Eyeing new taxes to fix Arroyo Grande's aging infrastructure

May 29, 2019

Arroyo Grande city officials kicked off discussions this week on how to generate more revenue, agreeing an estimated $3.5 million dollars is needed to fix the city's aging infrastructure. But the city's councilmembers don't agree on how to accomplish that. 

Two hours into Tuesday’s city council discussion on revenue generation, Mayor Caren Ray Russom reminded everyone why they were having this conversation.

“We’ve got to cover our pavement, we’ve got to cover our depreciation on the buildings and we need sidewalks,” Ray Russom said.

Also on that list, aging pipes under the city are slowly wearing down.

The city council is currently setting future priorities and asked City Manager James Bergman to present the council with significant revenue categories needed in the city. The number he came back with is $2.4 million annually to maintain facilities owned by the city, and another $1.6 million to keep city streets from degrading. From Bergman’s memo to the city, it became clear the largest revenue-generating opportunities is through taxes.

“If the majority of council is going to ask the public for money, we need to be darn clear about what exactly that money is [for],” Ray Russom said.

The city already asked local voters for a sales tax increase in 2006 and then extended that tax a few years ago. Most of that funding is going towards the interchange at Brisco Road and Highway 101, which has a $22 million dollar price tag and hasn’t been built yet.

Mayor Pro Tem Kristen Barneich asked Bergman why the city has a deficit for repairs, and he replied, things break.

“I don’t know if it’s a deficit, other than it’s a fact of life, right?” Bergman said. “In our personal savings, do we have money allocated for a new roof on our house?”

Options to pay for city repairs include increasing sales taxes, property taxes, transient occupancy taxes— even an increase on business license fees. All of which were approved by neighboring city Grover Beach voters in past years to generate revenue for projects.

A few members of the public were in attendance at this week's meeting and said they support the repairs, but worry how higher taxes will affect low-income property owners and small businesses.

“A lot of the small business owners are struggling to make ends meet, and even something small like doubling a business tax could really upset them and make or break some of them,” said Jocelyn Brennan, CEO of the South County Chamber of Commerce.

A large portion of the discussion centered around economic development efforts. Bergman said twelve 100-room hotels would need to be built in order to raise $4 million a year, without taxes. Or the city would need to add five shopping centers, or ten car dealerships.

Councilmembers each had different ideas on how to drum up revenue. Councilmember Jimmy Paulding proposed a combination of taxes, new business fees and creating a new hotel. Councilmember Lan George proposed installing paid parking meters downtown, which Mayor Ray Russom immediately opposed.

“I’ve said over my dead body will we do paid parking because it’s so restrictive to the business community,” Ray Russom said. “You just can’t make enough revenue to make it worthwhile.:”

Councilmembers did agree they can’t cut any more staff, as the city is already operating with bare bones staffing. And all the councilmembers agreed Bergman could begin to hunt for a consultant to help find ways to raise revenue. Bergman wasn’t sure how much that would cost.

The conversation surrounding revenue generation for Arroyo Grande will likely continue for a while, but the council has about a year to decide if it wants to place any new tax proposals on the November 2020 ballot. And the clock is ticking on the city’s infrastructure. Bergman said if they don’t start fixing stuff soon, it will end up costing the city a lot more than if the city had spent money on maintenance all along.