New SLO County sales tax could raise $35 million a year for transportation projects

A new San Luis Obispo County sales tax could raise $35 million per year for projects ranging from widening the Cuesta Grade to building bike lanes, supporters say.

The San Luis Obispo Council of Governments is developing a 0.5% sales tax to fund transportation projects such as highway improvements, according to SLOCOG Planning Director James Worthley.

Before the sales tax lands on the November 2024 ballot, it must be approved by a majority of the seven city councils in San Luis Obispo County as well as the SLOCOG board of directors and San Luis Obispo County Board of Supervisors, Worthley said.

The group must submit the ballot measure to the county by Aug. 9, 2024, to qualify for the election, according to SLO County Clerk-Recorder Elaina Cano.

Two-thirds of SLO County voters must support the tax for it to pass.

SLO County sales tax would fund transportation projects

The ballot measure would impose a 0.5% sales tax on every dollar spent in the county.

For example, the county would add an extra 15 cents to a $30 pair of shoes and $150 to a $30,000 car, according to a website promoting the sales tax.

The tax is expected to generate $35 million annually for 20 years, according to Worthley.

Potential projects include restoring Harford Pier in Avila Beach and adding pedestrian enhancements at Dinosaur Caves in Pismo Beach.

SLOCOG will rely on community feedback from an online survey, a telephone poll in October and local meetings to determine how to divide the tax revenue between projects.

“It really comes down to who’s clamoring for what,” Worthley said.

If voters approve the tax, they also automatically approve an investment plan that outlines how the funding is spent for 20 years.

According to Worthley, revenue from a standard sales tax measure goes into the General Fund, and the Board of Supervisors or city council decides annually how to use that funding.

Revenue from a transportation sales tax, however, can only be used for transportation projects outlined by the voter-approved investment plan.

“It’s locked in, and it provides that guarantee and safeguard,” Worthley said.

This ballot measure would be similar to Measure J, a failed 2016 initiative that proposed a 0.5% countywide sales tax expected to generate about $230 million for transportation projects, according to Worthley.

In 2016, 66.3% of voters supported the tax — just shy of the 66.7% required to pass the ballot measure.

Measure J’s investment plan distributed funding to each city and unincorporated community by population size and other factors, Worthley said, but the 2024 sales tax could be designed differently.

“It was SLOCOG’s first try at putting something on the ballot,” Worthley said, adding that the organization now has more experience with designing a ballot measure and is more likely to succeed this time around.

Tax could help leverage state funding

According to the county’s Long Range Regional Transportation Plan, SLO County needs $5.4 billion to meet its transportation infrastructure goals, but only has $3.1 billion available for such projects.

The sales tax could supplement that $2.3 billion shortfall, Worthley said, partly by strengthening the county’s applications for state grants.

According to Worthley, some state grants require applicants to offer up local funding for their proposed projects to win state funding.

The sales tax would create a dedicated funding stream for transportation projects, which can be used to bolster applications for those state grants, he said.

“If you can put together a good application and matching funds, you can capture those funds back to your region,” Worthley said.

The more local funding a county offers for a project, the more state funding they can get, he said.

For example, SLO County applied for state active transportation funds in 2022, and promised to use $12 million of funding from SLOCOG for the same projects.

The state awarded the county about $36 million in active transportation funding that year, Worthley said.

“We were pretty happy,” he said.

Meanwhile, Santa Cruz County applied for the same pot of active transportation funding with about $32 million of local dollars generated by its sales tax revenue, Worthley said, and the state awarded that county $115 million.

“They were able to leverage more funds out of the state,” he said of Santa Cruz County. “We just can’t compete at that same level. We can win, but we’re going to win lower amounts.”

What’s next?

In December, SLOCOG staff will present the survey and poll results to the group’s board, and recommend whether or not the group should proceed with the ballot measure.

“If (the survey results are) strongly supportive, then we might encourage our board to move forward to the next step,” Worthley said. “If it’s fairly lukewarm — if 50% of the voters want it and 50% don’t, then we probably won’t go forward at all.”

The board will then vote to decide if staff should design the ballot measure to present to the seven city councils and San Luis Obispo County Board of Supervisors.

“There are a lot of steps between today and a measure that lands on the ballot,” Worthley said.

To provide input on the proposed sales tax, go to bit.ly/44MAv9E.