An unusual double header of Monday and Tuesday City Council meetings will introduce wide-ranging legislation focused on budget-balancing, mayoral and council vacancies, and proposed parcel and sales taxes this week. Council will deliberate on several time-sensitive legislative items on both days. Some of those must be passed by the 17th; others before the end of the year, or as lock-step succession votes necessary to place items on April’s special election ballot.
The scheduling of an additional Monday Council meeting was originally intended to take some of the load off of what could be a fraught already-scheduled Tuesday Council meeting where both the budget legislation and mayoral/council vacancy legislation would be heard. But in very last minute wrangling on Friday morning, both agendas disappeared from the City's "Legistar" legislative website. When the agendas reappeared, the items that will begin the circuitous legislative path for two potential tax ballot measures had been moved to Monday's meeting via Rule 28. City officials confirmed that the Monday Special Meeting was solidified by the deadline of noon Friday.
Budget Balancing Legislation [12/17]
The late year budget balancing recalls the sudden cuts of 2020, when then-City Administrator Ed Reiskin told Council members that he was making a similar level of cuts to police and Fire on Christmas week on behalf of Mayor Libby Schaaf to avoid insolvency. At that time, Reiskin moved unilaterally and only briefed Council on the changes in a public meeting.
This time, Jestin Johnson the City Administrator under Mayor Sheng Thao, has included Council in the process to some degree, and the Council's votes are necessary for some of the budget fixes to shift funds. In keeping with the City Administrator's admonition to pass budget balancing legislation to begin curing Oakland's $128.9 MM deficit before the year’s end, balancing legislative actions split in two phases will come before Council at the Tuesday, 12/17 regular meeting. Some of those actions are already within the power of the City Administrator to enact and some have already begun, per Johnson's comments at public meetings—Council would "affirm" those by vote as they also pass the funding legislation and a "extreme fiscal necessity" declaration necessary to use them.
The first wave of cuts and re-allocations would see OPD’s overtime spigot wound down by $25 MM, and two OFD station “brownouts” as well as the cutting of some grant allocations and contracts.
Council Will Vote on Transferring Funds to GPF
The budget balancing legislation contains ordinances that can only be enacted by Council vote that will allow funds that normally can’t be used for general GPF costs to be shifted: including the Sugar-Sweetened Beverage Tax; the Affordable Housing Trust Fund [AHTF]; and the Vital Services Stabilization Fund. An additional vote must be taken to rewrite the legislation behind the AHTF to allow its use in the General Purpose Fund, which will remain in the language unless reversed by another Council vote. At a special meeting last Monday, Dan Kalb expressed concern that the fund could be abused in the future with the new legislation and added an amendment to limit any use of the fund to no more than 50% of its balance.
The City Administrator says some savings will be achieved by shifting costs, while some revenues have been re-assessed and expected to be end the year higher than originally estimated. The language of the legislation notes that the Council will be “affirming” actions that the City Administrator is authorized to carry out on their own. But other actions like the special fund releases, and the transfer of the self–insurance liability fund and emergency fund surpluses necessary in the balancing equation require Council authorization.
Several City Administrator cuts have already provoked opposition, including those in Phase 1. Dozens of speakers came to a City Council meeting last week to protest Cultural Arts Grant cuts, and many were concerned about the OFD brownouts.
Despite the expectation [most likely from corporate media] that a significant number of comments would be about police, all of them have been about fire and arts and culture funding about twenty speakers in.
— The Oakland Observer (@Oak_Observer) December 9, 2024
Deep Cuts Foreseen in January and February "Phase 2"
All of the Phase 1 changes, unless modified by Council, would happen before the end of the year, according to an accompanying report. The closures, fund shifting and cost-cutting representing about $113.8 MM get the City within nearly 90% of the level necessary to balance the budget. But the last 12% necessary for a balanced budget require a second wave of deep, more painful cuts in January and February—an additional four firehouses would be browned out along with 91 city-wide layoffs centered in Public Works, Human Services and the civilian roles of the OPD.
No sworn officer can be laid off due to contract stipulations, but one academy currently delayed due to under-enrollment would be cut in the first phase, and another budgeted for April would be delayed in Phase 2 and likely started in the first month of the new fiscal year next July [with an open question if there will be enough trainees to fill it].
You can download a spreadsheet of all of the Phase 1 and Phase 2 cuts here:
Council can return with budget amendments at any time to modify the changes, though time to do so would run out for the current council in weeks–and as a result of the recall and vacancy declarations at the same meeting Tuesday meeting, it would be Nikki Fortunato Bas’ last as CM and Council President as she moves to the Mayoral interim role and then on to the District 5 seat at the ALCO Board.
Council President Bas did add proposed amendments with directions to the legislation that would have the City Administrator study potential OPD overtime abuses, and investigate limiting OPD overtime to a maximum of 500 hours per OPD officer.
The admonitions on OPD overtime, one of the main drivers in the deficit, parallel a recent report on San Francisco's police department that found systemic abuse of overtime pay by officers there. Oakland's City labor unions have warned that unregulated OPD extension of shift overtime by individual officer won't be captured in the proposed overtime limits proposed by the City Administrator.
