“It Was Going to be Catastrophic”: City Departments Outline Budget Balancing Actions... and How Much Worse They Would Have Been
At a Special City Council meeting on Wednesday to introduce Mayor Sheng Thao’s mid-cycle budget amendments and discuss current fiscal year budget balancing, City Department heads for the first time outlined the scope of fixes for the General Purpose Fund [GPF] budget crisis that spans this fiscal year and the next. They described a grim budget reality had the Coliseum sale not happened as it did.
As projections for the looming back to back deficits grew more dire, City Administrator’s Office [CAO] asked Department heads to develop a plan to cut up to 20% from their budgets. Department heads like Fire Chief Damon Covington painted a stark picture of the cuts that would have been necessary in FY 24-25 had the City not solved its issues with one-time funds from the sale of the Coliseum. Covington revealed that under that cost-cutting process, OFD had faced $47 MM in cuts from its FY24-25 budget. With such a department-wide impact, OFD administrators couldn’t bring themselves make the decision about where to cut.
“We had a hard time coming up with the numbers that were requested of us [when] the city came and asked us to come up with our own budget cuts. So they did it for us. And it was going to be catastrophic,” Covington said in a surprisingly candid response to Council questions.
Covington noted that closing firehouses and losing firefighters would have been the only way to meet the cuts, but the reduced budget balancing burden provided by the Coliseum sale has allowed OFD to maintain staffing levels and day to day functioning in Thao's proposed budget amendments.
Even the less austere measures in Thao’s mid-cycle amendments are challenging, though. Covington noted that OFD's Staff Captain position had been cut for cost-savings, returning current Staff Captains to rank and file firefighter roles—a measure taken to spare the role of Deputy Chief, the only alternative cut.
“Your local firehouse will be able to show up and do what we do. But we have lost both of our staff captains who do an enormous amount of work. They don't work in just one area. They handle our fleet. They handle our public outreach for the fire department. They handle a lot of our grants work because we also lost our grants coordinator. The work that they do, that keeps administration moving and helps the troops on the ground, we’re gonna have to disseminate that amongst people who are already doing the work of three or four people. So it's not a small thing,” Covington said.
“Every department was initially asked to provide proposals to cut 20% of their operations, because that is the scale of what $175 million in reductions looks like. And mind you this is prior to receipt of the Coliseum sale. But that is an item that only became available to us within the last couple of weeks,” Johnson told Council members.
OPD's Superficial Staffing Decrease Hides Increased Budget
Budget Director Bradley Johnson revealed later that OPD’s proposed cut would have been just as proportionately steep at $81.5 MM. Though changes to OPD reconfigure budgeted staffing to 678 officers, down from 696 originally proposed in the FY 24-25 budget and 712 budgeted for in the current fiscal year, Johnson explained that high attrition in the OPD will probably do much to bring the staffing rate far below 700. But Johnson also noted that the budgeting number itself does not necessarily indicate a reduction in staff to the level of 678 officers.
"Attrition rates are relatively high right now so that authorized number will drop relatively quickly. I will also note that officers, depending on their leave status, do not necessarily charge their 'home positions'...the actual charging strength of the department is already below that 678 number right now. Funding at the level of 678, should not—and staying within that service constraint would not—require a reduction in actual positions that are doing work," Johnson explained.
Though largely ignored in the discussion at the meeting Tuesday, Thao's budget amendments give OPD a large increase—the OPD budget is larger than the previous year, and larger that what was originally proposed for the FY 24-25 in the original biennial budget [in the graph below, the FY 22-23 actuals represent an $11.4 MM overage over the budgeted amount that year complicated by use of OPD as a placeholder fund for ARPA monies].
Out-of-the-Box Funding Transfers
During the discussion, Johnson noted that several positions in OFD and its subsidiary department, MACRO, have been transferred out of the GPF in the FY 24-25 budget amendments to unconventional funding sources. Some of OFD’s inspectors will be funded through the Development Services Fund, a source of funds that often has tens of millions in budget surplus, but has a statutorily restricted set of uses confined to construction and planning. Some MACRO funding in Thao’s budget amendments would be covered instead with millions in proceeds from the Opioid lawsuit settlement recently negotiated by the Oakland Office of the City Attorney.
In addition to swapping GPF funds for monies from healthier funds in the coming budget, other budget workarounds to balance this year’s books were also revealed during the meeting and in the finance report. Some capital improvement project funding will be shifted outside of the GPF to Measure U, for example. The shifts will affect developments at Mosswood Park, the Caldecott Tunnel, the Oakland Museum, and Arroyo Viejo Park.
