OAKLAND — Whatever happens within the highly contentious Nov. 5 election is not going to change a lingering truth that hangs over the town: Oakland is spending extra money than it makes.
Despite an expected $95 million infusion from the town's coliseum sale next May, Budget Director Bradley Johnson said this week that cuts to some city services are simply unavoidable over time given a $120 million deficit, even when the cash arrives on time for the following two-year budget cycle.
For the whole 2023-24 fiscal yr that led to June, the town generated 14.9% less revenue than expected, in keeping with a report released this week that lays out specific numbers from the ultimate quarter of the yr.
The current fiscal yr, which ends next June, is in a “difficult situation,” the report said, with expenses expected to exceed revenues by $30 million.
“This reflects deeper, persistent imbalances between revenue and spending,” the report said.
This is on account of falling revenues again, including from taxes on real estate sales and business licenses, in addition to the Oakland police's continued overspending on officer extra time.
Those cuts could well include the police and fire departments, which Johnson said together account for three-quarters of Oakland's total general purpose fund.
“To the extent that they are not cut, it will mean even more disproportionate cuts to all other functions the city performs in its services,” Johnson said at a City Council committee meeting earlier this week. “There are no easy answers to this.”
Oakland's structural financial problems have persevered for several years, despite federal funding keeping the town afloat in the course of the COVID-19 pandemic.
Facing a historic deficit in the summertime of 2023, Mayor Sheng Thao proposed a budget — eventually approved by the City Council — that froze quite a few unfilled positions and merged some departments to avoid layoffs.
But home sales didn’t increase the next yr, due partially to the extremely high rates of interest imposed by the Federal Reserve to combat inflation in the course of the pandemic.
On a smaller scale, the town remains to be missing the revenue it had planned for 2023-24 from the sale of the old Raiders training facility — a net gain of $12 million that hasn't come despite a buyer, San Francisco Real Estate The Prologis company got here forward a few yr ago.
The property is currently leased to local soccer franchise Oakland Roots SC, which uses the power as a practice facility. Team officials declined to offer details on the status of the deal.
Thao tried a second time to avoid layoffs by freezing much more jobs and using all proceeds from the sale of the Colosseum for one-time expenses.
At the time, the sale had not yet been accomplished, leading the City Council to approve a proposed emergency budget that reduced the Oakland Police Department's officer positions even further than Thao's proposed budget called for, and a discount in service – generally known as a “Brown Out” – through multiple firefighting stations.
This emergency budget is now in effect after the backers of the group that purchased the Coliseum decided to not make additional payments to the town without insuring their ownership of the property against the town's dangerous financial situation.
But the worst cuts haven’t yet taken effect, because the town desires to drain reserves and unused funds within the meantime.
Thao, who faces recall within the upcoming election, has said in interviews she has no selection but to make use of revenue from the Coliseum for one-time salaries and other costs – a move sharply criticized by financial analysts who argue that The money must be invested for long run needs.
At this week's meeting, Fire Chief Damon Covington said the vegetation fire earlier this month would have been “virtually impossible” to combat if these deep emergency budget cuts had already occurred.
“We would have a different conversation,” Covington said of the damage from the fireplace, which officials said was ultimately limited to at least one constructing.
City Council members Janani Ramachandran, Treva Reid and Noel Gallo had voted over the summer to maneuver forward with the emergency budget immediately, although they countered criticism on that front with accusations that Thao had presented them with two bad options on the eleventh hour.
Financial experts say the town could have an alternative choice: It could ask unions to renegotiate their current labor contracts and conform to less money. Former city leaders took this route as the town tried to get better from the Great Recession within the late 2000s.
Union leaders didn’t address the prospect on the meeting earlier this week – which could rely upon how five City Council seats are elected in November, in addition to the recall of the mayor. However, they warned that further staff cuts wouldn’t be tolerated.
“I’m here to say,” said Julian Ware, the pinnacle of IFPTE Local 21, “deeper cuts cannot be the answer.”
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