Amid the turmoil at Oakland City Hall, a devastating budget crisis still looms

OAKLAND — There was already loads of cause for stress at City Hall before a series of FBI raids in Oakland last week forged a shadow over Mayor Sheng Thao and the flow of political money within the Bay Area.

Oakland has been grappling with one other crisis for months: a projected $155 million budget deficit, largely because of tax revenues which have fallen far wanting expectations. And the deadline to pass a balanced budget is fast approaching.

By the top of this week, the Oakland City Council must pass the mayor's proposal to shut the revenue gap while also addressing a structural deficit expected next 12 months.

But the FBI's mysterious raids on Thao's family home and three other addresses with ties to the politically influential Duong family – which has a recycling service contract with the town and donates generously to California politicians – were a significant distraction for City Hall.

Thao has made no public statements because the raids, aside from a vehement protestation of her innocence on Monday. Her absence from public life has led critics in the town to query who’s running City Hall, but observers say there’s little cause for concern.

“Everyone is in a state of panic, wondering, 'What's going to happen to the city? The mayor is missing!'” said Dan Lindheim, the previous city manager and now a professor of public policy at UC Berkeley. “The reality is nothing is going to happen. The mayor is not involved in the day-to-day operations. That's the city manager's job.”

The City Council is answerable for reviewing and voting on Thao's budget proposal, which calls for freezing a lot of vacant city positions to fill this 12 months's gap and using revenue from the private sale of Oakland's share of the Coliseum complex to offset next 12 months's deficit. The council plans to fulfill Friday to finalize the budget.

Thao's proposal calls for freezing 18 more sworn police positions, along with the 16 already slated for freezing, bringing the entire variety of full-time sworn police positions from 712 to 678.

Those cuts wouldn’t be based on layoffs but on officers leaving or retiring – a possible consequence provided that 91 officers are eligible to retire this 12 months and about 80 others are currently on administrative or medical leave.

Still, next 12 months's budget will reduce Oakland's police force to the bare minimum required by a tax reform passed by voters in 2014 that requires Oakland to have at the very least 678 cops on duty at any given time. If the number falls below that, the town risks not receiving the funding related to the measure.

OAKLAND, CALIFORNIA – JULY 27: The Coliseum in Oakland, California, on Wednesday, July 27, 2022. (Nhat V. Meyer/Bay Area News Group)
OAKLAND, CALIFORNIA – JULY 27: The Coliseum in Oakland, California, on Wednesday, July 27, 2022. (Nhat V. Meyer/Bay Area News Group)

That baseline itself — and a variety of other staffing minimums — may very well be repealed if the City Council votes to repeal it and declares a “state of extreme financial necessity.”

The mayor's proposal also calls for freezing quite a few positions in the fireplace department, including 20 vacancies for paramedics and 10 positions on the Community Police Review Agency, which deals with police misconduct.

The sale of the town's share of the Coliseum complex – including the stadium, arena and land in between – is predicted to generate around $63 million for Oakland next 12 months and $40 million within the 2025/26 fiscal 12 months. However, the terms are still being finalized with the group's buyer of the property.

Thao's proposal has drawn criticism from financial analysts – not since it involved selling the Colosseum, which had long been the town's plan, but since the proceeds can be used for one-time salaries somewhat than longer-term needs.

“Unless they have another Coliseum to sell, they have nothing to close the budget with in the next few years,” Lindheim said in an interview.

“This time will help mitigate the immediate impacts so that the deeper work to correct the structural imbalance can be done in time for the upcoming biennial budget process,” city spokesman Sean Maher said, adding that officials “do not take this time for granted.”

The city can be preparing an emergency budget that may go into effect if the African-American Sports and Entertainment Group – led by Oakland native Ray Bobbitt and backed by investment fund Loop Capital – fails to fulfill its payment deadlines in September and January.

While these more drastic cuts would still not end in layoffs, they would come with the closure of two of Oakland's six police academies – something Thao says he desires to avoid in any respect costs – and the closure of one other 60 fire department positions.

Thao's critics urged the mayor to not make staff cuts and as an alternative pressure Oakland's unions to renegotiate the extensive cost-of-living adjustments that were approved at the peak of inflation in the course of the pandemic.

Despite the criticism, Thao has been adamant about avoiding layoffs in the course of the budget crisis that officials have in comparison with the Great Recession. It's just one among the crises plaguing Oakland in an election 12 months.

On the day of the FBI raids, City Councilwoman Carroll Fife vowed to give attention to passing the budget, calling it her “primary goal right now.”

“I don't want to get distracted by something sensational that none of us have control over. My goal is to provide the leadership the city needs and continue to move Oakland forward.”

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