Having already taken steps to close a $122 million gap in the city’s budget last summer, Oakland continues to face a staggering financial crisis caused by a pandemic, a weakened economy, and overspending by the police department.
The city was already facing an additional $62 million shortfall that still needs to be accounted for before the current fiscal year ends on June 30, 2021. The city administration recently cut $29 million from the current year budget by reducing some services, laying off remaining part-time employees, reducing pay for non-unionized city department heads, and reducing police and fire overtime spending. But that still leaves a projected shortfall of $33 million that, according to City Administrator Ed Reiskin, has to be closed before the end of June.
“We’re in a very deep hole,” said Reiskin at a City Council committee meeting Monday. He noted that $33 million represents roughly 5% of the city’s general purpose fund, the bulk of the city budget, which pays for services like the fire department, libraries, parks and rec, police, and planning.
According to a report presented by Reiskin to the council’s finance committee yesterday, those cuts were just a preview of even bigger budget shortfalls the council will need to fix this spring as they draft the city’s next two-year budget, which runs from July 1, 2021, to June 30, 2023.
“When we start to look at the next two fiscal years we’re looking at potentially even more significant shortfalls,” said Reiskin.
City staffers predict that over the next two years, Oakland will face a $150 million shortfall in its general purpose fund. Members of the City Council received Reiskin’s report with a mixture of concern, questions, and caution.
Council President Nikki Fortunato Bas said the pandemic has shown “how under-resourced and vulnerable our communities are,” but asked that the administration present more detailed information at future meetings before the council takes action.
Several councilmembers have expressed skepticism about the city administration’s predictions regarding how badly revenue will drop. The mood in yesterday’s meeting was tense at times as councilmembers questioned city staff about budget numbers and the cuts the administration has already made.
“I want to continue to make sure we, as a council, are getting answers to our questions in a complete and timely manner from the administration,” said Bas, “and that we’re working together in good faith for the city.”
Toward the end of the meeting, District 3 Councilmember Carroll Fife and at-large Councilmember Rebecca Kaplan questioned Reiskin about the $29 million in cuts he recently ordered.
According to Reiskin’s report, the cuts were made “in consultation with city leadership.” Kaplan pointed out that Reiskin did not consult with the councilmembers. Reiskin answered that he wasn’t obligated to consult with the council about the cuts.
Fife then questioned whether Reiskin was permitted to make the cuts himself, or whether the council first needed to declare a fiscal emergency. Reiskin replied that the city charter permits him to “curtail expenditures” within the approved council budgets, if necessary.
City employee unions have pushed back against the city administration’s characterization of how bad the budget situation is, and whether layoffs, furloughs, or service cuts are necessary.
“It’s our fervent desire that the council be allowed to allocate city funds as they see fit with the input of their communities and unique insight into the needs of our city,” said Zac Unger, president of the Oakland firefighters union, during a period of public comment in the meeting. The firefighters union has asked that $10 million in funds the city expects to receive from the Coliseum Authority next month be used to reverse cuts to the fire department that recently resulted in the closure of three fire engines.
Nichola Peraino, a researcher with the union SEIU 1021, which represents about 1,000 city workers, told the council at yesterday’s meeting that the union’s members want the council to focus on finding new revenue, possibly by holding a special election later this year to vote on a tax measure that could raise millions for the city. He didn’t specify what kind of tax this would be, but Bas and Kaplan recently told The Oaklandside that one option could be reauthorizing Measure Z, a parcel tax that funds public safety services.
Julian Ware, who has worked for the city for 18 years, told councilmembers he’s opposed to budget cuts the administration has already made, and to future cuts because he thinks the city will be able to close much of the budget deficit with money it holds in its general-purpose fund reserve.
“We were told years ago that this is for a rainy day fund. A global pandemic clearly qualifies as such,” said Ware. He asked councilmembers to spend this money, estimated at $45 million, and other funds like the $10 million expected from the Coliseum Authority, to close the budget deficit.
Others told the councilmembers they believe more federal aid will soon be available, making cuts unnecessary, or far less than what appears necessary now.
“With the new administration in Washington, I think that we will be getting aid from the government,” said city worker Felipe Cuevas, who is president of SEIU 1021’s Oakland Chapter.
Although the city used about $37 million in federal CARES Act funds and $3.6 million in FEMA reimbursements to balance last year’s budget, Reiskin has cautioned against waiting on federal aid. “Staff is hopeful that the City will receive Federal Aid, but Council and the public should clearly understand, that WILL NOT be enough to resolve our significant fiscal problems; difficult choices will still be necessary,” he wrote in his report to council.
Councilmembers said the city should flex its influence in Washington, including with Vice President Kamala Harris, who was born in Oakland, to try and garner more federal support.
“Our mayor, this is a time, given the national political stage, that she can use her high-powered contacts in Sacramento and Washington D.C., and her personal friend in the White House, not only to lobby for federal relief to cities but also to help with the refunding of our safety net,” said Bas.