Tasked with zeroing out the biggest budget shortfall in Oakland’s history, Mayor Sheng Thao issued her plan today, proposing restructuring of major departments. Thao says the changes will cut costs and improve services without laying off any city workers.
Oakland’s mayor is legally required to propose a budget every other year on May 1. Thao’s $4.2 billion budget covers core city services like police, fire, roads, sewers, and other infrastructure. The proposal resolves a $360 million deficit in the General Purpose Fund, which makes up about 40% of city spending. Unlike the previous budget cycle, Oakland doesn’t have federal COVID stimulus money to cover any shortfalls.
Thao, who has been in office less than four months, wants to fix this historic financial hole by merging several departments, making some cuts to police and fire, drawing down emergency funds, and streamlining services in other departments.
On Wednesday, Thao will present her budget at a special City Council meeting. City Council must approve Thao’s budget by June 30, and over the next few weeks its members will likely propose amendments. Oakland residents will have opportunities to share their thoughts about the budget at City Council sessions and a series of town hall meetings in May.
The Oaklandside examined Thao’s budget plan and summarized its major changes in spending.
Consolidating departments—the biggest change
Thao’s administration wants to merge several departments that have similar services and clients. The mayor’s office says this will save up to $2 million per year and make the city’s programs more efficient in the long-run.
If the budget is approved, Thao would merge the city’s Housing and Community Development Department with its Community Homelessness Services program, which is currently under the Human Services Department. These programs already work closely together helping unhoused residents secure temporary and permanent homes, and Thao’s administration says this change will allow for better coordination. The mayor’s budget message also noted that Measure U, which was approved by voters last November, will help the city spend over $200 million on affordable housing over the next two years—the largest single investment in Oakland’s history.
A second merger would combine the remainder of the Human Services Department—including the city’s Head Start program, which promotes education and family services—with the Parks, Recreation, and Youth Development Department. This will create a new entity called Department of Children, Youth and Families.
The third major consolidation would combine the Planning and Building Department with the Economic and Workforce Development Department. This change reflects the mayor’s interest in improving the city’s permitting process for new development projects.
As part of this restructuring, the mayor also wants to reorganize how departments report up the chain of command to the city administrator, which oversees most of the city’s vital services. Departments will report to the administrator through channels that are grouped by function:
- Internal and Compliance Services: This channel will include Finance, Human Resources, Information Technology, Workplace and Employment Standards, the city clerk, and civil rights and compliance staff.
- Infrastructure and Economic Growth: This channel will host the new Planning, Building, and Economic Development Department, Department of Public Works, and Transportation.
- Community Services: This channel will cover Children and Youth Services, Housing, Development and Homelessness, Libraries, and Animal Services. It will also contain Homeless Administration, which is essentially encampment management and separate from the new homelessness and housing department.
- Community Safety: The fourth channel contains Fire, Police, emergency services, Violence Prevention, and neighborhood services.
Police and community safety
As we mentioned last week, Police and Fire are by far the largest departments in the city with the biggest budgets. To pencil out the deficit, Thao is having each department tighten their belts.
Thao proposes cutting the number of sworn police officer positions in OPD’s budget in 2023-2024 to 710 from 726 in the previous year. These positions are currently vacant, which means no officers will lose their jobs. Staffing in the police department is a complex process. For example, while the current budget covers 726 officers, there are only 706 in the field. OPD uses overtime to stretch its manpower when officers are lost through retirement or long-term leave. The mayor’s proposal would reduce the sworn overtime budget by 15% across the department.
Thao’s proposed budget actually increases OPD’s spending over the next two years. OPD’s current biennial budget is $683 million. Thao proposes increasing it to $722 million over two years. Thao also wants to maintain six police academies where new hires are trained, same as the last cycle.
Another major change would be the complete civilianization of OPD’s Internal Affairs Division. Currently, sworn police officers are responsible for investigating allegations of police misconduct. In the second year of the budget, 2024-2025, Thao wants to shift 16 officers out of internal affairs so that they can investigate crimes against the community like robbery, shootings, and burglaries. Thao would replace them with 16 civilian investigators working for the Civilian Police Review Agency, a branch of the Police Commission.
