Oakland Budget Deficit and Proposed Solutions

The City Administration recently submitted a revised budget estimate which   projects a 2020-21 fiscal year-end negative balance of -$62.29 million. This is the result of a myriad of factors caused by Covid-19 and police overtime spending. And if this isn’t enough bad news it is very possible that things will become worse as a result of an extended economic recovery, the failure of the Federal government to provide added funding and long-term budget challenges at the state level. Here is the report

The first element of the deficit is reduced City revenues as a result of Covid-19. Of particular note is the 1st chart which demonstrates the magnitude of the current downturn “The economic shock in April, May and June was more than three times as sharp as the previous record — 10% in 1958 — and nearly four times the worst quarter during the Great Recession.”

Oakland General Purpose Fund (“GPF”) Tax Revenues reduction peak to trough was greater for the last 18 months than for the entire 4 years of the great recession.

The second element of the deficit is the unfunded police overtime. Unfunded overtime is a long-term budget problem which was studied and well documented by the City Auditor in a recent report. Here also is a recent report from Chief Manheimer on this subject. This report demonstrates the many valid reasons for this expenditure.

Having acknowledged the reality of this problem, and the very real possibility that the situation may worsen, City Administrator Ed Reskin on Dec. 20th submitted a report on the initial actions that have been taken to close the shortfall. However as stated in the report “Unfortunately, these initial devastating but necessary service reductions will close only $29 million of the $62 million projected deficit. “

In its proposal the City Administrator proposes reducing funding to the OPD for Operation Ceasefire.  This causes us much concern.  Here are our views:  Make Oakland Better Now! and Oakland Community Organization (now “Faith in Action Eastbay”) strongly supported having Oakland reinstitute a properly operated Operation Ceasefire, and we strongly supported Measure Z as a means of providing the services necessary for Operation Ceasefire. Data released by academics and a more recent study by The Giffords Law Center showed that Operation Ceasefire  caused a significant reduction in Oakland gun violence.

For a variety of reasons, over the past two years, gun violence has significantly increased throughout California, and in Oakland.  By way of example:  In the past year, Oakland murders have increased 38%, and firearm assault has increased by 71%.  In its reports, OPD likes to show a percentage comparison of the current year with the average of the current year and the previous two years.  Our preference is a similar comparison between the current year an average of the three previous years.  Based on this, the 2020 murders are 46% more than the average of the three previous years.  And 2020 firearm assaults are up by 74% over the previous three years.

Based on the Giffords report and the recent tragic data, we strongly believe it is a mistake to decrease the funding for Operation Ceasefire. The reduced funding for Operation Ceasefire only saves roughly $1 million out of the current $29 million in cuts. Make Oakland Better Now! believes that the $1 million can be cut elsewhere without such a dramatic impact on violence reduction.

Staff has indicated that it intends to present the Council with a full report on the deficit and the options for closing the deficit at a Council meeting presently scheduled for Jan 12th.

We will be reporting in more detail on this budget crisis in the near future.

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