenue Measure.) There would be no direct costs to the City related to adding this proposed measure to the November ballot, as the full costs would be funded by SLOCOG. ALTERNATIVES The Council may choose not to provide feedback regarding a potential sales tax measure or the Draft Transportation Expenditure Plan at this time. SLOCOG staff will return to the SLOCOG Board on February 4, 2026, to present feedback received through stakeholder outreach and to receive direction on next steps. This may include refinements to the proposed measure and Transportation Expenditure Plan, as well as direction on whether to continue advancing the proposal for placement on the November 2026 ballot. If the measure proceeds and the Council does not provide input at the January 20 meeting, there will be limited time for SLOCOG staff and the Board to incorporate the City’s comments and ensure that City priorities are adequately reflected in the final ballot measure and Transportation Expenditure Plan. To move forward, the ordinance must be approved by a majority of the cities, and those approving cities must collectively represent a majority of the region’s population . If this majority approval is not reached, or if the SLOCOG Board or Coard of Supervisors chooses not to support the proposed sales tax measure, the current Regional Transportation Plan remains underfunded by $2.4 billion based on existing revenue forecasts, and without a new, locally controlled funding source, many planned local and regional transportation maintenance and improvement projects will not be achievable. ATTACHMENTS A - Draft Transportation Expenditure Plan B - December 10, 2025, SLOCOG Board Staff Report on Regional Self -Help Measure Page 91 of 114 Page 92 of 114 San Luis Obispo County Transportation Expenditure Plan Introduction San Luis Obispo County’s transportation system is essential to the safety, mobility, and economic vitality of its residents, businesses, and visitors. Yet existing state and federal revenues are inadequate to maintain local streets and roads, operate reliable transit, and deliver major regional improvements. This Transportation Expenditure Plan establishes a dedicated local funding source — a voter-approved ½-cent transactions and use tax — projected to generate approximately $35 million per year. All revenues will remain in San Luis Obispo County and may only be used for transportation purposes. The Plan emphasizes geographic equity, fairness, transparency, and strong taxpayer safeguards while ensuring flexibility to leverage state and federal funds. Revenue Distribution Annual revenues shall be allocated as follows: • 55% Local Road Repairs, Safety, and Improvements distributed by population to cities and the County. (Reviewed every ten years based on census data 1). • 40% Regional Corridor Improvements distributed by subregion population within the areas defined as shown. • 4% Seniors, Veterans, and Mobility Challenged Transportation Services, regionwide. • 1% Administration 1 Should a new city become incorporated, the percentages would be adjusted to reflect the updated population distribution. Page 93 of 114 Eligible Uses of Funds Local Road Repairs, Safety, and Improvements (55%) Funds are distributed by population and may be used for: • Local road maintenance, rehabilitation, and repair. • Safe Routes to School and Safe Routes to College programs. • Bicycle and pedestrian improvements (sidewalks, crosswalks, multi-use paths). • Bridge safety and seismic retrofits. • Local operational and traffic safety improvements. • Community enhancements tied to transportation (streetscape, lighting, landscaping, wayfinding). • Signal synchronization. • Piers, walkways and other pedestrian or bike paths in and around waterfront and river areas. • Transit services including local trolley services may be funded if desired by a City. Regional Corridor Improvements (40%) Regional project funds shall be distributed among subregions and may be used for: • Highway and major corridor congestion relief improvements and including van or carpool lanes or other congestion relief measures. • Safety and interchange improvements. • Regional bicycle and pedestrian connectors between communities like the Bob Jones Trail. • Interagency Transit access and improvements and efficiency programs • Mitigation impacts for proposed improvements. • Other projects consistent with the adopted Regional Transportation Plan (RTP). Seniors, Veterans and Mobility Challenged Transportation Services (4%) Project funds shall support expansion and improvements to mobility programs that prioritize services for seniors, veterans, and mobility challenged regionwide. Administration (1%) SLOCOG shall allocate no more than 1% of annual revenues for administration, planning, reporting, auditing, and program oversight. Page 94 of 114 Maintenance of Effort (MOE) The enabling legislation in Public Utilities Code PUC 180001(e) states: It is the intent of the Legislature that funds generated pursuant to this division be used to supplement and not replace existing local revenues used for transportation purposes. Each Agency receiving revenues for “Local Projects” shall annually maintain, at a minimum, the same level of local fully discretionary general fund revenues that were expended on average for fiscal years 2023/24, 2024/25 and 2025/26, for transportation purposes. Dedicated funds for transportation such as gas tax revenues are not counted as general fund revenues. Transfers into the general fund will not be counted as general fund revenues. Grant awards and general fund revenues used as matching funds for grant awards will not be counted as general fund revenues. Unusual one-time general fund allocations that have been expended for transportation purposes may be exempted prior to determining the Agency’s average expenditure for the three fiscal years noted above at the discretion of the SLOCOG Governing Board. An agency petitioning for an exemption under this provision must supply evidence of the need for special consideration and the petition must be approved by a majority vote of the SLOCOG Governing Board. The Authority shall not allocate any Net Revenues to any jurisdiction for any fiscal year until that jurisdiction has certified to the Authority that it has included in its budget for that fiscal year an amount of local discretionary funds for streets and roads purposes at least equal to the level of its maintenance of effort requirement. An annual independent audit will be conducted by the Authority to verify that the maintenance of effort requirements are being met by the jurisdiction. Any Net Revenues not allocated pursuant to the maintenance of effort requirement shall be allocated to the remaining eligible jurisdictions according to the formula described in the Ordinance. Exceptions Subject to Authority approval, if any local jurisdiction had extraordinary local discretionary fund expenditures during any fiscal year it may determine that year’s minimum expenditure base level of local discretionary funds by: (a) subtracting those extraordinary expenses funding, assessment district contributions, development impact funds, redevelopment agency contributions, or other non-recurring contributions) from its total expenditures; or Page 95 of 114 (b) petitioning the Authority for special consideration. It is possible that a local jurisdiction may need to revise its minimum expenditure base beyond the subtraction of extraordinary expenses. In this instance, the Authority may allow the establishment of a new base for that jurisdiction's Maintenance of Effort requirement. A local jurisdiction petitioning the Authority under this provision must supply evidence of the need for special consideration and the petition must be approved by a majority vote of the Authority. Requirements For Eligible Jurisdictions In order to be eligible to receive Net Revenues, a jurisdiction shall satisfy and continue to satisfy the following requirements. 