CITY OF GROVER BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 9
Placement: Business
Meeting Date: January 12, 2026
TO: Honorable Mayor and City Council
FROM: Matthew Bronson, City Manager
PREPARED BY: Matthew Bronson, City Manager
SUBJECT: San Luis Obispo Council of Governments Draft Transportation Expenditure Plan
RECOMMENDATION
Receive a report from the San Luis Obispo Council of Governments on its Draft Transportation Expenditure Plan and provide input and comment about the plan.
BACKGROUND
The San Luis Obispo Council of Governments (SLOCOG) is the regional transportation planning agency, metropolitan planning organization, and council of governments for San Luis Obispo County. SLOCOG is responsible for long-range regional transportation planning, funding allocation and coordination among the County of San Luis Obispo and the seven incorporated cities including Grover Beach. The SLOCOG Board of Directors includes the County Supervisors and a representative from each city with Mayor Dee serving as the City’s representative.
The San Luis Obispo region faces a substantial and growing funding gap in maintaining and improving its multimodal transportation system. As identified in SLOCOG’s adopted Regional Transportation Plan, the region currently experiences an estimated $2.4 billion shortfall, with updated estimates for the 2027 Plan indicating this need will exceed $3 billion. This gap affects local roadway maintenance, safety improvements, congestion relief, transit reliability, and bicycle and pedestrian connectivity throughout the county.
In 2016, SLOCOG placed a 1/2 cent transportation sales tax on the ballot (Measure J) to provide new transportation revenues within the county but this measure failed to receive the 66.7% approval necessary for a special tax. SLOCOG subsequently evaluated placing a transportation sales tax measure on the November 2024 ballot but ultimately chose not to advance that effort after reviewing public feedback, readiness, and timeliness. These considerations informed SLOCOG’s expanded public engagement and technical work throughout 2025.
The absence of a dedicated, locally controlled transportation revenue source places San Luis Obispo County at a disadvantage relative to the 25 “self-help” counties in California that have voter-approved transportation sales taxes. These counties leverage their local funding to secure substantially more State and Federal competitive grants for highways, corridors, local streets, and mobility programs. Since the failure of Measure J in 2016, the San Luis Obispo region has likely missed $600–700 million in combined local revenue and competitive grant awards that could otherwise have been secured and invested in local and regional transportation improvements.
Staff Report: SLOCOG Draft Transportation Expenditure Plan Page 2 January 12, 2026
Draft Transportation Expenditure Plan and Proposed Sales Tax Measure Over the past year, SLOCOG has developed a Draft Transportation Expenditure Plan and Implementation Guidelines. The plan is intended to address the regional transportation funding shortfall, respond to public feedback about transportation needs, and establish an equitable distribution of new transportation revenues. This work is associated with a proposed 1/2 cent transportation sales tax measure for the November 2026 election that would generate approximately $35 million annually escalating each year for 30 years within San Luis Obispo County to address local and regional transportation needs.
The plan and the related transportation sales tax measure allocates funding across the four categories shown below with the percentage of funding indicated:
• 55% for local road repairs, safety, and improvements (allocated to each jurisdiction based on population)
• 40% for regional corridor improvements (allocated to four subregions by population share) • 4% for senior/disabled/veterans’ mobility improvements • 1% for administrative costs
The plan emphasizes transparency, local control, subregional equity, and accountability through provisions such as a Citizens Oversight Committee, maintenance of effort requirements, regular audits, and multi-year implementation plans. Additional background information and details about the plan are shown in the staff report from the December 10, 2025 SLOCOG Board meeting (Attachment 1) and the plan itself (Attachment 2). Under the plan, Grover Beach would receive an estimated $865,712 annually in the local road repair category with additional funds for South County improvements available through regional corridor improvement category. Potential examples of regional corridor projects are South 4th Street improvements between Grover Beach and Oceano, North 4th Street improvements between Grover Beach and Pismo Beach, and West Grand Avenue improvements between Grover Beach and Arroyo Grande.
Funds from this measure would supplement the City’s road repair and maintenance programs which are primarily funded through Measure K-14 bond funds along with Local Transportation Funds, Gas Tax funds, and the General Fund. The City has made significant progress in repairing local streets through passage of Measure K-14 though the City faces an estimated $3-4 million funding shortfall to fully complete the Measure K-14 programmed projects by 2032 along with an annual cost of $1.5 million to maintain these repaired streets. In addition, the City has previously estimated approximately $25 million in major street improvement needs for segments of West Grand Avenue, South Oak Park Boulevard, North and South 4th Street, Farroll Road, The Pike, and El Camino Real. These numbers will be updated as part of a street repair update at the February 10, 2026 meeting. Lastly, while the City received $3 million in grant funding from SLOCOG in 2024 to partially fund the West Grand Avenue Streetscape Project, future grant funding from SLOCOG would be unlikely without additional countywide transportation revenues.
As part of SLOCOG’s public outreach and review process, SLOCOG staff is presenting the Draft Transportation Expenditure Plan to all seven cities and the County Board of Supervisors in December 2025 and January 2026. The Council is requested to provide input and comment to SLOCOG prior to consideration of the draft plan by the SLOCOG Board on February 4, 2026.
Staff Report: SLOCOG Draft Transportation Expenditure Plan Page 3 January 12, 2026
Multi-Year Goals
☐ Public Safety and Community Services ☐ Economic Development and Housing ☐ Community Infrastructure ☐ Financial and Organization Sustainability Council Priorities
☐ Water & Wastewater Infrastructure ☐ Community Engagement
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Receive a report from the San Luis Obispo Council of Governments on its draft Transportation Expenditure Plan and provide input and comment about the plan.
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
ATTACHMENTS
1. December 10, 2025 SLOCOG Board Report
2. Draft Transportation Expenditure Plan
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 muchneeded 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.
Attachment 1
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 Measurerelated 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.
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.
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 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 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, costsavings, 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 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 selfhelp 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.
Draft 11/20/25 pg. 1
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 data1).
• 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.
Attachment 2
Draft 11/20/25 pg. 2
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 intersection, 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 Jurisdiction.
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%)
Draft 11/20/25 pg. 3
SLOCOG shall allocate no more than 1% of annual revenues for administration, planning, reporting, auditing, and program oversight.
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:
Draft 11/20/25 pg. 4
(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 (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.
Draft 11/20/25 pg. 5
b. Expenditures identified by type (i.e., capital, operations, administration, etc.), and program or project.
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.
Draft 11/20/25 pg. 6
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.
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.
Draft 11/20/25 pg. 7
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 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 Draft 11/20/25 pg. 8
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.
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, Draft 11/20/25 pg. 9
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- 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 RTPconsistent 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 Draft 11/20/25 pg. 10
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. • 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.
Draft 11/20/25 pg. 11
• 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.
• 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.
Draft 11/20/25 pg. 12
• Actions may be approved by a simple majority of members present, provided the quorum is met.
Term of Membership
• 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.
Draft 11/20/25 pg. 13
• 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.
Measure Duration
This Transportation Expenditure Plan shall remain in effect for 30 years as approved by San Luis Obispo County voters.