What Happened?
In a five hour budget meeting Tuesday, 8 council members struggled, often divisively, with concerns over the risk of budgeting an unconfirmed $63 MM worth of revenue from partial payment of the City’s Coliseum stake. The meeting had been continued from a budget deliberation on Friday.
A bare majority of the Council supported Thao’s main budget plan that relies on the Coliseum sale, with a contingency plan of severe cuts should it fail, along with the Nikki Fortunato Bas budget team’s amendments to it. CMs Janani Ramachandran and Treva Reid after several denunciations of Thao’s budget amendments and process, then spent over an hour shoehorning their original amendments into the Bas amendments to the Thao budget. Bas and her team had already incorporated a good deal of the Ramachandran/Reid/Gallo amendments on security ambassadors for their districts, and Thao had also added back a partial restoration—a total of about $600K of restorations for ambassadors.
But Ramachandran and Reid pressed to have the full amount they’d requested in the amendments, $900K. Bas and her team added the requested amendments—the $900K Ramachandran and her team had originally asked for. After joining the other CMs in voting for amendments to the budget proposal that increased the original amount proposed by Bas’ budget team for corridor-specific ambassadors, the two CMs then voted against the budget they had just voted to amend, along with Noel Gallo. CMs Bas, Rebecca Kaplan, Kevin Jenkins, Carroll Fife and Dan Kalb all voted for the budget.
Public Safety Cuts in Alternative Budget Comes into Focus for First Time
Throughout the meeting, Reid and Ramachandran passionately denounced Thao’s budget, calling it irresponsible, and added recriminations against Bas and her budget team for carrying out what they implied were deceptive and exclusionary practices. Reid also implied that Finance and City Administrator Office staff recommended the alternate budget amendments.
“I have stated that this option is fiscally irresponsible. Before we received option two, where we had more information to look at, I believe that option two, which was recommended by finance, with all the challenges that are still noted, is a more fiscally responsible response,” Reid said.
Ramachandran stood by her original demand to delay the budget for a month, despite having been cautioned by multiple city staff at previous meetings and this one that the delay to entering the budget parameters into the payment system could lead to the loss of millions of dollars and cause serious chaos and delays. At Tuesday's meeting, however, staff added more information about potential effects from Ramachandran's plan–including the very thing Ramachandran said she was hoping to avoid, signals to the financial markets that Oakland is a bad investment bet.
“I will restate that yes, administratively, there might be logistical issues of delaying this vote forward...so I know I don't have enough votes today to postpone this vote till the end of July, which was my original proposal. I urge my fellow council members to please consider not making the wildly irresponsible choice and choosing to spend money that we don't have and we don't know how much and when we're going to get,” Ramachandran said.
Reid for her part struggled to defend her positions on adopting the Alternative budget amendments without the Coliseum sale, with some of her underlying assumptions rebutted in real time on the dais by City staff. Both Budget Director Bradley Johnson and City Administrator Jestin Johnson both replied that they had not recommended either budget and did not intend to, for example.
City Administrator Johnson noted that the existence of the alternative itself came about from a request to have more options—apparently from the Bas budget team—not from a staff decision.
“We're not here to make a recommendation one way or the other. Once we had a proposed budget and the recommended budget with certain triggers, we were asked to provide additional options as we worked closely with the budget team. So that's what you have before you so we're not making a recommendation one way or the other. So I just want to make that very clear. That's why you have the other options for you all to consider as a body,”
Reid also found herself in the awkward position of fighting for a budget that would likely cut on the ground police staffing—a reality that had gone unmentioned in previous public descriptions of the budget*, but that was included in a new report as the Finance Department included more specificity to the alternative plan’s dire budgeting. Johnson himself noted in his presentation that he was presenting a “new” slide at the request of Council President Bas with the academy breakdown in the best case Option 2. Even with the Coliseum funding, the alternative budget would cut the last police academy in FY 24-25—a de facto loss of officer hiring that had not been discussed in previous meetings.
Reid struggled to find a way to argue that the missing police academy would not affect OPD’s “operational strength”. Reid said that only two academies graduate per fiscal year and thus the number of police officers would not be affected in FY 24-25, despite having waged the opposite struggle to add a late academy in a budget amendment in 2021. Despite Reid’s claims, however, OPD reports to the Oakland Police Commission in June show that the last academy of FY 24-25 would begin in February 2025, and would graduate in July or August, the first month or two of FY 2026. While Reid's argument is technically true, the next fiscal year would begin next July with five or six months of unrefreshed attrition and a five to six month wait for the new academy to commence and graduate.
One of both Reid and Ramachandran’s critiques against Thao’s process–and the late introduction of a budget alternative—was that it had prevented Council members from scouring the budget for alternatives that would have secured funding for police and fire. Reid and Ramachandran both argued that with more time under the assumption that the sale would not go through, she and others would have been able to find cuts to save police and fire spending.