Other expenditure line items being eliminated to balance this fiscal year’s books are actually from amounts budgeted as long ago as 2020 and either unused for their intended purpose, or obviated in some way—either by addition of other funding sources or abandonment of programs. These funds have been carried over to the next fiscal year to await expenditure—some for as long as four years—but Finance Director Roseman told Council members they are now being used to cover the looming end of year deficit. Council balked somewhat at a blanket elimination of carry forwards without some line item explanations—a request for a more robust explanation of the cuts will be heard at a council meeting Tuesday afternoon. Some of the reductions include:
—the elimination of Reimagining Public Safety Taskforce funding either left over from the first iteration, or unused for a second iteration that was previously budgeted in 2021, netting $250K
—about $6 MM unused funds for MACRO that are likely remainder from a $10 MM grant won by CM Rebecca Kaplan as the pilot began in 2021.
—$150K for a “cameras for business corridor” program that never materialized
—$192K for a Scooter/Bike Share Expansion
One of the reductions is $400K for a CPRA database that appears to have been referred to by Director Mac Muir during a presentation to the Oakland Police Commission on May 23. During the presentation Muir also wondered aloud if the City would be freezing the additional 13 CPRA investigators necessary to carry out a partial transition of IAD to CPRA, which had been budgeted in 2023 and planned to begin this year. Though the positions, and transition, were frozen from the budget, CPRA received a small increase in staffing relative to its staffing in FY 2023, though no cuts. At the Council meeting, Muir suggested that the feasibility study and initial steps necessary for the transition could still happen this fiscal year.
Amendments on Top of Amendments
Thao's proposed budget amendments are just that, "proposed" amendments. The Council President's budget team that includes CM Carroll Fife, CM Kevin Jenkins and CM Dan Kalb are this week turning in proposed amendments to the Mayor's proposed amended budget, which include proposed changes to the Mayor's budget as well as new budget requests. Those will be heard in the coming weeks starting June 12. The budget must be passed by Council by June 30.
Additionally, CMs Janani Ramachandran, Treva Reid and Rebecca Kaplan may also turn in their own amendments as they have in the past. All the Council amendments must first be reviewed by the Finance Department and found to balance expenditures with legitimate and allowable revenues—or they cannot be deliberated. During the FY 23-25 budget session, CM Noel Gallo turned in last minute budget amendments that were not costed and had no funding sources and were not allowed into the budget. It's not clear whether Gallo intends to do the same thing this year.
The extent of changes to the services the City and Council carries out through budget amendments may only become apparent after the budget passes and services are affected. The closed session meeting to deliberate and potentially accept the terms of a Coliseum sale deal will be held June 6th, with the agreement for such a sale already scheduled for a June 12th Council meeting.
City Ballot Measures Begin Legislative Process
Several Council and City sponsored ballot measures began their legislative journey at a Rules Committee meeting last Tuesday. Only one ballot measure, the Wildfire Prevention Zone Special Tax, was forwarded out of the Committee to a Council meeting [to be heard this Tuesday]. The others have been continued to future committee meetings to be considered more fully. The ballot measures are:
—Wildfire Prevention Zone Special Tax: The tax envisioned by CMs Dan Kalb, Janani Ramachandran and the City Administrator would be a successor to the Wildfire Prevention Assessment District [WPAD], which for years used a localized parcel-tax in the wildfire-prone areas of the Oakland Hills to pay for and carry out prevention and mitigation efforts. But since 2013, there’s been no dedicated funding source for mitigation efforts in the WPAD areas, which are identified by CalFire as a “Very High Fire Severity Hazard Zone.”
The new special tax would be on the City’s ballot if it passes Council, but only residents of the WPAD would vote on it. WPAD property owners of single family residential parcels would annually pay $99/parcel; multiple residential unit parcels would pay $65/per residential unit. There’s a complicated formula for non residential parcels which will appear on the ballot explanatory narrative.
The WPAD used a different process to determine the area of taxation and effect in the WPAD—the accompanying report describes it as complicated, and the services provided disorganized and open to interpretation and suggests these were contributing factors in the previous failure of a WPAD successor in 2013. The City’s report lists the following as the focus of the special tax plan:
—Implementing a comprehensive vegetation management plan
—Expanding roadside clearing to protect emergency evacuation routes
—Enhancing fire patrols on high-fire danger days
—Expanding goat grazing fuel reduction efforts
—Performing annual inspections of all parcels in the WPZ
—Providing public education efforts
—Providing community oversight and annual auditing of the funds
At Rules, Council Members in the committee were positive about the legislation. Of all the ballot measures, it passed Rules with ease and has already been placed on Tuesday’s council agenda for passage. Once passed, the legislation would lead to a ballot measure for the residents of the former WPAD only, and a 2/3 plus must vote for it to pass.
—Cultural Facilities Infrastructure Bond Measure: The Cultural Facilities Infrastructure Bond Measure would, if passed, authorize the City to issue $182 MM in General Obligation Bonds, the proceeds of which would be used to pay for infrastructure and upgrades to City-owned “cultural” facilities. Those include: the Oakland Museum, Chabot Space and Science Center, Children’s Fairyland and Peralta Hacienda. The City Council passed legislation in 2022 that keeps the current taxation level, allowing new parcel taxes only to be added to the property tax load of residents when a current debt obligation sunsets. As such, there’s no information in the text of the legislation or explanatory report about the extent of the tax obligation for residents—with the assumption that the payments for residents will not increase from their 22-23 levels.
