The San Luis Obispo County executive office presented a multi‑year financial forecast to the Board of Supervisors on Nov. 4 that estimates a baseline FY2026‑27 general fund shortfall of approximately $7.5 million, with a plausible range between $4 million and $11 million depending on key assumptions.

Lisa Howe, budget analyst, told the board the forecast incorporates known increases (including negotiated labor costs and step increases) plus an assumed 6 percent vacancy rate so that departments can plan. The forecast treats the upcoming fiscal year as a status‑quo baseline, excluding board‑directed program additions unless previously authorized.

Major assumptions and sensitivities

• Discretionary (non‑departmental) revenue is projected to grow about 2.6 percent for 2026‑27; sales tax and transient occupancy tax (TOT) trends are running below budget and are each forecasted to decline by roughly $1 million in the coming year based on current receipts.
• The county incorporated negotiated salary/benefit increases and a 6% vacancy assumption; staff also incorporated updated pension and OPEB rates after actuarial input.
• A 1% swing in non‑departmental revenue changes the gap by about $3 million; similar 1% changes in departmental revenue or salary/benefits change the gap by roughly $4.3 million.

Howe emphasized that the forecast contains a higher than usual degree of uncertainty because of the county’s recent financial restructuring and ongoing external risks, including state and federal budget or policy actions and a continuing federal shutdown that has affected some local programs (notably CalFresh issuance). She called the financial rebalancing and resiliency initiative—launched in the prior budget cycle—the county’s primary framework to restore structural balance over several years.

Next steps

Staff will return with a budget‑policy package, proposed budget balancing strategies and proposed development policies in subsequent board meetings; formal budget hearings remain on the standard schedule for May–June 2026. Departments will continue preparing detailed budget submissions in December and staff plans to report additional updates—especially from the Health Agency and KPMG operational review—over the coming months.

Sources: County executive office presentation to the Board of Supervisors, Nov. 4, 2025; in‑meeting Q&A with county staff.