OAKLAND – The difficult cuts long promised by city officials to combat a historic local financial crisis are at the doorstep — and layoffs are now officially on the table.
A new report released Friday said city officials are contemplating up to 91 layoffs early next year, though an unknown number of those could end up being demotions or jobs transferred to the city’s port authority.
If the layoffs come to fruition, they would cement the consequences of a devastating financial turn in Oakland, where high interest rates have tanked tax revenues, including from home sales, and the police department has consistently blown through its budget on overtime spending.
And while federal relief funds during the pandemic “provided temporary relief” to the city’s problem of outspending the revenue it generates, they also “delayed necessary structural reforms,” a new report prepared by the city administrator’s office and budget team states.
“The City’s financial challenges are the results of compounding structural deficits that have developed over several years,” the report makes clear.
Officials are now projecting a $129 million structural deficit by the end of this fiscal year — a leap of $14 million from earlier reports because of debt servicing and other financial obligations from the previous fiscal year that ended in June.
The cuts, which still may be avoided if Oakland’s largest labor unions agree to negotiate a pay reduction, would primarily affect part-time workers or people hired recently at higher salaries.
They would include the full-time equivalent of 17.5 non-sworn police department positions, 29.5 public works staff, roughly 9.5 human services jobs and 6 personnel in the IT department, plus the “brown-out” of four fire department stations.
The potential reductions would take effect early next year pending a union negotiation. But in the short term, there are baseline cuts that officials are preparing to make straightaway, without consulting labor groups or the city council.
Among those, two fire stations will be browned out, plus another station currently under construction; two police academies will be eliminated, leaving the city with zero training hubs for new cadets; grants for cultural arts programs will be slashed; and overtime pay will be throttled, including for police officers.
OAKLAND, CALIFORNIA – JULY 27: Festival goers mix and mingle during the Art + Soul Oakland event in Oakland, Calif., on Saturday, July 27, 2019. Under proposed cuts to cultural arts grants, the festival may be done for good. (Ray Chavez/Bay Area News Group)
The council, meanwhile, will vote Monday on shifting up to $38 million from other funds, such as for affordable housing and the city’s self-insurance liabilities, to its General Purpose Fund, which mostly pays salaries and other operating costs.
City leaders are also expected to decide whether to draw $9.6 million from its emergency reserve, which totaled about $70 million at the end of the previous fiscal year.
The full-blown financial crisis has often left members of the city council at odds with each other, including about whether money gained from selling off city assets should be leveraged against the crippled budget.
Officials are no longer budgeting any revenues from the $125 million sale of the city’s share in the Coliseum, a late-game swing by Mayor Sheng Thao that did not save her from being recalled by 60% of voters last month.
Thao will leave office in the coming weeks, and officials indicated that Council President Nikki Fortunato Bas — who is also leaving office after being elected to the Alameda County Board of Supervisors — is the city leader most actively involved in internal budget talks, along with City Administrator Jestin Johnson and Finance Director Erin Roseman.
Last month, the city accidentally published a report authored by Roseman cautioning that Oakland was on the verge of bankruptcy and accused city officials of continuing to spend money recklessly.
The report was removed and replaced with one that warned only of “insolvency” — the financial state that leads to a legal bankruptcy proceeding — but in the days since, the city’s credit rating was downgraded two levels by a major national agency.
Oakland’s labor unions, meanwhile, did not take the proposed cuts lightly.
IFPTE Local 21, which represents the city’s engineers, architects and other workers, pointedly noted police overspending in a report that urged city officials to better enforce taxes to combat the deficit instead of considering staff cuts.
And the police officers’ union hammered city officials for Friday’s report, warning in a statement that layoffs and the elimination of training academies would create a “public safety disaster” in Oakland.
Shomik Mukherjee is a reporter covering Oakland. Call or text him at 510-905-5495 or email him at shomik@bayareanewsgroup.com.
