Grover Beach and Arroyo Grande city councils are considering ballot measures to convert from general law to charter cities to cut municipal costs and give local businesses an edge in providing goods and services.
But Pismo Beach officials rejected the idea four years ago because the change could ultimately cost more than it might save.
“Those folks who are considering it ... ought to look carefully at the second and third consequences,” cautioned Kevin Rice, Pismo Beach city manager.
But the process is just getting started in Grover and Arroyo, and it could be July before voters know if the question will be on their Nov. 6 ballots.
“They have not committed to anything yet,” City Manager Steve Adams said of the Arroyo Grande council, which reviewed a draft city charter April 24 at the first of three required public hearings.
A second hearing is set for June 12, with the third scheduled July 10.
Grover Beach council members are moving along a similar path.
“They directed the staff to begin drafting a charter,” City Manager Bob Perrault said, adding he expects to present the draft at the first public hearing May 14.
The second hearing is scheduled June 18, with the third and final public hearing set for July 16.
“Then it could go to the November ballot, unless the council makes significant changes to the charter,” Perrault said.
Why go charter
Grover Beach, Arroyo Grande and other California cities were driven to consider charter city status by a perfect economic storm that brought a tsunami of rising costs and a drought of revenues.
As charter cities, they could set policies that would save a lot of money in a variety of ways.
“The charter provides a city with the ability to control purely local affairs,” Perrault explained.
Those include elections, salaries for city officers and employees, land use and zoning procedures and public works financing, among others.
For example, Adams said, the cities could save money by conducting elections by mail.
“It would also allow us to give preference to local businesses in providing goods and services,” he said.
The cities could also have projects funded and built by volunteers using supplies and services donated by local contractors.
But the biggest benefit would be not having to pay prevailing wages on locally funded public works projects.
Perrault didn’t estimate how much that might save Grover Beach.
But based on other cities’ experiences and estimates, the savings could be as much as 30 percent.
For Arroyo Grande, that could translate into annual savings of $50,000 to $200,000, Adams said.
Why not go charter
But Rice warned potential savings could be swallowed up by the “second and third consequences” of operating under a charter.
“Initially, it’s appealing to people — ‘Oh, we won’t have to pay prevailing wage,’” he said.
But he noted a charter would allow nongovernment groups to put issues on the ballot.
That happened in San Luis Obispo when an initiative to require binding arbitration in labor disputes was placed on the ballot.
Voters approved the proposal and, as a result, the city later was ordered to pay several years of back salaries and benefits to some of its employees.
That was right about the time Pismo Beach was looking into becoming a charter city.
“When the council heard about that decision, they said, ‘Thanks, but no thanks,’” Rice said.
About 25 percent of the municipalities in California are charter cities, according to the League of California Cities.
They range from the state’s largest — Los Angeles at 3.8 million people — to the smallest — Vernon at population 112.
The list also includes Bell, which shares not only charter status with Vernon but also recent charges of corruption involving exorbitant city salaries and excessive taxes.
To allay fears the same abuses could happen in Arroyo Grande, the staff is proposing a charter that would not increase the power to levy taxes and would use state law to set salaries.
There are other potential drawbacks, as well. One is a claim that the quality of work goes down when prevailing wages aren’t paid.
But Adams said the city doesn’t have to forgo paying prevailing wages.
Another disadvantage is the initial cost. Adams estimated putting the issue before Arroyo Grande voters in November would cost $5,000.
Perrault put the estimate at $15,000 to $19,000 for Grover Beach and noted changing a charter would require going through the same process again.