04/19/1982City Council Minutes
Monday, April 19, 1982 - 12:10 p.m.
Page 2
economy was in a period of stagnation and he expected very little turn
around next year. Secondly, the State would be withdrawing funds from
local government equal to or exceeding the amounts proposed in the
Governor's budget. Using those two assumptions, it appeared the City
would experience a 1.1% increase in total revenues. One factor was that
the investment earnings would be substantially reduced as water and
sewer reserves would used for capital improvements. He explained that
he was using a "worst case" estimate of the coming year's resources. He
then went through twenty -five exhibits he had prepared giving the
historical trends from 1977 through projections of 1983. Looking at
total revenues, the estimate for the coming year showed a smaller
percentage increase in 78 -79, which was the year of Prop 13. Next year
estimates showed total revenues of $16,263,136. He then broke this down
into various categories of revenue. The most dramatic being that as a
government agency we are dependent upon taxes for our existence as 47.9%
of our revenue in the coming year would be coming from taxes. The
second most significant category was the enterprise operations of the
City which is the water and sewer utilities, parking funds and bus
transit operations, which contribute 26.1% of the total revenue. The
revenues derived from fees and services charges and its expenditure is
restricted to the services being provided. He stated the final category
of significance was ,subventions.; and :grants . received =from other
governments. Those accounted for 15% of the total projected income and
came from a variety of sources although many contained restrictions of
their use. The remaining categories when combined, contribute the final
11% of the total projected revenue. He then examined each of the
significant categories, i.e. 1) tax revenues, which consist of property
tax, sales tax, utilities taxes, bed tax revenues, franchise tax and
business license revenues; 2) subventions and grants consisting of motor
vehicle in lieu fees, property tax relief,, state cigarette tax, state
gasoline taxes; federal revenue sharing, other grants and in lieu taxes
and alcoholic beverage fees; and 3) enterprise revenues, water utility
revenues, sewer utility revenues, parking fund revenues, transit
' revenues. He summed it up by stating that in the end the City could
expect the General Fund increased by 2.4% and special revenue funds by
6.6 %. The total monies available for streets and highways would
increase by 9.3% while the funds traditionally used for capital
improvements would decrease by 12.3 %. Finally, the combined enterprise
funds would show a margin of 1.9% increase and the overall total would
post a net gain of 1.1 %.
Paul Lanspery, City Administrative Officer, stated that, of all of these
taxes and other fees collected, only the parking fines could be
increased by the Council, although this would represent a very small
percentage of the overall picture. He did state that other fees such as
park and recreation fees would continue to be increased so programs
would pay for themselves: He stated that he is working on the initial
departmental budget requests and would expect several of them to require
cutbacks. Also, not included in these figures is the Police and Fire
MOU's.
After brief discussion,. Council received and filed the reports (5 -0).
Monday, May 17th, at 12:10 p.m. was set to discuss the overall 1982/1983
budget process.
ITEM 2: PCC BUDGET FORMULA
Paul Lanspery, City Administrative Officer, explained that the policy
included a policy statement which he would not expect the Council to
adopt today, but rather review it and make any recommendations or
suggested changes and then adopt it as a part of the upcoming budget
hearings.
Rudy Muravez, Finance Director, explained that -with the expenditure of
public funds there has to be an attempt at reconciling costs with
benefits since the purpose of these expenditures were defined as
"community promotion ". He had performed an analysis of the benefits
which accrued from promoting San Luis Obispo, recognizing that this was
a tourist related community and that.a substantial portion of the local
City Council Minutes
Monday, April 19, 1982 - 12:10 p.m.
Page 3
economy was dependent upon the tourist industry. He explained that if
you applied the percentage differences of those tourist related
categories to the total retail base, you arrive at a tourist market of
approximately $32 million annually. A second element of the tourist
industry was the revenue derived from hotels and motels using the
amounts of estimated bed tax that was approximately $13 million in
annual revenue. As a 'comparison,' he used the City of Santa- Maria'which
shows an estimated hotel and motel market of $6,250,OOO.finding that the
difference or incremental revenue is approximately $6,750,000. When
this is added to retail sales of $32 million it definitely shows that
tourism makes a significant contribution to the local economy. He then
explained how advertising is classed as a hard sell expenditure to
promote the tourist industry. Promotional services, however, would be a
soft sell expenditure and that many of the Chamber of Commerce
activities benefit local residents as well as promote other industries.