Thao also continues to prioritize non-police community safety programs. Her budget maintains the baseline funding through the general fund of the Department of Violence Prevention, but the department’s overall budget is shrinking to $41.8 million from $48 million. Thao wants to expand investment in the Mobile Assistance Community Responders of Oakland (MACRO) program, which has civilians respond to some non-emergency 911 calls.
Fire Department cuts save $20 million
The proposed budget would delay the rollout of a 25th fire engine for the Oakland Fire Department for two years. It would also “brown out” one existing fire engine on a rotating basis, meaning the chief of the Fire Department will have to suspend the operation of one engine. According to the budget, this will create slower response times for neighborhoods nearest to the browned-out engine. The department will consider how to mitigate the effect of brown outs on neighborhoods with the highest existing inequities.
These moves are anticipated to shave over $20 million dollars from the deficit.
Infrastructure and IT security
Thao’s budget includes a $213 million investment toward repairing and upgrading roads, parks and recreation facilities, libraries, storm drains, and non-road infrastructure. The city is already on a five-year paving plan, and $74 million is being allocated over the next two years for street resurfacing projects, which will be critical for parts of the city hit hard by the storm surge over the winter.
The budget also sets aside over $6 million for traffic safety programs—a major priority for all city councilmembers. This funding will cover traffic calming programs, safer intersections, and safe routes to school. An additional $1.6 million will be spread over the next two years to pay for bike and pedestrian plans.
Thao also wants to maintain the Keep Oakland Clean and Beautiful programs, which are considered essential to preserving and attracting businesses, especially in underserved neighborhoods. The city plans to clean over 1,200 encampments annually. The mayor’s proposal cuts Parks, Recreation & Youth Development’s transportation budget by 50%. This funding is used for shuttling youth to and from recreation centers and other programs.
The city is also ramping up its cybersecurity infrastructure in the wake of the devastating ransomware attack several months ago. The proposed budget adds $10 million over the next two years to upgrade and harden the city’s cybersecurity protections.
Many of the departments the mayor wants to bolster play critical roles raising revenue for the city. For example, the Transportation Department is installing parking meters around Lake Merritt over the next two years, which is expected to generate annual revenue of more than $1 million.
Hiring
In March, the San Francisco Chronicle reported that Thao had initiated a hiring freeze in several departments, including her office, the city administrator, finance, human resources, and the Department of Violence Prevention. In a message accompanying the budget, the mayor’s office claims freezing hiring hundreds of positions paid for through the General Purpose Fund will save the city approximately $133 million over two years. But this will not affect hiring in departments that have other sources of revenue besides the General Purpose Fund. Thao’s staff said the mayor intends to fill more than 600 positions in other departments, including the new Planning, Building and Economic Development Department, Transportation, Housing, and Public Works. The proposal also calls for the creation of a “Vacancy Strikeforce” in HR to focus on filling vacancies in these departments.
The mayor also wants to invest $100,000 in partnering with community colleges and high schools to recruit candidates for local civil service jobs. The budget also funds community programs like the Summer Town Camp.
According to the proposed budget, Thao plans to save millions of dollars by restructuring hundreds of civil service jobs so they draw their salaries from funds that aren’t running deficits.
Campaign finance overhaul delayed
One casualty in the proposed budget is the Democracy Dollars program. Last November, Oakland voters approved a ballot measure to encourage civic engagement by giving residents money vouchers they can use to support candidates in city elections. The money for the vouchers, $4 million, is supposed to come from Oakland’s general fund. As a result of these cuts, vouchers and outreach about the program will be delayed until the 2026 election cycle.
Emergency funds and new revenue
Like many cities, Oakland has a number of “rainy day” reserves it can use in emergencies. Thao’s budget would rely on some of this money to reduce the deficit. For example, under the mayor’s proposal, the city would completely exhaust the $12 million in its vital services stabilization fund. But not all the funds will be used—for example, the city is not touching the $15 million in its General Purpose Emergency Reserve Fund.
One reason the general fund is experiencing a deficit is that the city fell short of the revenue it expected to collect from taxes levied on property sales and hotel guests. But Thao’s administration expects to rake in tens of millions of dollars through a progressive business tax on large companies that voters approved last year.
