Category Archives: City Council

On May 26, and at additional meetings in June, Oakland’s City Council will be considering one or more of the three budget proposals submitted on April 29 by Mayor Jean Quan. Mayor Quan has named the three budget proposals Scenario A (All Cuts Budget) Scenario B (Cuts Plus Savings from Employee Concessions) and Scenario C (Cuts, Plus Employee Savings, Plus Income from a Presumed $80 per Parcel Property Tax).

Make Oakland Better Now! (MOBN!) has combed through these documents, and still has many unanswered questions. The answers may be available, but as far as we can tell, they don’t appear in the budget documents. In our first two posts, here and here, we asked what the budgets told us about City priorities. In the coming days, MOBN! will raise more questions  and try to explain why the answers matter.

A “reserve” consists of money set aside in each year’s budget as protection against unexpected surges in expenses or drops in revenue.  An appropriate reserve is essential to responsible budgeting because not every expense, nor every element of income, can be accurately predicted two years in advance.  Oakland Ordinance No. 12946, Section A.(1), requires that Oakland set aside a reserve of 7.5% of its General Purpose Fund, which may be appropriated by Council “only to fund unusual, unanticipated and seemingly insurmountable events of hardship of the City, and only upon a declaration of fiscal emergency.”

One would expect that in the General Purpose Fund, the required reserve would either be a budget line item, or that the budgeted revenues would exceed expenditures by the required 7.5%.  None of the proposals has a General Purpose Fund reserve line item that we have been able to find.  And here is how revenues and expenditures compare:

Scenario A

Scenario B

Scenario C

At a budget town hall on Tuesday night, Acting City Administrator Ewell stated that we would be unable to know what the reserve amounts would be until the City had closed its books for 2010-11, which would likely be this fall.  In other words, if the City finishes this fiscal year with a positive GPF balance, that balance, plus with the minimal positive balance in Scenarios A and B or less the negative balance in Scenario C would constitute the City’s reserve for 2011-12.  Mr. Ewell acknowledged that this was not likely to amount to the 7.5% required by Ordinance No. 12946.  In fact, it seems likely there will be no reserve – and therefore, no margin of error – at all.

The City Council adopted its reserve policy in 2009 as part of the last two-year budget process, and in response to a situation where Oakland was starting a fiscal year with a reserve of only $9 million.  The ordinance requires a 7.5% reserve in the first instance, and allows that reserve to be appropriated only to meet a need which is “unusual, unanticipated and seemingly insurmountable.”  Certainly the City is having a difficult time balancing its budget.  But is that difficulty “unusual?”  Is it “unanticipated?”  If not, is a no-reserve option even legally an option

Part Two

On May 26, and at additional meetings in June, Oakland’s City Council will be considering one or more of the three budget proposals submitted on April 29 by Mayor Jean Quan. Mayor Quan has named the three budget proposals Scenario A (All Cuts Budget) Scenario B (Cuts Plus Savings from Employee Concessions) and Scenario C (Cuts, Plus Employee Savings, Plus Income from a Presumed $80 per Parcel Property Tax).

Make Oakland Better Now! (MOBN!) has combed through these documents, and still has many unanswered questions. The answers may be available, but as far as we can tell, they don’t appear in the budget documents. Our first post was at A Better Oakland, here. In the coming days, MOBN! will raise more questions here at Oaktalk and try to explain why the answers matter.

As stated in MOBN!’s last post, one way to identify the city’s priorities is to look at how it actually spends its money and where it makes its budget cuts. Interpreting the three scenarios for this purpose; however, presents challenges.

Each budget scenario includes reductions which have not been applied to individual departments or programs. In Scenario A, Mayor Quan proposes a reduction of $13 million in savings from mandatory leave without pay, fewer internal service fund transfers and unspecified reorganizations. In Scenarios B and C, she proposes reductions of $29.8 million in savings, substituting unspecified employee concessions for the mandatory furloughs. But since these reductions are not allocated to departments, there is no way to determine–under any of the scenarios–what will be spent on any department, let alone any program.

Furthermore, although much of the city’s discussion of budget problems focuses on the General Purpose Fund (GPF), this is only about 40 percent of the city’s overall budget. If Oaklanders are to understand how the city is setting its priorities, we need to have a clear understanding of spending from all funds; however, in each of the budget documents, all of the savings from either mandatory furloughs or employee concessions are shown as if they were realized from the GPF–many city employees are paid, in whole or in part, from other funds, many of which are restricted. It seems unlikely that the Mayor plans to furlough only employees paid out of the GPF. So this raises yet another question: How can the city plan balance its GPF with either unilateral or negotiated labor savings that, by their nature, are applied across all funds?

Without denigrating the importance of any city department or program, the police and fire departments, museum, library, parks and recreation, human services, public works and community and economic development are most directly involved in providing services to Oaklanders. Of these departments, the only ones whose overall budgeted expenditures in Scenario A (before the unapplied $13 million reduction) are lower than their final budgeted expenditures for the 2010-11 fiscal year are the museum, library and human services. The museum is being turned over to the Oakland Museum Foundation under an agreement reached a year ago, thus funding from the City is being reduced by 100 percent. Library expenditures are being reduced by 83 percent, with the city giving up its Measure O library fund. Human services expenditures are being reduced by 2.1 percent. Budget increases for other departments (before the unallocated reductions) include fire services (4.2 percent), parks and recreation (4.5 percent), public works (1.8 percent) and community and economic development (5.6 percent).

To be fair, the above percentages don’t include the unallocated furloughs and other savings. The budget documents don’t tell us how these reductions will affect individual departments.  But if we proportionately allocate the reductions across all departments, the effect would be as follows:

Also, to be fair, the police department sustained the largest cuts of all at the beginning of the 2010-11 fiscal year when Oakland reduced the department’s administrative costs by over $100,000 and laid off 80 police officers. So the big picture under Scenario “A” is this: over the years 2010-13, the largest cuts are to police and library services.

What city priorities do these cuts reflect? A cynical Oakland resident might well suspect that the cuts have been chosen to get the unions’ attention during negotiations and the public’s attention in a parcel tax election.

Mayor Quan and the administration will no doubt respond that there was simply nowhere else to make the big cuts. Is that true? In the coming days, MOBN! will be posing questions that need to be answered so we can learn what all of our choices are and choose the route that works best for Oakland.