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PROJECTS $120M DEFICIT IN FORTHCOMING BUDGET CYCLE

COUNCILMEMBER RAMACHANDRAN HIGHLIGHTS NEED FOR GREATER TRANSPARENCY AS CITY ENACTS BUDGET CUTS IN COMING WEEKS

Following yesterday’s sudden and unexpected cancellation of the City Council’s Special Finance Committee meeting to discuss the City’s budgetary situation, Councilmember Janani Ramachandran (District 4) is highlighting a report issued last Friday by the City’s Finance Department that outlines severe current and future fiscal dangers Oakland is now facing. The report, authored by City financial experts, states that the “FY 2024-25 budget is in a precarious position,” and that “the City’s fiscal health is at significant risk.” This is based on three primary factors:

• The City’s implementation of the Contingency Budget passed by Council this past July due to the changed payment schedule of the anticipated Coliseum sale,
• Projected overspending in the FY24-25 budget by at least $30 million, and
• An accumulated deficit of nearly $80 million ending the Fiscal Year 2023-2024.

This news comes as continued calls by Councilmember Ramachandran – along with Councilmembers Treva Reid and Noel Gallo – for full transparency from City leadership on Oakland’s budgetary crisis have gone largely unheeded. Highlights from the the Finance Department’s report include the following:

• Oakland ended FY23-24 with an operating shortfall of $79.84 million in the City’s General Purpose Fund (GPF). This is despite the City Administrator’s enacting of cost-saving measures earlier this year, including a hiring freeze and halt on employee travel. The deficit that ended the previous fiscal year is due to underperformance in several key tax and revenue collection areas – including a shortfall of $12.1 million in one-time revenue from the expected sale of the Raiders training facility that has yet to come to fruition.
• The City is expected to exceed General Purpose Fund spending by an estimated $30 million during FY24-25, primarily based on public safety spending.
• The City has begun implementation of the Contingency Budget, which was triggered on October 1 because $15 million of the Oakland Coliseum’s one-time sale proceeds was not received in September as originally promised. A revised Purchase & Sale (PSA) agreement between the City and African American Sports & Entertainment Group (AASEG) was finalized without City Council approval earlier this month, which will result in Oakland not receiving $48 million in installment payments previously scheduled to be paid in November 2024 and February 2025. Although the payments are anticipated to come at the end of May per the new deal, because these installment payments were tied to the GPF budget, $48 million in new budget cuts are now inevitable. There are several proposed cuts in the Contingency Budget (see pages 34-36) as passed by Council in July, including a drop in budgeted OPD officers to 600, temporary closures of five fire stations, deleting or freezing police academies, and halting violence prevention contracts.
• A preliminary analysis of Oakland’s FY25-27 fiscal state projects a $120 million structural deficit due to unsustainable imbalances between revenues and expenditures. The Finance Department states that “comprehensive, ongoing balancing measures” focusing on the “strategic reorganization and prioritization of services” will be needed to restore Oakland’s long-term fiscal sustainability.

“The Finance Department’s report provides the clearest indication yet that the irresponsible budgetary decisions made by our City’s leadership have failed us, and that an honest and transparent approach is needed to restore stability to Oakland’s future budgets,” said Councilmember Ramachandran. “We need to end our reliance on one-time revenues such as the Coliseum and Raiders facility sales while being honest with our residents about the hard choices we will have to face in order to fix our City.” 

Prior to the cancellation of yesterday’s special Finance meeting by the Committee Chair, Councilmembers Ramachandran, Reid, and Gallo had repeatedly called on the Administration to provide clarity on the cuts within the Contingency Budget that the City Administration will enact first – but to date their attempts at scheduling a public meeting to discuss this issue have been unsuccessful. On October 7, the three Councilmembers called a special meeting to discuss this contingency budget, but a quorum of Councilmembers failed to appear. And on October 15, the Special Finance and Management Committee meeting requested by the Councilmembers to discuss the contingency budget was unexpectedly cancelled a half-hour before the meeting began.

Click here to read the full Finance Department report.