1. Mitigation Fee Program. Assess traffic impacts of new development and require new development to pay a fair share of necessary transportation improvements attributable to the new development. 2. Circulation Element. Adopt and maintain a Circulation Element as part of the jurisdiction’s General Plan, 3. Capital Improvement Program. Adopt and update a minimum Five-Year Capital Improvement Program (CIP). The CIP shall include all capital transportation projects, including projects funded by Net Revenues, and shall include transportation projects required to demonstrate compliance with pavement management requirements. 4. Pavement Management Plan. Adopt and update a Pavement Management Plan, and issue, using a common format approved by the Authority, regular reporting on the status of road pavement conditions and implementation of the Pavement Management Plan. 5. Expenditure Report. Adopt an Expenditure Report to account for Net Revenues, developer/traffic impact fees, and funds expended by the Eligible Jurisdiction which satisfy the Maintenance of Effort requirements. The Expenditure Report shall be submitted by the end of six (6) months following the end of the jurisdiction’s fiscal year and include the following: a. All Net Revenue fund balances and interest earned. b. Expenditures identified by type (i.e., capital, operations, administration, etc.), and program or project. Page 96 of 114 6. Project Final Report. Provide Authority with a Project Final Report within six months following completion of a project funded with Net Revenues. 7. Time Limits for Use of Net Revenues. a. Agree that Net Revenues for Regional Projects shall be expended or encumbered no later than the end of the fiscal year for which the Net Revenues are programmed. A request for extension of the encumbrance deadline for no more than twenty-four months may be submitted to the Authority no less than ninety days prior to the deadline. The Authority may approve one or more requests for extension of the encumbrance deadline. b. In the event the time limits for use of Net Revenues are not satisfied then any retained Net Revenues that were allocated to an Eligible Jurisdiction and interest earned thereon shall be returned to the Authority and these Net Revenues and interest earned thereon shall be available for allocation to any project within the same source program. 8. No Supplanting of Funds. Agree that Net Revenues shall not be used to supplant developer funding which has been or will be committed for any transportation project. 9. Public Notice of Use of Measure Funds. Member agencies will provide the public with planned use of measure funding as part of its annual or biennial budget process. This includes each City and each Community Advisory Council will receive at a minimum, twice yearly presentations from the jurisdiction to review proposed investments prior to annual allocations. Determination of Non-Eligibility A determination of non-eligibility of a jurisdiction shall be made only after a hearing has been conducted and a determination has been made by the Authority’s Board of Directors that the jurisdiction is not an Eligible Jurisdiction as provided hereinabove. Taxpayer Safeguards 1. A transportation special revenue fund (the “Local Transportation Authority Special Revenue Fund”) shall be established to maintain all Revenues. 2. Accounting Receipt, maintenance and expenditure of Net Revenues shall be distinguishable in each jurisdiction’s accounting records from other funding sources, and expenditures of Net Revenues shall be distinguishable by program or project. Interest earned on Net Revenues allocated pursuant to the Ordinance shall be expended only for those purposes for which the Net Revenues were allocated. Page 97 of 114 3. No Net Revenues shall be used by a jurisdiction for other than transportation purposes authorized by the Ordinance. Any jurisdiction which violates this provision must fully reimburse the Authority for the Net Revenues misspent and shall be deemed ineligible to receive Net Revenues for a period of five (5) years. 4. A Taxpayer Oversight Committee (“Committee”) shall be established to provide an enhanced level of accountability for expenditure of Revenues under the Ordinance. The Committee will help to ensure that all voter mandates are carried out as required. The roles and responsibilities of the Committee, the selection process for Committee members and related administrative procedures shall be carried out as described below. 5. A performance assessment shall be conducted at least once every three years to evaluate the efficiency, effectiveness, economy and program results of the Authority in satisfying the provisions and requirements of the Investment Summary of the Plan, the Plan and the Ordinance. A copy of the performance assessment shall be provided to the Committee. 6. Regular status reports regarding the major projects detailed in the Plan shall be brought before the Authority in public meetings. 7. Annual Report Annually the Authority shall publish a report on how all Revenues have been spent and on progress in implementing projects in the Plan and shall publicly report on the findings and posted on the agency website. Ten-Year Comprehensive Program Review At least every ten years the Authority shall conduct a comprehensive review of all projects and programs implemented under the Plan to evaluate the performance of the overall program and may revise the Plan to improve its performance. The review shall include consideration of changes to local, state and federal transportation plans and policies; changes in land use, travel and growth projections; changes in project cost estimates and revenue projections; right-of-way constraints and other project constraints; level of public support for the Plan; and the progress of the Authority and jurisdictions in implementing the Plan. The Authority may amend the Plan based on its comprehensive review, subject to the requirements of Plan Update, Approval Process, and Expenditure Plan Amendments section of this plan. Governing Board and Organizational Structure The San Luis Obispo Council of Governments (SLOCOG) serves as the designated Local Transportation Authority for San Luis Obispo County and is responsible for administering Page 98 of 114 the Transportation Measure in