Tag Archives: City Budget

The State of Oakland’s Finances

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The COVID-19 pandemic is creating financial challenges for all levels of government, and the City of Oakland is no exception. Numerous revenues will decrease, if they haven’t already, as the need for municipal services continues. This downturn occurs at a time when the city was facing very significant financial challenges due to underfunded long-term obligations and the emergence of new challenges such as homelessness.

(Read Berkeleyside’s recent coverage: Looming budget crisis ‘like nothing Oakland has ever before experienced’)

Two important reports outlining the state of Oakland’s finances were recently published. We’ll discuss both reports and what they suggest for our city finances. This post summarizes the two reports and provides more details on the City Auditor’s report. The second post will provide more detail on the Finance Director’s report and the Council reaction at its hearing on April 21st.

These two reports are:

1. City Auditor’s report
City of Oakland Financial Condition For Fiscal Years 2012-13 to 2018-19” was prepared  by the City Auditor before the advent of COVID-19. (Its original objective was “to examine the City’s financial well-being by calculating financial ratios, analyzing trends in the City’s financial data over the past seven-year period, and comparing the results to other cities of similar size.”) But the letter of transmittal does note that the current COVID-19 pandemic will likely dramatically compound the issues raised in this report.  It reaches a series of conclusions about the fraught condition of Oakland city finances and recommends corrective actions.

2. Oakland Finance Director’s report
The Finance Director’s new report “FY 2019-20 Third Quarter Revenue & Expenditure Report (Preliminary)” concludes with this stark projection:

In sum, we project that, absent rapid adjustments by the City Council, the COVID- 19 pandemic will result in a GPF budget shortfall over the next fourteen months of approximately $80 million ($26.17 million + $53.78 million).

The report contains a list of a number of actions already taken by the administration and recommends a number of policy considerations for the Council. It states: ‘The point is that – absent an unexpected State or Federal bailout – this problem will not be easily resolved, and it will not be fixed by tinkering at the margins. It will require significant action by City leaders.”

So first, let’s take a deeper look at the City Auditor’s report. Here are some notable excerpts:

  • “Oakland does not rank favorably in most financial indicators, when compared to similar-sized California cities.” This is illustrated by 9 Charts that compare Oakland to 7 other similar California Cities.
  • “This report does not include information on the condition of the City’s infrastructure, the citywide asset replacement value, or the funding gap for infrastructure needs because the City does not produce an annual citywide capital asset report.”
  • “This report prepared prior to COVID-19, however, illustrates the City needs to do more to address its increasing pension and OPEB liabilities, quantify its unmet infrastructure needs, and prepare for the future in which, according to the City’s five-year forecast issued in March 2019, expenses are expected to outpace revenues.”

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The report concludes with the following recommendations to City Council to address the City’s unfunded pension and OPEB liabilities:

  1. Convene a retirement advisory group to gather, evaluate, and organize information for a comprehensive solution to address Oakland’s unfunded pension and OPEB liabilities. This Advisory Group will be tasked with designing a plan to impact retirement liabilities on three levels:

    • State/Federal — what legislative changes, if any, are needed to be proposed so that the municipalities may be in better control of their financial future as it relates to pensions.

    • CalPERS — does CalPERS serve the needs of all its member agencies and how can Oakland and other municipalities have a greater impact on CalPERS policies.

    • Oakland — what changes may be made now within the restrictions of CalPERS and State Law, and which of these changes can be agreed to by all stakeholders.

    This process should be convened publicly and have clearly defined processes for stakeholder input, including citizens, unions and employees. The Advisory Group should be comprised of a broad cross section of stakeholders, for example, the City should strongly consider including:

    • Academia and pension/OPEB experts.

    • An independent financial consultant with no ties to the City to perform
    analysis on potential reforms as they are recommended by the Advisory Group.

    • An independent law firm with no ties to the City to evaluate the legality of potential reforms as they are recommended by the Advisory Group.

  2. Form a coalition of cities to find common ground to support comprehensive solutions at the State level and CalPERS.
  3. The City’s Finance Department should provide the City Council with an annual analysis of how the City’s long-term financial position could be strengthened.
  4. The City should develop a reserve policy that is consistent with the GFOA recommendations to maintain unrestricted budgetary general fund balance of no less than two months of general fund operating expenditures.
  5. The City should have a centralized report of fixed assets to be able to monitor changes in the condition of the assets and evaluate cost associated with maintaining and repairing them.

 

We welcome your thoughts. What do you think the City should do to respond to the immediate and long-term challenges facing Oakland City finances?