And lastly, the grants -in -aid and facilities reserve, which relate to
community promotion. Those two categories were intended to provide the
environmental amenities, both cultural and physical, which would make
the City a desirable place to visit and live. He felt the earmarking of
funds for community promotion had resulted in a soundly financed and
beneficial promotion program during the past 12 years. It was therefore
staff's recommendation to continue the current general formula approach
whereby the Council would allocate funds on an annual basis for
promotional expenses. It was also recommended that the program name be
changed from Community Promotion to read "Community Promotion and
Facility Support ".
Councilman Griffin stated that he had no real problem with the
philosophical approach; however it was time to review the formula. He
did feel the original establishment of this formula had some validity.
He would like to see the policy statement,. though, recognize the
cultural aspects of this functional area. He felt the facilities
support was a valid one.
Councilwoman Dovey stated she had no problem using the bed tax as one of
the bases for the formula especially in light of the history and
promised by previous Councils to the hotel and motel industry that the
bed tax would be used for promotion. However, she would suggest limiting
the formula by eliminating both the sales tax and the business license
tax. This would also allow the General Fund to be increased and yet
using a certain percentage of the bed tax would not decrease the
promotional funds available.
Councilman Dunin gave a brief history of the promotional formula and the
establishment of the Promotional Coordinating Committee. A great deal
of thought had gone into the establishment of this formula. He felt it
was a good one and unless someone could present a better one, he could
not see disposing of it.
Councilman Settle agreed with Councilman Dunin and stated he could
support the formula and also support the suggested name change from
Community Promotions and Facility Support. He would support the staff
recommendation.
Councilwoman Dovey stated that she did not like the idea of earmarking
funds unless there was no other way. She felt her suggestion of
eliminating the other two taxes was an effort to simplify the formula.
She would like the formula simplified and staff to take an overall look
at the revenues derived.
Councilman Griffin stated his primary concern was not locked into any
one particular formula but he did feel there should be some continuity
and assurances that monies would be continued to support these
promotional and cultural activities.
Councilman Dunin expressed again that the main source of income to the
City was through the sales tax and bed tax which constituted the
financial health of the City of San Luis Obispo and unless something
better comes along he would support the current formula to promote the
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City Council Minutes
Monday, April 19, 1982 - 12:10 p.m.
Page 4
City. In response to an earlier comment, he stated that if the City
were to find itself in financial trouble then this is the time where
more monies need to be put into advertising. He would support adopting
the policy statement at the budget hearings.
After brief discussion, and upon general consensus, Council agreed to
maintain the current promotional formula, look at the policy statement
during budget time and include a statement emphasizing the cultural
aspects. Council also agreed to the name change.
2:00 p.m. Councilman Griffin left the meeting.
A -2 LEASE AT SAN LUIS JUNIOR HIGH SCHOOL
Paul Lanspery, Administrative Officer, stated that the Board of
Education of the San Luis Coastal Unified School District had opted to
close the Junior High School at the close of 81/82 to ease the strain on
their budget during a period of low enrollment. Subsequently, the board
called for bids from the outside for interim use of the school and
received four bids plus a letter from the City of San Luis Obispo
indicating preliminary interest in the office, gym, home economics unit
and the outdoor fields and court. The Board would meet again on
Tuesday, April 20th, to consider those .bids received. He questioned
whether the Council was interested in the City continuing to indicate to
the Superintendent of Schools that the ,City was interested in acquiring
this site on-an interim basis: Upon question, he' stated the City was
looking at a five year lease with an option to lease for an additional
five years, or a total of ten. He submitted a list of preliminary
figures prepared by Jim Stockton, Recreation Director, on the first year
cost estimates. He explained that the indication to the school district
that the City was interested would be followed up with a written
proposal after negotiation and better costs had been determined. He was
simply now asking if the Council was interested in submitting this type
of proposal.
Councilman Dunin stated
proposal at this point.
and was afraid this could
that he could only be lukewarm about the
He felt there were a lot of pitfalls involved
get quite costly.
After brief discussion, Council directed staff to write a letter to the
school district informing them of the City's interest in a possible
lease proposal (4 -0 -1).
There being no further business to come before the City Council, Mayor
Billig adjourned the meeting at 2:15 p.m.
...'APPROVED BY COUNCIL: 5/18/82
Pamela Voges, C' y Clerk