compliance with Public Utilities Code (PUC) 180000 et seq. Upon voter approval of the Transportation Measure, the Board of Directors of SLOCOG will serve as the Authority Board and will oversee its implementation in accordance with the plans and programs detailed in this and future updates of the Expenditure Plan. This Expenditure Plan provides for the creation of a Citizens’ Oversight Committee to ensure transparency and accountability. Details regarding the Committee are contained in this plan. The Biannual Implementation Plan will be prepared and updated by SLOCOG staff and approved by both the SLOCOG Policy Board and the Local Transportation Authority. Per PUC 180000, the Authority’s governing board will include representation as follows: • Five (5) members of the San Luis Obispo County Board of Supervisors • One (1) member representing each incorporated city within San Luis Obispo County—Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo—appointed by their respective city councils. Alternates to the regular members may participate in accordance with SLOCOG bylaws. Should another city become incorporated, it will have one seat on the steering committee. Plan Update, Approval Process, and Expenditure Plan Amendments Three primary documents guide plan administration: 1. Expenditure Plan – Approved by voters and amendable once per year, following the process described below. 2. Annual Report – Prepared each year by the Citizens’ Oversight Committee to review expenditures and communicate results to the public. 3. Biennial Implementation Plan – Prepared every two years to outline project expenditures and coordinated with the development schedule of the State Transportation Improvement Program (STIP). In compliance with state and federal requirements, SLOCOG regularly prepares a Regional Transportation Plan (RTP)that identifies priority projects across all transportation modes, including highways, local roads, public transit, bikeways, and aviation. Should funds become available for projects not listed in this Expenditure Plan, they may be drawn from the RTP project list. SLOCOG will have the option to issue bonds to accelerate project delivery, thereby reducing overall costs by advancing construction timelines. Page 99 of 114 All updates to the Expenditure Plan will undergo public review and hearings. Candidate projects and priorities may evolve, but the county’s extensive transportation needs will ensure robust use of all available funding, including sales tax revenues. During each update, a balanced approach across transportation modes will be emphasized to ensure efficiency and equity in addressing mobility needs throughout San Luis Obispo County. Amendment Process As specified in PUC Section 180207: • (a) Once per calendar year, the Authority may review and propose amendments to the county’s transportation expenditure plan to incorporate additional revenues, account for unanticipated funds, or respond to unforeseen circumstances. Amendments adopted late in the year will not preclude additional amendments in the following year. • (b) The Authority must notify the County Board of Supervisors and each city council, providing copies of proposed amendments for their review. • (c) Amendments become effective 45 days after notification. Changes to funding categories or overall allocation formulas require voter approval. Biennial Implementation Plan At least once every two years, SLOCOG will prepare and adopt a Transportation Measure Implementation Plan. This plan will include a financial component consistent with both the Regional Transportation Improvement Program (RTIP) and the STIP. Process steps include: • SLOCOG staff, working with member agencies and stakeholders, will draft and update the Implementation Plan biennially. • The SLOCOG Policy Board will review the Draft Implementation Plan, hold public hearings, and incorporate feedback. • Following review, the Policy Board formally adopts the Implementation Plan. Bonding Authority The Authority shall have the power to sell or issue, at any time, and from time to time, including on or before the collection of the taxes authorized by this Ordinance, bonds, notes or other evidences of indebtedness, including capital appreciation bonds, payable from and secured by the proceeds from the sales taxes authorized by this Ordinance and from the proceeds of the existing Measure (TBD) sales taxes, in order to finance and refinance the transportation projects identified in the Transportation Expenditure Plan. Bonding indebtedness shall be limited to 35% of net sales measured at the end of the 30- Page 100 of 114 year program. An additional bonds test (ABT) no lower than 1.5x Maximum Annual Debt Service will be measured against revenues for any consecutive 12-month period in the prior 18 months. Allocation of Excess Revenues If revenues exceed projections or contingency needs, excess funds will first be used to complete projects listed in this Plan. Secondary priority may be given to additional RTP- consistent projects, following an amendment process. Independent Financial Audits If the Transportation Measure is approved by the voters, the San Luis Obispo Council of Governments (SLOCOG) will conduct independent financial audits of all revenues and expenditures associated with the measure in accordance with Public Utilities Code 180000 et seq. These audits will ensure full transparency and accountability in the use of voter-approved sales tax revenues. The results of the audits will be presented annually to the SLOCOG Policy Board and made available to the public, reinforcing confidence in the administration of the Transportation Measure. Findings will also be shared with the Citizens’ Oversight Committee to support their independent review of expenditures and compliance with the Expenditure Plan. Administration Program – 1% of Measure Revenues To effectively manage and implement the Transportation Measure, SLOCOG will cap administration costs at no more than 1% of annual sales tax revenues to administrative activities. This allocation supports the necessary planning, oversight, and program development functions required for successful execution of the measure. Key administrative responsibilities of SLOCOG include: • Annual Work Program and Budget Prepare and adopt an annual work program and budget outlining planned expenditures, oversight activities, and administrative costs. • Allocation Program Requirements and Focused Studies Develop requirements for each funding program established by the Expenditure Plan and undertake specialized studies needed to implement those programs effectively. • Biennial Implementation Plan Prepare and update the Transportation Measure Implementation Plan every two years, aligning it with the Regional Transportation Improvement Program (RTIP) and State Transportation Improvement Program (STIP)schedules. Page 101 of 114 • Project Prioritization Establish and update priority lists for regional capacity-enhancing and rehabilitation projects, in coordination with member jurisdictions and consistent with Expenditure Plan goals. • Independent Annual Audit Conduct an independent audit