Oakland City Council, mayor plan for $58 million deficit

At a budget retreat in Oakland on Monday, city officials discussed not whether to make budget cuts, but how much to slice from each department. With a projected $58 million deficit to fill in the 2011-2012 fiscal year, Mayor Jean Quan said that closing the budget gap by only making cuts would require 80 percent reductions in discretionary spending from the general purpose fund.

“If you don’t touch police and fire, and you don’t get employee contributions, and you don’t do a parcel tax,” Quan said, “in order to balance this budget, you would have to eliminate 80 percent of everything else.”

Discretionary funds, which pay for programs in Public Works, Parks and Recreation, libraries, Human Services, and the Community and Economic Development Agency, account for over 21 percent of the $441 million in projected general purpose fund expenditures for the 2011-2012 fiscal year.

Since the rest of the city’s nearly $1 billion budget is tied up in mandatory spending on services such as sewer maintenance, housing development, and bond-funded programs, discretionary funds represent only 10 percent of the entire city budget.

The City Council had previously discussed a baseline of 15 percent cuts to all general purpose fund programs, including to the fire and police budgets. As she described the budget outlook at Monday’s meeting, Quan repeated a phrase she’s often used to describe the process: “You’re not to the bone, you’re to the marrow.”

Quan’s projected deficit for the 2011-2012 fiscal year has climbed $12 million from the amount she announced last month. In addition to this year’s $58 million deficit, the mayor predicts a $72 million deficit for the following fiscal year. Quan noted that the deficit has been an issue for four years already. At the meeting, she said that city officials have eliminated 530 jobs since they started cutting the budget in 2007, and last year employees accepted 10 percent cuts in the form of furloughs.

Quan’s staff said that declining tax revenues—particularly from property and real estate transfer taxes—were the main cause of the deficit.

After Quan and her staff gave their projections, the City Council heard presentations from 10 department heads, each conveying their budgeting needs and cuts they’ve already implemented in the past five years of cuts.

Police Chief Anthony Batts said that police department programming is already funded at a minimum level. Citing aging computer systems and other infrastructure problems, Batts said, “If we’re going to make any significant cuts, it’s going to have to be in people.”

Police staffing levels have fallen since 2009 due to layoffs and attrition. In 2010, Batts said the force should have 925 police officers in order to function adequately. After Quan re-hired 10 laid off officers in January, staffing levels hit 666.

What’s more, taxes collected for Measure Y programs, which funds problem-solving officers, fire safety staff and violence projection, came up short of the cost of the program this year. While the measure has brought in nearly $20 million in past years by assessing a flat-rate tax on Oakland property owners, Batts said the department had $15 million to work with for the coming year and would have to pull from its regular budget to cover the difference.

Batts also cited sick leave as an ongoing drain on funding, and other department heads echoed the issue of strain on staff due to lower numbers of employees. Increasing sick leave and fewer employees have made it difficult to keep programs staffed across the board; library director Carmen Martinez said that the increase in the numbers of mentally unstable people on the streets has forced her shrinking staff to deal with belligerent patrons more frequently.

Martinez said that like the police department, which is facing a shortfall in Measure Y funds, the library system receives several million dollars from a local parcel tax. Measure Q, authorized in 2004, is a parcel tax brings in $13 million for library services, but if the general purpose contribution to libraries dips below $9 million, the city can’t collect the parcel tax.

In an effort to lessen cuts to the general purpose fund, in March Quan attempted to get a new parcel tax on the ballot for a summer special election. She projected $11 million in revenue from the tax, but the council did not address the issue in time to create a special election for the summer.

While projections from each department were grim, they did not include savings from furloughs. Many departments have labor negotiations pending, and projections included all of the required salary increases. Interim Oakland Fire Chief Mark Hoffman said that ongoing labor negotiations could result in “flexible deployment” of staff, which would save the department money. The fire department accounts for $103 million, or almost 24 percent of the general purpose fund, according to the mayor’s staff.

Officials from the Parks and Recreation Department and the Community and Economic Development Agency both stressed that they contribute back to the general purpose fund with revenues from Oakland’s golf courses as well as other revenues.*

“The golf courses have been doing awesome,” said Audree V. Jones-Taylor, director of the Department of Parks and Recreation. “We continue to give $100,000 to $200,000 to the general purpose fund.”

The meeting—not intended to be a decision-making session—ended with the department presentations. Quan will release a line item budget by April 29, after which the City Council will begin building their budget ordinance.

*Update: This article has been corrected from a previous version that said the Community and Economic Development Agency (CEDA) contributes to the general purpose fund from development and code enforcement revenues. CEDA director Walter Cohen did not specify the source of the funds that his agency contributes to the general purpose fund. Oakland North regrets the error.