Will the latest budget cuts actually fix Oakland’s budget?

More one-time fixes won't solve Oakland's budget crisis

A few weeks ago, we explored why Oakland’s constant state of budget crisis has brought the city to the verge of insolvency. Last week, city council met to discuss how it plans to close the latest $129M shortfall.

Here’s what we know so far about the proposed “fixes” — and how they could affect us all.

Big picture: The city’s plan to fill the budget gap comes in two phases:

• The first phase would shut down two fire stations, postpone a police academy, and cut $25M in projected police overtime. The city will also pull $113M from special funds and emergency reserves.

• The second phase involves laying off 90+ city employees, closing four additional fire engine companies, and either negotiating concessions from the city’s labor unions or tapping even more emergency reserves by declaring a fiscal emergency.

Zoom in: The most striking part of this plan is the reliance on reallocating $113M from restricted funds for things like affordable housing, sewer repair, and insurance.

• City council wants us to believe these are rational moves — but it’s yet again another one-time fix, following the pattern of frantically plugging holes instead of addressing root causes of the deficit.

• Digging deeper, it’s clear many of the proposed cuts could have been avoided or mitigated just months ago.

Biggest hits: By far, the police and fire departments are hit the hardest, collectively losing a new police academy, up to six fire stations, and much needed staffing.

• Before this, Oakland was already down 200+ police and fire positions over the past 5 years.

• The city will also be forced to cut its community ambassador program, cultural affairs funding, housing services, and after-school programs, to name a few.

Pay day: Earlier this year — roughly halfway through the current 2-year budget cycle — the city tried to tackle the deficit by making cuts across the discretionary General Purpose Fund (GFP).

• While public safety suffered, city officials were able to enact special circumstances to increase restricted funding to non-safety departments.

• Net-net, this meant 19 of 25 departments actually got budget increases when the contingency budget was enacted on October 1.

Double the pain: Because we’re already more than halfway through the budget cycle, it takes twice as many layoffs to achieve the same cost savings had they been made at the start.

• Under the proposed plan, nearly 100 city employees will lose their jobs, not to mention the scores of police positions that will remain unfilled.

Overspending fallacy: A popular narrative city officials like to spread is that the budget deficit is due to overspending by police and fire — but there’s a lot more to the story.

• First, higher overtime spending is the natural consequence when you expect fewer people to do the same (or more) amount of work. Police and fire are already understaffed, but the demand for their services and resources have only increased.

• Second, the police and fire departments were already on track to exceed their budgets adopted earlier this summer. Then the contingency budget made further cuts, widening those deficits even more. Context is key — you can’t really say overspending has gotten worse when you change the goal posts in real-time.

Revenue games: City council members often like to talk about increasing revenue vs. cutting costs — but there’s no magic revenue switch to turn on in the next two weeks.

• Leaders have floated sales and property tax increases, but those won’t move the needle nor will they be realized in time. Also, Oakland already has one of the highest sales tax rates in the state.

• And the Coliseum deal — which has been a mess from the start — is trending in the opposite direction with growing uncertainty around the sale. Even so, any meaningful tax revenue from the Coliseum redevelopment is at least a decade away.

Bottom line: Insanity is doing the same thing over and over again expecting a different result — and that’s exactly what Oakland is doing with the budget (again).

• Oakland’s leaders continue to rely on one-time cash sources while making incremental budget cuts. It’s not sustainable — it just a few months, we will face another massive deficit for the next fiscal year.

• Instead, they should focus on the tough and undoubtedly unpopular decisions — ranging from concessions with the city’s labor unions to smarter debt management — to balance the budget sustainably.

• It won’t be easy: Oaklanders will feel near-term pain, but it’s the fastest and surest way to reposition the city for sustainable economic, social, and cultural growth.

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In other news…

• Appointed DA could be named by the end of January (East Bay Insiders)

• Oakland schools won’t merge, but budget crisis still looms (Oaklandside)

• Oakland’s Credit Rating Cut by Fitch as California City Tries to Plug Budget Gaps (Bloomberg)

• Oakland proposes slashing police OT: ‘Devastating blow to a city already reeling from crime’ (SF Chronicle)

• Buyer backs out of major Oakland property sale, delaying crucial budget salve (Mercury News)

• Organizers behind Alameda County recalls want registrar of voters fired (KRON)

• Oakland corruption probe: Duong family supported Sheng Thao to rake in taxpayer funds, prosecutors say (Mercury News)

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Recommended reading…

• The Evidence on Policing and Crime (The Atlantic)

• Oakland leaders perpetuate misinformation to justify public safety cuts (Oakland Report)

• Why do people become homeless in Oakland and Alameda County? (Oaklandside)

• Grand Avenue: Can It Live Up To Its Name? (Splashpad)

• Moderates, progressives, recallers, coal foes…Who really won in Oakland elections? (Oaklandside)

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Correction: Original version of this article incorrectly stated the number of police and fire positions lost over the past 5 years.