of all Transportation Measure funds to ensure compliance, fiscal integrity, and accountability to the public. • Public Outreach and Communication Carry out ongoing outreach and public education efforts to keep residents informed about project progress, financial performance, and planned updates. • Bond Issuance for Accelerated Delivery Issue bonds when appropriate to expedite project delivery, reducing overall project costs by leveraging future revenues for near-term improvements. • Revenue Allocation to Local Jurisdictions Distribute Transportation Measure proceeds to incorporated cities and the county in accordance with the formulas and criteria established in the Expenditure Plan. • Support for Oversight Committees and Related Technical Assistance Provide staff support to advisory committees and furnish technical assistance to member jurisdictions to ensure consistent, equitable, and effective program implementation. Citizens’ Oversight Committee Committee Purpose • To provide oversight on the implementation of the Transportation Expenditure Plan and advise the SLOCOG Policy Board when the Plan needs to be updated or augmented, ensuring that funds are spent in accordance with the approved Plan. • To inform the public and confirm that revenues and expenditures from the Transportation Measure are spent as promised to San Luis Obispo County voters. Committee Formation • The Committee will be formed within six (6) months following voter approval of the Transportation Measure in San Luis Obispo County. • The Committee shall be a permanent component of the Expenditure Plan and cannot be eliminated by amendment. • Meetings will begin when Transportation Measure revenues are recommended for expenditure, including Implementation Plan updates. Selection and Duties of Committee Chair and Vice Chair • The Committee will select a Chair and Vice Chair from among its members, each serving a one-year term. Page 102 of 114 • Chair Duties: Call meetings, set agendas, and preside over meetings. • Vice Chair Duties: Perform the Chair’s duties in the Chair’s absence. Committee Meetings • The Committee will hold at least two formal meetings annually, with additional meetings scheduled as needed. • All meetings will comply with the Brown Act (open meeting requirements). • Meetings will be conducted in accordance with Robert’s Rules of Order. Subcommittee Requirements • The Committee may form subcommittees to address specific tasks or focus areas. • All subcommittees will consist of an odd number of members to ensure clear decision-making. Committee Membership, Selection, and Quorum The Committee will reflect the geographic and demographic diversity of San Luis Obispo County and consist of 12 members. Each represented organization will nominate its representative, with final appointments approved by the SLOCOG Policy Board. Membership Composition: • One resident representative appointed by each incorporated city (Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, San Luis Obispo) and one member from each of San Luis Obispo County’s Supervisorial District’s within the unincorporated areas. (Total of 12) The SLOCOG Policy Board will review and appoint these members. If any jurisdiction is unable to appoint a representative, SLOCOG may fill the position through an open application process. Should a new City become incorporated, a representative from that jurisdiction shall be appointed by the City. Quorum • A quorum will consist of no fewer than seven (7) members. • Actions may be approved by a simple majority of members present, provided the quorum is met. Term of Membership Page 103 of 114 • Members serve two-year terms, with a maximum of eight consecutive years of service. • To establish staggered terms, the initial appointments will be divided so that half serve one-year terms and half serve two-year terms, determined by random selection. • Proxy voting is not permitted. Eligibility • Must be a U.S. citizen, 18 years or older, and a resident of San Luis Obispo County. • Cannot be an elected official of San Luis Obispo County or its cities. • Cannot be an employee of state, county, or city government agencies within San Luis Obispo County (except employees of educational institutions). Staffing • SLOCOG staff will provide technical and administrative support, including preparation of agendas, meeting materials, and public communications. • Administrative costs for staffing will be funded through the Transportation Measure’s administrative allocation. • Expert staff and consultants may be invited to present information or analyses as needed. Responsibilities The Committee will review and provide recommendations on financial and programmatic aspects of the Transportation Measure, including: • Reviewing and commenting on independent financial and performance audits of Measure funds. • Reviewing periodic reports, studies, and plans related to Measure revenues and expenditures. • Ensuring that expenditures are consistent with the Expenditure Plan. • Conducting an annual review of sales tax revenue use and publicly reporting findings. • Presenting recommendations and findings in a formal annual report to the public and SLOCOG Policy Board. • Accessing information from SLOCOG’s independent auditor and requesting additional information as necessary to fulfill oversight responsibilities. • Remaining informed of advancements in transportation planning and finance to ensure oversight remains relevant and effective through the duration of the Measure. Page 104 of 114 Measure Duration This Transportation Expenditure Plan shall remain in effect for 30 years as approved by San Luis Obispo County voters. Page 105 of 114 Page 106 of 114 F-2-1 SAN LUIS OBISPO COUNCIL OF GOVERNMENTS STAFF REPORT MEETING DATE: DECEMBER 10, 2025 ITEM F-2 SUBJECT: STAFF CONTACT: Supplemental Funding Update: Polling Results, Draft Expenditure Plan, Implementation Guidelines, and Next Steps James Worthley/Annie Bowsky/Kendall Flint, DKS/Richard Bernard, FM3 SUMMARY Transportation funding for future infrastructure falls short of our needs within the San Luis Obispo region. A dedicated, local transportation sales tax is an invaluable tool that 25 California county transportation authorities use to deliver timely, cost-efficient transportation improvements to their communities. Adding San Luis Obispo county to the list of California’s self-help counties would help unlock hundreds of millions of dollars in additional transportation funding, guaranteeing, and delivering much- needed transportation improvements and repairs for our residents and to our communities. A San Luis Obispo regional, ½ cent sales tax for transportation would: •Generate $35M annually, escalating each year (topping $1B over 30 years without escalations) •Reclaim $0.8M to $1M, annually, from State funds •Collect a $3M to $5M one-time windfall from State funds •Qualify the region to receive our fair-share of State and Federal funds (our neighboring Central Coast Counties have seen average annual grants that equal or nearly double collected tax amounts) •Include Investment Guidelines providing safeguards, assurances, and oversight of all funds. •Guarantee 99% of all funds be for transportation-related improvements within the Expenditure Plan Attachments: Draft Polling Results and Draft Transportation Expenditure Plan / Implementation Guidelines RECOMMENDATIONS Staff: 1) Receive and Comment 2)Adopt Distribution Formulas 3)Direct Staff to Present Draft Expenditure Plan materials to Member Agencies and Seek Comments / Feedback; and Proceed with Development/Refinement of Draft Materials 4)Direct Staff to Publish a Public Hearing Notice ahead of the February 4, 2026 Board Meeting 5)Direct Staff to Return on February 4, 2026 for SLOCOG Board Review of Comments Received and Determination of Next Steps. 