BUDGET BITS NO.2 – WHERE DOES OAKLAND’S MONEY COME FROM (Part 1)?

This is the second installment in our series on the 2015-17 budget process. The mayor’s budget is scheduled to be released on Thursday, so between now and then, we’ll summarize some of the observations in the city’s recently published Five-Year Fiscal Forecast, which help set context for the budget decisions to be made over the next two months. For this and the post that follows, we summarize the Forecast’s discussion of revenue sources, limitations on those sources and projections for revenue. 

As a starting point, remember that the city budget consists of the General Purpose fund – the fund over which the city has the most discretion in spending – and all other funds, many of which are restricted due to their source (e.g., grant funds designated for a specific purpose), City Charter restrictions (e.g., the 3% of the general purpose fund that must be assigned to Office For Children & Youth under the Kid’s First! Charter amendment) or other reasons. There is a tendency for the city to look at the General Purpose Fund budget and “All Funds” budget separately, and they do so in the Five Year revenue forecast.  Here’s how the city is calling General Purpose Fund revenues for the next five years:

Table 10

And the City projects that one way or another, about half its General Purpose Fund revenue is related to real estate values:

Budget pie chart

Meanwhile, all funds projections look like this:

Table 11

Note, however, that the rows for “Interfund Transfers” and “Transfers from Fund Balance” don’t reflect real income.  They are just transfers between accounts.  With this in mind, we think the actual projected totals, and growth rates, should look like this (in millions):

All Funds — Revenue in Millions FY 2014-15 Midcycle Adopted Budget FY 2015-16 Forecast FY 2016-17 Forecast FY 2017-18 Forecast FY 2018-19 Forecast FY 2019-20 Forecast
Total  $1,148.69  $1,133.79  $1,149.63   $1,174.77  $1,202.58   $1,227.88
  ($251.72)  ($158.65)    ($159.68)  ($159.72)  $  (162.17)  ($164.06)
Revised Total     $896.97     $975.14  $989.95 $1,015.05  $1,040.41  $1,063.82
Growth Rate 8.71% 1.52% 2.54% 2.50% 2.25%

Overall, the projected numbers are positive: General Purpose Fund revenues are projected to rise between now and 2020 from over $491 to $543 million, and the jump is bigger if you take out the transfers. If the forecast is accurate, it represents the first multi‐year period of revenue growth since before the 2008 recession.

In a post tomorrow, we will look at some of the limitations on revenue sources.

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