Oakland City Council’s Parcel Tax to Improve Funding for City Parks, Litter Reduction, and Homelessness Support

(image source: Oakland Homeless Response)

On November 14, Oakland’s City Council passed a resolution to submit a parcel tax to voters on the March 3, 2020 primary ballot.  The amount of the tax will vary depending on forms and usage of real property, but residential property would be taxed at rates of $148 per single-family residential parcel and $101.08 per residential unit for multiple residential parcels with a 50% reduction for affordable housing projects, and for non-residential units, a rate based on frontage, square footage and building area. (Read the Chronicle’s recent article on the parcel tax here, and East Bay Express’ coverage here.) Continue reading

What’s in the New “Oakland Together” Budget?


(This is a post in our Budget Bits series, following Oakland’s mid-cycle budget policy and process. Read our previous updates: post one, two, three, and four.)

On June 24th, the City Council unanimously adopted its two-year, $3.29 billion budget. (The full budget document can be read here.) The final adoption reflected a combination of the Mayor’s Proposed Budget and augmented by $44.4 million in amendments proposed in the “Oakland Together Proposal,” which was a combination of amendments by numerous council Members. The Mayor’s Proposed Budget included the funding needed to continue many necessary city services and required funding for continuing obligations such as bond payments, retirement and healthcare. The Council amendments added increased services in a number of critical areas. 

Make Oakland Better Now! believes that many of the service issues presented in both the Mayor’s proposed budget and in the adopted budget are critical. However, in the Adopted Budget, the Council took little action to significantly pay down our City’s long-term unfunded liabilities of $2.7 billion nor did it significantly increase the protections in the Rainy-Day Fund. Oakland also has unfunded Capital projects of $2 billion.

We are now in longest positive economic surge since WWII. However, there have been numerous indications that economic conditions may change during the period of this two-year budget. How will Oakland respond? Continue reading

Council President Kaplan’s Budget: Our Response

Oakland Budget
Tonight, at a special meeting of the City Council, the Council will receive the recommended amendments to the Mayor’s proposed budget from City Council President Rebecca Kaplan (you can read the budget here).  Oakland’s Finance Department issued its review of President Kaplan’s budget, urging Council to reject the budget calling it “unbalanced” and “illegal with respect to provisions of the City Charter, City ordinances, ballot measures, and State law. ”

(Read recent coverage on the two budgets from The San Francisco Chronicle and the East Bay Times.)

Debate over budget priorities and changes will continue. Make Oakland Better Now! sent a letter to City Council (available here) and urged them to consider the following issues concerning President Kaplan’s proposed budget changes: Continue reading

Oakland’s Proposed Budget: Our Recommendations

(This is a post in our Budget Bits series, following Oakland’s mid-cycle budget policy and process. Read our previous updates here and here.)

The Oakland City Budget is now in the process of being reviewed by the Council. At a special meeting on June 10th, the Council will receive the recommended changes to the proposed Budget from Council President Rebecca Kaplan. It will also receive the recommendations from the Budget Advisory Commission.

Oakland is facing significant budget challenges and pressures. With the long and short term in mind, we reviewed the Mayor’s proposed budget, the priorities and adjustments. Our key findings and recommendations our outlined below.

Police Department

For years, we have recommended and supported major changes to the Police Department. It is important to support Ceasefire, the accountability programs instituted by the Monitor, and the Police Commission. The Proposed Budget does this and we fully support it. The Budget also includes $475,000 for the ShotSpotter program, which we support.

Parks and Street Lights

The Landscape and Lighting District (LLAD) was created 30 years ago to fund lighting and parks, but it did not include an inflation factor. As a result, these services are woefully underfunded. The budget has a one-time, fix which we support. But we strongly recommend the Council take steps to place a measure on the March Primary Ballot (yes, it’s in March) to fix this problem.

Fire Safety 

The Proposed budget adds 11 new positions to the Fire Prevention Bureau – covered by fees – to modernize and augment Fire Inspections, Vegetation Management, and Fire Plan Check reviews, and meet the Bureau’s operational needs to improve public safety outcomes. It also invests $1.1 million in one-time funding each year for Wildfire Prevention (total of $2.2 million) and authorizes $100,000 each year ($200,000 total) for implementation of the City’s Vegetation Management Plan. MOBN! supports this proposal and also recommends the Council consider re-submitting the lapsed tax funding for wildfire services.