6)Direct Staff to Fund a 2026 Tracking Poll within Existing Contract Services and Budget. TTAC: Support Staff Recommendation. CTAC: Support Staff Recommendation. SSTAC: Support Staff Recommendation. DISCUSSION Successful Transportation Measures are built upon input received through presentations, website feedback, focus groups, workshops and stakeholder input. The desired result is an equitable distribution of funding, with “right-fit” investments and flexibility, to address multiple transportation needs throughout the region. Staff worked with its consultant teams (DKS Associates, FM3, and Koble Collaborative), gained input from community groups and organizations, responded to media inquiries and interviews, hosted a website with information and a survey to gain input from the public, Four focus groups were completed in August 2025, 6 in person and 1 virtual Workshops were completed in Fall 2025, Polling was completed in Fall 2025, and SLOCOG has presented at nearly 70 public or community meetings, groups, and workshops across the region since June 1, 2025. With this information gathered, staff worked with its partners and the consultant team to prepare the draft Transportation Expenditure Plan and Implementation Guidelines for Board review. SLOCOG Board Approved: 10-1, with 1 absent Page 107 of 114 F-2-2 Staff continue its efforts to engage with the public and key stakeholders to seek and share information and to refine necessary materials. Polling Results – Attachment 1 (Attachment 1, developed by FM3, is anticipated to be available for download on 12/8/25) A statistically-valid poll (phone/text/email) began in October 2025. FM3 conducted an 18-minute survey among 1,000+ randomly selected November 2026 likely voters in San Luis Obispo County. The survey was conducted using dual-mode methodology where the survey is conducted both online and by land and cellular phones. The survey was offered in Spanish and English both online and by phone. A sample size of 1,000+ has a margin of error of ±3.1% (at the 95% confidence level). Results of this poll will be presented at the SLOCOG meeting. Prior to the April 1, 2026 Board meeting, the completion of a Tracking Poll is recommended to ascertain voter perspectives on the Draft Expenditure Plan. By shifting funds within the existing Local Roads First contracts, this poll may be completed using currently budgeted resources. $35,000 would complete a 600 person poll; $50,000 would complete a 1,000 person poll. Results of this poll would be provided at the April 1st 2026, SLOCOG Board meeting Draft Transportation Expenditure Plan and Implementation Guidelines – Attachment 2 Expenditure Plans provide the allocation and revenue distribution of unescalated revenues (with no presumptions of State/Federal grants). Staff, and its consultants, considered all feedback to date and developed the draft Transportation Expenditure Plan resulting in the following distributions and premises. 1. 55% for Local Road Repairs, Safety and Improvements (Jurisdictions determined) a.Distribute funds by formula to the jurisdictions based on share of population b.Build in flexibility through local control recognizing that each local agency (and its public) may differ in their transportation funding needs and priorities. c.Assure the public has a voice when each local agency determines its priorities. d.Uses may include (as determined by the local agency): Road and bridge repairs, maintenance, rehabilitation, safety, and congestion relief; pedestrian, bicycle, sidewalks, crosswalks, multiuse path, Safe Routes to School, and community enhancements, Signal improvements/synchronization, local transit or trolley services, and other local transportation priorities. 2. 40% for Regional Corridor Improvements (SLOCOG determined) a.Distribute funds by formula guaranteeing regional improvements based on share of population. b.Assure equitable, guaranteed, distribution by using 4 subregions: North County, North Coast, Central County, and South County c.Build in flexibility to recognize each subregion’s priority needs may differ from another. d.Assure the public has a voice when SLOCOG determines priorities. e.Uses can include: Improvements to highways, arterials, interchanges, bridges, van/carpool programs, regional trail corridors, safety/congestion relief, and regional transit. 3.4% for Senior/Disabled/Veterans’ mobility improvements (SLOCOG determined) a.Use a public process in conjunction with current procedures to address and improve mobility of those that are mobility challenged. b.Assure the public has a voice when SLOCOG determines its priorities. 4.1% for Administration of the Measure Funds a.Tasks include: Developing Implementation Plan, Project Prioritization, Annual Audits, Outreach and Communication, Revenue distributions to jurisdictions, Support for Measure- related Committees and technical assistance. To distribute funds, staff reviewed various data metrics (including Population, Sales Taxes collected, Road miles, and Employment by city and by subregion) and various combinations with the City Managers in October 2025 and received concurrence for the previously described funding distribution methodology. Ultimately, the goal is an fair, equitable, and understandable (to the public) distribution of funds. Page 108 of 114 F-2-3 1-Year Distribution of $35M, as described above: 55% for Local Road Repairs, Safety and Improvements $19,250,000 Arroyo Grande $ 1,256,955 Atascadero $ 2,029,354 Grover Beach $ 865,712 Morro Bay $ 733,207 Paso Robles $ 2,146,387 Pismo Beach $ 550,195 San Luis Obispo $ 3,207,856 Unincorporated $ 8,460,335 40% for Regional Corridor Improvements $14,000,000 North County $ 4,923,893 South County $ 4,001,218 Central County $ 3,085,830 North Coast $ 1,989,059 4% for Senior/Disabled/Veterans’ mobility improvements $1,400,000 1% Administration Costs (Maximum) $350,000 Draft Implementation Guidelines (included within the Transportation Expenditure Plan) include Safeguards and policies for use of Measure funds. These Safeguards were developed and included within the draft Implementation Guidelines to provide public assurances that the funds will be spent as promised, including: 1.Maintenance of Effort: Seeks to protect transportation investments from replacing current levels of general funds spent on transportation with Measure funds leading to diminished transportation benefits. 2.Mitigation Fee Program: Assures the public that new development pays a fair share of necessary improvements attributable to the new development. 