Oakland City Council hears dire report on state of municipal budget
For the first time on Tuesday, residents are getting a clearer picture of the budget issues happening in the city of Oakland thanks to a special council meeting. The presentations showed a budget shortfall of about $93 million - even more than projected.
The meeting was set up to explain to council members that they needed to start making immediate cuts or the city could be facing insolvency.
"Councilmember Gallo, you've asked on repeated occasions from us to let you know when it is critical that we take action. I want you to hear clearly at this dais that we must take action over the course of the next month and a half to preserve our solvency. I want to make sure that that is very clear," said Bradley Johnson, the budget administrator for the city of Oakland.
Led by its two biggest overspending departments, police and fire, the city's is facing an estimated $115 million one-year budget shortfall that, when added to the money required to restore its emergency reserve fund, will require a total of about $143 million to erase.
Officials with the city's finance department sounded the alarm last week, emphasizing the need to balance the budget now or declare a fiscal emergency.
"The two largest departments in your general purpose fund are your fire department, which is projected to overspend by $34.5 million or 21 percent of its budget, and your police department, which is expected to overspend by $51.9 million or 16 percent of its budget," said Johnson.
Oakland is currently operating on its so-called "contingency budget" of $758 million, which went into effect after payments for Oakland's $125 million sale of the Coliseum were rescheduled.
That budget includes dozens of cuts that have already been enacted, from initiating a hiring freeze to putting the brakes on "unfinalized" contracts and city grants to halting business travel, among other things.
Still, in order to avoid insolvency and potential bankruptcy, many millions of dollars in additional cuts to services are likely.
"To me really there are only two choices. One is either radically cut staff or get staff to make substantial concessions," said Dan Lindheim.
He was the city administrator in Oakland from 2008 to 2011 and now is a professor at UC Berkeley. He said there is no way to get out of the city's current budget crisis without making some kind of cuts to public safety.
Members of the council knew this was coming as they were counting on money from the sale of the Coliseum to help balance this year's budget and the next.
They even put a contingency budget in place to outline which departments would be cut if the Coliseum deal fell apart or was delayed. AASEG, the group buying the property, has already missed the Nov. 7 payment to the city of $10 million but insists the deal is still on track and it will pay the full balance of $110 million by the end of the fiscal year.
Councilmember Nikki Fortunato Bas noted that the current budget quagmire is the result of several factors, including reduced federal spending, high interest rates, the state's rules on taxing property and the city's persistent overspending.
She and other council members also mentioned possibly putting a sales tax increase on an upcoming ballot that could raise up to $20 million a year, the administration's efforts to draft "a strategic plan that will improve our organizational structure," and the need for a study focused on police staffing so the council can make more informed decisions about OPD's budget.
"And finally, I also requested an independent audit by the city auditor of our revenue collection," Bas said. "We have to make sure, with all of the revenue that is owed to us, that we're collecting every dollar of it."
During the public comment portion of the meeting, several city staffers, union leaders and community members urged the council to avoid cuts to vital city services like street and sidewalk repair, after-school and summer programs for youth, illegal dump site cleanup and cultural activities and institutions.
Julian Ware, president of the union IFPTE Local 21, said a coalition of municipal unions drafted a plan they believe will help the city balance the budget while avoiding the most painful cuts.
It includes reducing police overtime by $24 million to $52 million, staffing up parking enforcement and other revenue-generating departments, reducing "non-service" spending and cutting the growth in senior management's pay by up to $8 million, among other things.
The proposal will result in $142 million to $204 million in potential new revenue and savings, which would be enough to close the city's budget gap, according to the union's report.
"We're here today to share our disdain over dangerous and feckless budget cuts proposed by the city administration, which threaten critical services to our residents," Ware said. "Cut waste not services."
The council did not take any action at Tuesday's meeting and instead will discuss which cuts to make at the next meeting on Dec. 3, which is after the Thanksgiving holiday.
They'll also meet again Dec. 5 for a closed session to talk about labor union contracts and whether any cuts can be made there.