Bas’ amendments also direct the City Admin to explore:
—an audit and investigation on failures to collect Business Tax revenue
—potential consolidation of DPW and OakDOT, and merger of some Human Services operations into Parks, Recreation and Youth Development and others in Housing and Community Development
—preparation for a July 2025 academy that would begin immediately upon the new fiscal year
The legislative packet also includes the IFPTE 21 produced "Oakland's Roadmap to a Sustainable Budget", which contains valuable data and recommendations, and reflects the proposed OPD overtime and Business License Tax oversight in Bas' amendments.
Revenue Generating Tax Ballot Measures [12/16]
Along with the legislation, the Finance Department and CM Kevin Jenkins are rushing forward with ballot measure legislation that would generate more revenue from a new parcel and sales tax respectively in coming years as a way of confronting Oakland’s flagging revenues.
The Finance Department’s parcel tax proposal would generate revenue to fund the City’s independent oversight agencies, the City Auditor, Public Ethics Commission [PEC], Community Police Review Agency [CPRA], Office of the Inspector General [OIG] and Police Commission. The parcel tax would generate about $23 MM per year that would have the dual impact of saving the City $23 MM in GPF, while more fully funding agencies like the PEC that have languished without adequate staffing. The PEC has been unable to fund its charter-mandated Democracy Dollars program with city funds alone due to back to back budget deficits, and the Finance Department envisions the additional funding finally doing so.
The legislation for an Oakland sales tax increase of .5 cents has been mentioned in reports of recent weeks, and Jenkins spoke briefly about his intention to bring the sales tax legislation at a recent meeting, although he sounded a negative note when he said that San Diego voters had recently declined to pass a similar increase there. Jenkins sales tax proposal would raise the City’s sales tax by half a cent in order to generate $20 MM in new revenue to stabilize the City's service provision. Jenkins and his co-sponsors, Treva Reid, Nikki Fortunato Bas, and Rebecca Kaplan argue that the City’s sales tax level is actually lower than several of its surrounding neighbors and a rise has been due for some time. The sales tax would be overseen by the state.
Although the report argues the tax would have a sunset date, the legislation does not appear to indicate one in its current form.
Still, the twin legislation is being introduced before Council in a rush in an effort to begin the legislative process in time for placement on the April 15th special election ballot. The effort is complicated by the short lead time, Council rules on passing tax ballot measures and the change in council membership between the beginning and end of the process.
The sales tax legislation, as an ordinance, needs two readings on top of the City’s rules requiring ballot measures be heard by Council at least twice. Both measures would have to be passed by the next Council 88 days before April 15 to be placed on the ballot. That will give the new council little breathing room in engaging the tax measures, with final passage necessary by January 18, less than two weeks after its first session begins. Council will be taking only the first of several steps by hearing the legislation on Monday, and no final passage is possible.*
Tax Ballot Measures Require "Emergency" Declaration per California Law for April Ballot [12/17]
**The sales tax ballot measure would normally not be placeable on a special election ballot, so the Council would have to vote to declare an “emergency” based on state law to do so. The "emergency" is distinct from the City's emergency declarations, and is likewise different from the fiscal emergency declaration discussed in other contexts. The emergency declaration functions specifically to add general tax ballot measures to the special election and it would require a full 8 votes affirming that a “severe budget imbalance” emergency exists. This kind of emergency declaration appears to only be mentioned in the California Constitution regarding extending or creating taxes via ballot outside of a general election.
The tax legislation will be heard on 12/16, with the emergency declaration scheduled for 12/17. CM Janani Ramachandran appears to still be on leave, so its not clear how Council will clear the 8 vote hurdle.
Measure BB Transfers to Cover Infrastructure Bond Measure Pause [12/16]
With the implementation of the contingency budget, the Finance Department appears to have made the unilateral decision to hold Oakland’s Measure infrastructure bonds off the market. As such, Capital Improvement Projects that would have relied on the funds will be put on hold for the rest of the fiscal year. In order to ameliorate some of the impact to the City’s repaving program which would have relied on $51 MM of bonds revenue, OakDOT will substitute unused Measure BB funds, to cover about $1.27 MM of the costs, combined with another $13.8 MM in Measure KK bonds revenue that wasn’t used last year. Oakdot’s report says it doesn’t expect more than 30 miles of Oakland streets to be repaved in FY 25 [the next six months of the fiscal year] given the far lower amount. Many repaving projects will be pushed to FY 26.
In another legislative item, CMs Rebecca Kaplan and Bas propose concretizing the delay and reaffirming a new schedule to the Measure U and KK allocations in the next fiscal year. They also propose to use a $10 MM tranche of Measure BB funds to patch some of the projects, including the Lakeside Bicycle Safety Project, which was spurred by a lethal vehicular collision around the lake. The project was feared to be postponed indefinitely. Another set of legislation would instruct Housing and Community Development to allocate an additional $10 MM in Measure U funds expected in 2025 to the current NOFA.
More about other items in the agenda, which includes the vacancy and election declarations, in "At Council" weekly update...
*previous version of the text read "and no vote is possible ", but is more accurately written as "no final passage is possible".
**only the sales tax measure, a "general tax" requires the emergency measure for April's ballot. As of this correction, however, the parcel tax measure for independent oversight agencies did not advance to the next City Council meeting and is for the time being dead.
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