3.Circulation Element: Assures the public the jurisdiction has a transportation plan that aligns with their General Plan 4.Capital Improvement Program: Provide the public a clear understanding of where Measure Funds will go in the coming 4-6 years. 5.Pavement Management Plan: Requires road conditions inventory, analysis, and evaluation to show: current status, a multi-year plan for road maintenance, and projected pavement conditions. 6.Expenditure Report: Annually, a city-developed report generated to account for Measure funds (received and expended), impact fees and transportation expenditures to satisfy the Maintenance of Effort requirements. Provides the public with clear understanding of all funds received, and interest gained, as well as expenditures. 7.Time Limits for Use for Regional Projects: Sets a ‘use by’ date to assure Regional funds are not sitting unused for an excessive period of time. 8.No Supplanting of Funds: Assures public that Measure funds will not supplant developer funding. 9. Repercussions: Identifies actions -all the way to withholdings and repayment – if funds were used inappropriately. 10.Regular Status Reports: Provides Board and public updates at public meetings on major projects. 11.Annual Report: A report published to the Board and public on how all Measure funds have been spent and progress in implementing the Plan. 12.Biennial Implementation Plan: Every two years, Measure funds are programmed working with member agencies and stakeholders. Board reviews draft in public hearing and incorporates feedback before adopting. Page 109 of 114 F-2-4 13.Performance Assessment: Every three years, prepare an evaluation of the efficiency, effectiveness and results of the provisions and requirements of the Expenditure Plan and Ordinance. 14. Ten-Year Comprehensive Program Review: A broad review of the full program along with assessment of changes to local, state, and federal transportation plans and policies; land use; travel and growth; project cost estimates; constraints; and revenue projections. 15.Amendment Process: There would be no provision or allowable amendment to change funding categories or overall allocation formulas without voter approval. Amendments provide an option to make changes within the Plan to account for unanticipated funds or respond to unforeseen circumstances with extensive notifications through public review and hearings. 16.Bonding Authority: Does not immediately enact bonds, but allows consideration of bonding (through a public process) should it make sense to advance projects, Measure funds would be used for repayment of Measure-eligible expenses only. 17.Excess Revenues: If revenues exceed projections, primary and secondary uses would be identified. 18.Financial Audits: Independent financial audits of all revenues and expenditures provide public with transparency and accountability assurances. 19.Program Administration: Under current law, a cap of no more than 1.5% of Measure funds can be used for administrative activities (i.e., Developing Implementation Plan, Project Prioritization, Audits, Outreach and Communication, Revenue Allocation to jurisdictions, Support for (Measure) Committees and technical assistance). The draft Transportation Expenditure Plan caps Administrative costs at 1%. 20.Citizens’ Oversight Committee: Reviews and provides recommendations on financial and programmatic aspects – review audits and reports, presents recommendations, etc. Provides public assurances that average citizens are also watching. Membership proposed: 12 members. •One resident representative appointed by each incorporated city (Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, San Luis Obispo) and one member from each of San Luis Obispo County’s Supervisorial District’s within the unincorporated areas. (Total of 12) All sections of an Ordinance are to be drafted. Such an Ordinance is the actual local law a regional board adopts to place a measure on the ballot. A few typical components include: •Title and Authority •Findings and Purpose •Tax Imposition (type, rate, duration, etc.) •Effective Date •The Investment or Expenditure Plan and Guidelines with Safeguards (Oversight and Accountability) Schedule and Next Steps The draft expenditure plan, if supported by the SLOCOG Board, would be sent to the seven city councils and Board of Supervisors for review and input (eight meetings). Changes/recommendations from these meetings will be considered for inclusion into a final expenditure plan. The SLOCOG Board would then have the opportunity to review and consider approval of the final expenditure plan - with any final modifications - and direct staff to seek city/county approvals as well (8 more meetings). Following city/county meetings, the SLOCOG Board may then consider its final approval and to send it to the BOS for inclusion on a future ballot –November 2026 would be the first such opportunity. •Summer and Fall 2025: Engagement Efforts, Focus Groups, Workshops and Polling •November 2025: Drafting of the Expenditure Plan and Guidelines) and Engagement opportunities •December 10, 2025: SLOCOG Board Meeting: Review/Comment on Draft Expenditure Plan; Send / Present Draft to Cities/County for review and input. •December 2025/January 2026: Cities and County Review/Comment on Draft Expenditure Plan Page 110 of 114 F-2-5 •February 4, 2026: SLOCOG Board Meeting: Receive/Address Jurisdictions’ comments/adjustments; Review/Approve Final Measure Materials; Introduce Ordinance; Send Final Expenditure Plan to Cities/County for Approvals •February/March 2026: Cities and County consider Approval of Final Expenditure Plan. •April 1, 2026: SLOCOG Board Meeting: Receive Tracking Poll Results and Consider Adoption of Ordinance along with Measure Materials. Jurisdiction Council / Board Action item to: Review and provide input into draft plan SLOCOG 12/10/25 Arroyo Grande 1/13/25 Atascadero 1/13/26 Grover Beach 1/12/26 Morro Bay 1/13/26 Paso Robles 12/16/25 Pismo Beach 12/16/25 SLO City 1/20/26 County BOS 1/27/26 BACKGROUND Benefits of a Dedicated Transportation Sales Tax Transportation investments improve the region’s: safety, reliability, mobility, goods movement, and economic vitality; and a sales tax is paid by all users of the transportation system, including tourists. Regions (self-help counties) with more local funding have a competitive advantage: they are better able to build and maintain infrastructure and services, recapture competitive funds (our paid taxes), and have more flexibility to build partnerships and prepare for new technologies and future challenges. Our jurisdictions require additional funds to repair our roadways, to deliver local and regional safety improvements, to improve transportation overall, and to offer as a match in order to capture our paid taxes through competitive State or Federal funds. Higher matches can leverage or ‘win’ more funds from Sacramento. Without our own dedicated transportation sales tax, we are effectively providing a ‘tax holiday’ to our tourists that come from the 25 counties with their own dedicated transportation