During the deliberation, CM Kevin Jenkins asked for some research into whether an East Oakland Black Cultural Zone could be added to the bond target. The BCZ development at Eastmont mall, however, has not yet been built. It’s unclear how an addition would work with the other structures. Here’s the proposed revenue breakdown:
—The Oakland Museum of California $98 MM
—Chabot Space and Science Center $55 MM
—Children’s Fairyland $22 MM
—Peralta Hacienda Historical Park $9 MM
The deliberation was accompanied by a slideshow detailing significant deterioration, water and seismic damage to all four facilities. Additionally, most of the facilities require ADA improvements. The item was continued to the next Rules meeting to consider Jenkins’ request.
—Public Ethics Commission Strengthening and Modernization
The ballot measure is being brought by the PEC itself and would create charter changes in the way the PEC functions, including:
Limit Commissioner Candidacy: the proposal would broaden the requirements to serve on the Commission. Currently no one on the commission can have been a campaign employee or candidate for City/OUSD office in the past two years before appointment. The proposed changes would also ban anyone who in the previous two years was: a City or OUSD elected official, or the staff or immediate family of an elected official; a candidate for City or OUSD office; a registered City lobbyist; the officer or employee of a political party; or someone who has contributed in the aggregate more than two times the City contribution limits ($1,200 in 2024) to candidates for a City or OUSD office or to a campaign committee making independent expenditures in City or OUSD campaigns.
Proposed changes would also expand campaign participation restrictions to include prohibiting commissioners from being officers or staff of a political party during their tenure; clarifying that the restriction against Commissioners contributing to “municipal” campaigns during their tenure also applies to OUSD campaigns; and prohibiting Commissioners from being employed by or receiving gifts from a City or OUSD elected official during their tenure.
Change the Way Commissioners are Removed from the PEC: Currently Commissioners can be removed by their appointing entity–the Mayor, City Attorney and City Auditor–who bring the request to Council for a vote. The proposed changes would only allow the City Council and Commission to propose the removal of a Commissioner and only through Super Majority Vote.
Increase Minimum Staffing: The proposal would increase minimum enforcement staffing for the PEC from 2 to 4, adding one investigator in FY 25-26 and another in FY 2027-28. Staff could still be reduced during a budget crisis to the same extent other departments would be, but the Council must have first voted for an extreme fiscal necessity [as Council did in 2023].
Legal Counsel for the Enforcement Chief: Providing that the Enforcement Chief may be an attorney and authorizing the Commission to hire or contract for legal staff to assist with the enforcement of laws under the Commission’s jurisdiction.
Mandatory Council action on PEC Legislative Proposals: Requiring that Commission legislative proposals be referred to the City Council for consideration within 180 days.
Complete Ban on Lobbyist Gifts to Officials and Candidates: Prohibiting registered lobbyists from giving gifts to elected officials, candidates, and their immediate family, consistent with best practices in other jurisdictions.
There are other changes, as well. Council officials seemed concerned about the sheer scope of changes, including mandatory staffing and the PEC’s inability to parse its work to weed out dilatory and punitive complaints. The ballot measure was held in committee and will continue to be deliberated at the next Rules meeting.
—Charter Amendment for Mayoral Salary Setting
Council continued this ballot measure to the next Rules meeting without deliberation, it will be discussed Thursday. During an extremely politicized debate about a scheduled Mayoral pay raise last year several months after Sheng Thao assumed the position, Council requested the City Administrator and the PEC return with a ballot measure to embed the role in the PEC and remove it from Council deliberation. PEC also sets the following best practices for setting the salary as follows.
—Every two years, the PEC increases the Mayor’s salary by changing the Bay Area Consumer Price Index (CPI) over the last two years, but capped at no more than 5% over the two-year period.
—Every four years, taking effect at the start of a new mayoral term, the PEC has the discretion to instead adjust the Mayor’s salary to promote greater pay equity and competitive compensation, but by no more than the rate of inflation over the past two years plus an additional 10 percent. The determination would be based on prevailing wages in other jurisdictions and with other department heads.
—The PEC, in its discretion, may waive or reduce a salary increase in any fiscal year in which either (a) the City Council declares that the City is facing an “extreme fiscal necessity” or “fiscal crisis or fiscal emergency,” or (b) the General Purpose Fund (GPF) revenue for the current fiscal year is projected to decline.
A fifth ballot measure proposed by CM Jenkins was withdrawn at his request at a previous Rules meeting. This Thursday, Rules will discuss once more the mayoral salary ballot measure and the Public Ethics Commission ballot measure.
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