Homelessness

The Proposed Budget provides $12 million in grant funding for numerous homeless services, in the second year it adds $3.8 million from the newly established Vacancy Tax, and adds staff for the newly created (by Measure W) Commission on Homelessness. It is also expected these funds will be augmented by new appropriations from the state.

MOBN! supports this budget item and further recommends that the County of Alameda become a more active and cooperative participant in addressing homelessness. We also support the creation of a new position, a person who would oversee all of the services that Oakland provides to the homeless, and who would work with the State and County to coordinate efforts and funding.

Capital Investments

As a result of the passage of Measure KK, which MOBN! strongly supported, the budget contains $110.6 million for transportation related infrastructure, including$75.8 for street paving and $30 million for affordable and transitional housing. This is in addition to $32.68 million authorized in the 2017-19 adopted budget. MOBN! supports these actions.

Fiscal Health

The Budget makes continued progress on financial stability by reducing the use of one-time revenues for ongoing expenses and continues paying down negative fund balances pursuant to Council approved policies. MOBN supports this action.

The Proposed budget also implements the Administration proposed and Council approved plan to create long-term funding for the underfunded Other Public Employee Benefits (OPEB) program, which funds healthcare benefits for retired employees. This is a great first step, but the Administration and Council must continue to review and seek solutions to the ever-increasing pension obligation of PERS. No clear solution has been identified except for the potential revenues Split Role Initiative, which is now scheduled for the 2020 General Election ballot. We will have more on this as the policy develops.

 

We urge all members of MOBN! and interested Oaklanders to weigh in on the 2019-21 Budget! Hearings are scheduled on June 10th, June 18th, and if needed, June 25th. Make sure you’re represented in this process.

Budget Bits 2: Oakland’s Economic Reality

As the city of Oakland prepares its 2019 – 21 budget, Make Oakland Better Now! has reviewed the documents presented to the City Council. Our summary below will provide background for the budget actions in the months ahead. Clearly, the city is facing significant budget challenges.

In February, the City Council received a budget briefing on the financial realities the city will face in the next two years. Then in March, the five-year fiscal forecast was presented to the Finance and Management Committee. Both of these reports show the city is facing a structural deficit with substantial financial challenges. Here are the highlights:
Continue reading

Budget Bits: Oakland’s Budget Process Is Underway

For many years and several budget cycles, Make Oakland Better Now! has provided Oakland residents with tools to help understand the city budget. We’re proud to continue our analysis, as Oakland’s Mayor, City Administrator, and City Council move toward adoption of the midcycle, 2019-2021, budget.

So far, we’ve seen some budget priorities from individual City Councilmembers including D2 Councilmember Nikki Fortunato Bas , D3 Councilmember Lynette Gibson McElhaney, and D6 Councilmemeber Loren Taylor. The Finance & Management Committee has also been given an updated Five-Year Financial Forecast, which you can read here.

But what do Oaklanders want to see in the new budget? Back in February, a community survey – now required – was presented by FM3 Research, the survey specialists contracting with the city. The full report is available here. It’s quite lengthy, but there are a couple of key points worth highlighting. Continue reading

Oakland’s Mid-Cycle Budget: Gun Tracing, Illegal Dumping and More

                                                                                                      (Photo:Jeremy Brooks)

On Tuesday, June 19, Oakland’s City Council will be considering the usual mid-cycle adjustment to Oakland’s budget. The administration’s initial proposal is here.  (Its supplemental reports are here and here.) We’ve spent much time evaluating all of the current possibilities, and considering them in light of our priorities:  public safety, public works, transparency and accountability, homelessness reduction and budget responsibility.  Our recommendations to the Mayor, City Administrator and City Council are shared below: Continue reading

Make Oakland Better Now’s Budget Positions: Oakland Police Department


Introduction

As we analyze Mayor Libby Schaaf’s proposed 2017-2019 budget, we see there are many important issues, some long-term and some short-term. Today we’ll briefly look at long-term budget issues involving the Oakland Police Department, how the budget impacts police and public safety. Continue reading

Follow the Money: The Impact of Oakland’s 2017-2019 Budget

Join Make Oakland Better Now! and SPUR for a discussion on Oakland’s budget – the process, the costs, and the economic priorities shaping our city. Our panel will include Budget Director Sara Schlenk, Budget Advisory Chair (and MOBN board member) Ed Gerber, a representative from Open Oakland, and others.

Follow the Money: The Impact of Oakland’s 2017-2019 Budget
When: Wednesday, June 7 at 6.pm.
Where: SPUR Oakland (1544 Broadway)
RSVP on Facebook Continue reading