sales tax. The Insufficient Status Quo The region’s current funding path relies not only on stable state and federal fund sources but also aspires to win competitive state and federal transportation grants. Every two years, SLOCOG programs its formula allotment of state and federal transportation funds. The 2023 Regional Transportation Plan (RTP) identified a transportation funding shortfall of $2.4B and the initial financial estimates of the 2027 RTP anticipate transportation funding shortfalls topping $3B (Agenda item F-1 October 2025). Similarly, the success of the Major Transportation Projects (Agenda item F-2 October 2025) leans heavily upon the success of a local transportation-specific sales tax measure. Projects are Cheaper Now than Tomorrow Regions with a sales tax have a significant advantage over those without. When their new improvements are ‘fully funded’ but run into unexpected project escalations or inflation, these regions can use sales tax revenues to close the gap rather than losing the project (sometimes grant funded) or delaying for several months or years to await additional funding (and incurring further cost escalations). All regions are susceptible to State budget cuts (i.e., the 2024 proposed 50% cut to REAP funding in the State) but measure counties are better equipped to backfill and deliver improvements in spite of the state cuts. The other four counties on the Central Coast annually generate $25m-$50m through their dedicated transportation sales tax to address the funding needs of their counties and they are successful in leveraging large competitive grants using their sales tax funds. In total, 25 California counties (7 of the 8 in Southern Page 111 of 114 F-2-6 California, 4 of the 5 on the Central Coast, 8 of the 9 in the Bay Area, 6 of the 8 in the Central Valley and Sacramento), have voter-approved dedicated transportation sales taxes. These 25 counties account for 89% of all Californians. Without a dedicated local sales tax, SLO county is not able to secure its fair share of billions in State and Federal grants. Ability to Leverage Comparing one investment category (Active Transportation), In FY 22/23, Santa Cruz COG ‘won’ $115m from Sacramento using their $32M of their 2016 sales tax measure funds. The Santa Cruz region has another $53m remaining in measure funds to use as leverage for more Active Transportation grants and has other categories of funding (Highway Corridors, Rail, and Neighborhood Projects) to also seek grants. In comparison, SLOCOG’s 2023 long range plan projects $184m for Active Transportation in our region between 2023 and 2045. Monterey will spend $600m from their 2016 measure funds on road maintenance and improvements in the coming decades. This is on top of their local jurisdictions’ annual investments and state or federal allotments, and they will use some of it to leverage or ‘win’ State and Federal funds, outpacing our region. With the failure of Measure J in 2016, the region lost out on over $270M in the last 9 years and this could have easily doubled (or more) by capturing grants and competitive funds from State and Federal grants. The impact of a dedicated transportation sales tax for successful measure counties is evident. Those counties deliver more projects and investments, faster, and at a lower cost. Shrinking Fuel Tax Reliant on the fuel tax, locally, we have a funding problem. Most of our jurisdictions have pavement conditions that are too low – costing more to maintain - and do not have a path to reach pavement condition levels that are less costly to maintain. Our primary artery, U.S. 101 has recurring congestion in South County and has seen emerging congestion in North County, and we do not have the funding necessary to address its existing or emerging congestion and safety issues. Gasoline gallons consumed in California hit their peak in 2017 and 2018 topping 15.5B gallons. Discounting the significant drop due to COVID-19, every year sees a decrease in consumption from the prior year. 2023 and 2024 gasoline consumption was 13.6B and 13.4B gallons respectively (Source: CDTFA). Better Together Setting aside our own self-interests can be challenging, but a regional approach helps to build the infrastructure for today and the next generation. There is a holistic benefit of a regional measure. City measures collect and spend only within their borders, yet, our residents travel beyond the singular bubbles of each city and community, whether for commuting, shopping, or entertainment. We all do better when everyone does better. An increase of transportation funding across the region provides benefits (safety, access, mobility, cost- savings, etc.) to each person, community, and jurisdiction. With both local needs and regional needs, collaboration and coordination would be a key aspect if both a regional measure and a local measure were on the same ballot. Presentations are ongoing: Encouraging feedback through the www.localROADSfirst.com website, SLOCOG continues to inform residents through engagement meetings, more presentations are already scheduled in 2026, and staff is open to additional presentation requests. With or without a presentation, the public is invited to share their thoughts, questions, and preferred allocations across transportation improvement areas through the LRF website and survey. Future presentations will now shift to showcase the draft Expenditure Plan. Additionally, staff continue to work with the City Managers, County Executive Officer, Transit Operators and others to gain insights into key aspects, topics, and needs. Public Workshops were completed: Six in-person workshops, and one virtual workshop, was held in September/October. Staff encouraged attendance through: 3-minute public comments at City Council meetings, articles within County Advisory Committee newsletters, coordination with city managers and city and county staff, a press release, media outreach, and a dedicated SLOCOG eblast. Four Focus Groups completed: In August, one Focus Group was held in each of the four subregions. For each group, 12 residents were sought and confirmed, along with several backup members should a confirmation fall through. Using registered voter information, the intent was a representative sample across metrics (political registration, age, gender, community) within each subregion using a random-selection Page 112 of 114 F-2-7 process. These 2-hour meetings were facilitated by Koble Collaborative, Inc.; one page of conclusions is included below; and memorandum is attached ATTACHMENTS - October 1, 2025-F-3. Self-Help Measures Impacts on the Central Coast The impact of Self-Help measures in other counties is evident. They deliver more projects and investments, faster, and at a lower cost for their residents and visitors. Additionally, these four Self-help counties have leveraged hundreds of millions of State dollars back to their counties using their transportation measure funds. Each region receives its fair-share of formula funds, but without a significant influx of matching funds, the San Luis Obispo region cannot successfully compete to win back our fair share from