But Budget Director Johnson told both CMs that there would be likely no available changes to the budget allocation available even with a significant search for alternative cuts, given its bare-bones level of funding that already cut $12 MM cut to services city-wide—aside from a series of austere budget alternatives provided by the Finance Department that included cuts to senior centers, recreation centers and all GPF homelessness funding.
“If you make $63 million of non-public safety cuts to adopt option two without impacting public safety [which already has $12 MM in non-public safety cut]…the inherent nature of that is, most of your social services, most of your administrative services, most of your services to seniors would have to go away, and that sort of definitionally is going to mean layoffs come October,” Johnson said.
Staff Suggest Credit Rating Will Suffer, Bonds Could be Halted in Thao Budget
The alternative set of budget amendments is a controlled descent into austerity with more security and flexibility. But risks if the contingency is necessary in the Mayor’s budget, however, are also sobering, as Finance Department staff noted again and again both in this meeting and last, including: the canceling of all city contracts, browning out five fire stations and cancellation of two police academies, as well as significant halt to contract processes and services.
But the credit rating argument and attendant loss of access to the bond market—outcomes that staff say are likely even with on time payments for the Coliseum—was clearly the biggest recurring hurdle for Bas and other CMs backing the Mayor’s budget. But both Bas and CM Dan Kalb argued that they’d spoken to both the City and County bond advisers, who’d told them the risk to the City’s access to bond markets was minimal. Bas argued that balancing the risks with the need to continue levels of city services and public safety was the broad responsibility of the Council, to which the role of legal and financial staff was only advisory.
“We as the city council, we are charged with a number of different things, including being responsive to our constituents, being fiscally responsible, and we are trying to make the best decision possible today…again, we've done our due diligence. We've had an opportunity to speak with bond advisors, including Oakland's municipal bond advisor. We will have access to the bond market,” Bas said.
Kalb said he had also spoken to bond advisors and that he was confident the sale would go through.
“I do believe that the Coliseum sale will go through…and I believe that will happen based on everything I've heard from all the parties. I believe that based on my discussions or our discussions with two experts in the bond world, including one that the city uses and the city recommended that we talk with and one that the county recommended we talk with, that while there's some risk, it's not substantial. And I believe that the most likely risk, if at all, is one notch lowering of our very excellent credit rating that we have now,” Kalb said.
Both Kalb and Bas have argued that the City’s credit rating is higher than comparable cities, and that while the latter are lower, they still access the bond market.
Ramachandran and Reid Insist on Full Implementation of Amendments
CMs Ramachandran, Reid [and nominally, Gallo] submitted their amendments to the Thao mid-cycle budget amendments weeks ago, mostly focused on about $900K in spending for security ambassadors for her district, district 7 and district 5.
In the latest iteration of the Thao budget and Bas team amendments, Thao had added in $300K, and Bas another $300K, as well as responding to some other amendment requests like finding funding for police evidence technicians and a Fire Captain. Kaplan also successfully added amendments [see here].
But during the deliberation it became clear that the additions would not be enough to satisfy Ramachandran and Reid, who struggled bitterly to reach the funding level for ambassadors they’d initially asked for from the Thao/Bas amendments, despite the fact that the two had spent the first three hours of the meeting maligning the Thao/Bas budget amendments and insisting they would not support them.
At one point, both CMs Fife and Kalb seemed incredulous about Ramachandran and Reid’s fight for amendments that they would ultimately vote against. In response, Ramachandran claimed she had not yet telegraphed her vote.
“If I'm understanding correctly, this is an ‘irresponsible budget’, but there's a request to add ambassadors to option one…are these amendments being requested to be put into option one of the budget or option two?” Fife asked.
Kalb, who was chairing the meeting while Bas was recovering from Covid and participating remotely, also hinted at the contradictions in Ramachandran’s position.
“I will note that you're requesting those to be added even though, as you—and you have every right to do—even though you're making it clear you're voting against this motion anyway, even if we do add them, is that correct?”
Fife returned to her question.
“So with the request to add these items into the budget, option one by council member Ramachandran, would you then vote to support option one?”
Ramachandran snapped back,
“That has nothing to do with these amendments. I don't have to say how I'm going to vote before I take the vote,” Ramachandran retorted.
Kalb broached the idea of taking a recess to do the math on adding the amendments. When the CMs returned, Kalb announced that the Bas team had incorporated the Ramachandran/Reid amendments [Gallo did not participate in the discussion nor advocate for the amendments], making the budget, the Thao/Bas/Reid/Ramachandran/Kaplan budget. But having successfully amended the budget, both Reid and Ramachandran proceeded to vote against their own budget. The budget passed with the nays of Gallo, Ramachandran and Reid.
Per council directives passed alongside the budget, the City administrator will return in late July to update on the Coliseum sale. Before the budget was discussed, the Council also passed all the necessary attendant waivers to maintenance of effort for various ballot measure funds, as well as the waiver for minimum Measure Z staffing, necessary for either set of budget amendments.
*during the meeting, City staff also clarified that there would be sufficient time in the second option to reverse fire engine brownouts before they take effect if the Coliseum sale were to go through, correcting statements reported by this publication last week.
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