The Morro Bay City Council removed the planned purchase of Morro Elementary from the city’s current budget, a procedural adjustment officials say has no impact on the city’s effort to acquire the historic campus.
The change, approved during City Council budget deliberations on May 26, shifts the $5.3 million purchase from the current fiscal year budget—which ends June 30—to the city’s upcoming fiscal year budget beginning July 1.
Mayor Carla Wixom said the adjustment is tied strictly to timing, noting that escrow on the property is not expected to close until Oct. 31, well into the next fiscal year.
“This has zero impact on the purchase,” Wixom told New Times. “That’s still moving forward.”
The city entered escrow earlier this year after unanimously approving a $5.3 million purchase agreement with the San Luis Coastal Unified School District in March. The nearly century-old campus was appraised at $10.2 million and has become a focal point for ongoing community discussions around housing, historic preservation, recreation, open space, and future civic use.
Despite its removal from the current budget cycle, Wixom said the acquisition remains a top priority and is fully accounted for in the city’s longer-term financial planning.
During budget discussions on May 26, City Manager John Craig described the overall spending plan as structurally sound despite growing fiscal pressure.
“This is a fiscally responsible budget,” Craig explained. “It’s in a challenging time that we have the entire funds budget. All the different funds that we have is our $52.6 million. It keeps the city financially sound.”
Craig said the city is confronting a difficult financial environment where expenses are increasing faster than revenues.
“Revenues are plateauing, costs are rising. The city is being honest about that dynamic,” he said during the meeting. “We’re looking at expenditure growth. We know that it’s outpacing our revenue growth. We are taking proactive steps now to address that situation before it becomes dangerous or becomes a crisis for the city.”
He added that the proposed budget includes $9.6 million in capital and infrastructure investments across 11 projects, including street paving, harbor repairs, water line improvements, upgraded police radio communications, and the purchase of a new wildland fire engine.
“These are investments in the safety and reliability of the community,” Craig said. “And it’s not just maintenance.”
The largest single capital expenditure remains the Morro Elementary purchase.
“It’s a major milestone,” Craig said. “Acquiring the Morro Elementary School site is one of the City Council’s top priorities this year. Again, $5.3 million. This is a very significant community investment. The budget is built around that and completing that acquisition with financing factored into the budget we have here.”
Council members agreed to remove the purchase from the current fiscal year budget because the transaction will not close before June 30. Instead, it has been shifted into the next budget cycle, when the sale is expected to be finalized.
Financing for the purchase is still being evaluated. Current projections assume the city may rely in part on loans to complete the acquisition, though Wixom said no final decisions have been made.
“We very well most likely will take out a loan,” Wixom told New Times. “But we don’t know what that debt service would look like yet, and nothing is set in stone.”
The city is also exploring whether surplus property sales could help offset costs. One potential asset is the former teen center site on Atascadero Road near Morro Bay High School, recently appraised at about $2 million.
“Our hopes are to have that potentially sold and that revenue dedicated to the purchase of the school,” Wixom said.
Although Morro Elementary closed as an elementary school in 2001 due to funding reductions, the campus remains active today, housing a public Montessori school, preschool programs, and Shoreline Calvary Chapel.
The city’s due diligence period on the property runs through the end of August. Community input is also expected to continue this summer, including a city-hosted workshop scheduled for June 24. ∆
This article appears in June 11-18, 2026.