Sacramento. In the San Luis Obispo region, a voter-approved ½% sales tax measure would generate $35m/year (2024) and would be used to leverage state and federal funding grants. Well-over a billion dollars could be leveraged back to the San Luis Obispo region in 30 years using the approach of self- help counties. Currently, there are 25 CA self-help counties (transportation-specific sales tax) that encompass 89% of all Californians. Our neighboring counties and SLOCOG each receive formula funds. Unlike SLOCOG, they collect a transportation-specific sales tax raising and investing $25M to $50M, annually into their transportation systems and they recapture gas tax funds that are reserved only for self-help counties. Moreover, they use these funds to also leverage competitive grants back to their county. Looking back over the past 10 years, neighboring counties have raised $200M - $450M through their respective transportation-specific tax (San Benito County is much, much smaller in population and revenue generation). Using solely these tax dollars, they then won (or leveraged) State grants– ranging from $200M to over $750M, in ten years or less. Comparatively, the San Luis Obispo region has lost out on $270M that would have been collected had a transportation measure passed in 2016, and another $330-$430M in likely our share of grant awards. Overall, this is a loss of transportation investment of $600M to $700M in the last nine years. This significant level of investment would have been used to improve Highways and interchanges, transit, mobility, Safe Routes to School, safety, road maintenance and more within our communities and throughout the region. Using formula funds (similar to those that all COGs receive), SLOCOG has been successful in securing grants as well, including recent awards for: •Bob Jones, $18M grant •US 101 southbound South County (Shell Beach) improvement: $61M. The table, left, identifies grants won by neighboring counties specifically using their measure funds as the grant match. Self-Help Counties have a competitive advantage: they are better able to build and maintain infrastructure and services, recapture competitive funds (our paid taxes), and have more flexibility to build partnerships and prepare for new technologies. Page 113 of 114 Page 114 of 114 SLOCOG’s Draft Transportation Expenditure Plan and Implementation Guidelines Jan. 20, 2026 Presentation to the City of San Luis Obispo Introduction to SLOCOG Founded in 1968 San Luis Obispo County & 7 Cities Arroyo Grande Atascadero Grover Beach Morro Bay Paso Robles Pismo Beach San Luis Obispo 12 Member Elected-Board 2 US 101 South County Southbound through Shell Beach –Funded!! No funding to go further Northbound – no funding Interchanges – no funding US 101 North County Northbound – no funding Southbound – no funding Interchanges – no funding 3 Highway investment is needed 3 What could we fund? Funding Approach: Central Coast Counties Transp- Tax (2024) ‘26 STIP (1 Yr) ‘22 STIP (1 Yr) ‘18 STIP (1 Yr) Region $24.4M$1.9M$2.3M$4MSanta Cruz $34.8M$3.4M$3.9M$7.1MMonterey $48.9M$4.1M$4.6M$8.4MSanta Barbara $0$3.6M$4.1M$7.5MSLO 4 The Solution: Central Coast Counties Currently, 25 Counties (89% of Californians) HAVE a Voter‐ approved Transportation Tax Grants Won Collected (’16-pres) Region $350M$196MSanta Cruz $227M$277MMonterey $759M$458MSanta Barbara $0$0SLO $430M$270MLost out on 5 6 Engagement Activities Engagement & Input Public Presentations – ongoing Online Tool – ongoing Focus Groups – Aug. 2025 7 Community Workshops – Oct. 2025 Including one at the Library Community Room in SLO 1,000 Phone/Internet Polled – Fall 2025 Topic Specific City Managers/County CEO/Staff Transit Providers 70+ public meetings Flexibility: priorities differ Guarantees: appropriate spending Assurances: $ will benefit them 7 DRAFT San Luis Obispo County Transportation Expenditure Plan 1/2% Sales tax generates ~ $35M/yr + a 30‐year sunset 55% ($19.25M) Local Road Repairs, Safety, & Improvements Population Basis to each jurisdiction Each Governing Board sets own priorities (Local Control and Flexibility) – requires public input – every 2 years in CIP Only for Transportation 8 DRAFT San Luis Obispo County Transportation Expenditure Plan 1/2 % Sales tax generates ~ $35M/yr + a 30‐year sunset 40% ($14.00M) Regional Corridor Improvements Population Basis to each subregion SLOCOG Board sets priorities – requires public input – every 2 years in CIP- Only for Transportation 9 DRAFT San Luis Obispo County Transportation Expenditure Plan 1/2 % Sales tax generates ~ $35,000,000 How will $ be spent? (Before spending) Capital Improvement Program More local control Pavement Management Plan Biennial Implementation Plan Public Notice of Funds Use How were $ spent (After spending) Local Expenditure Reports (ann.) Annual Reports Board Status Reports Performance Assessments (3 yrs), Comprehensive Program Review (10 years) 10 Draft Implementation Guidelines and Safeguards To Augment transportation funds Maintenance of Effort Development Fees, mitigations, and no supplanting Oversight and Guarantees and More 30 year sunset Financial Audits (annual) Citizens’ Oversight Committee Repercussions if $ spent inappropriately Timeliness use of funds Amendment Process Bonding Authority 11 What is the Cost? Dec. 10, 2025: SLOCOG Board – Reviewed Draft Investment Plan and Guidelines; Sent to Cities/BOS Dec. 2025 - Jan. 2026: 7 Cities and County Review Draft Expenditure Plan Feb. 4, 2026: SLOCOG Board – Review/Approve Final Measure Materials, Introduce Ordinance Feb. 2026 – Mar. 2026: 7 Cities and County Consider Approval of Plan Apr. 1, 2026: SLOCOG Board – Consider Adoption of Ordinance with Measure Materials; Request for Ballot Nov. 3, 2026: Election Day / Voter-Consideration of Measure Fail -> No Change Pass -> Delivers Expenditure Plan Other/Future Election 12 Schedule and Next Steps 13 14 37% 39% 9% 10% 4% Great need Some need A little need No real need Don’t know/No answer 41% 33% 12% 11% 3% Great/ Some Need 76% A Little/ No Real Need 23% Great/ Some Need 74% A Little/ No Real Need 20% There is a high, but somewhat soft sense that the transportation systems Countywide and in voters’ own areas have a need for additional funding. Generally speaking, would you say that San Luis Obispo County has a great need, some need, a little need or no real need for additional funding for the County’s transportation system, including US101, highways, local streets, bike lanes, sidewalks and public transit? Do you think your area has a great need, some need, a little need or no real need for additional funding for the transportation system, including US101, highways, local streets, bike lanes, sidewalks and public transit? 1,000+ responses; phone/text/email; +/-3.1% 15 40% 18% 6% 4% 5% 23% 4% Q. Do you think you would vote yes or no on this measure? Initial Vote After Information 35% 20% 6% 3% 7% 26% 4% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes 61% Total Yes65%55%58% Total No 35% Total No32% After information, support for the measure nearly reaches the two-thirds threshold. (M.O.E. = ±3.1%) 1,000+ responses; phone/text/email; +/-3.1%