Bruce Nye is Board Chair of Make Oakland Better Now! The opinions in this post, however, are his, and do not necessarily reflect the positions of the organization. Make Oakland Better Now! will be holding an emergency city budget meeting to vote on the organization’s position on the city budget on Monday, January 11, 2010 at 6:30 p.m., at Oakland City Hall, 1 Frank H. Ogawa Plaza, Hearing Room 4.
For some time, we’ve been hearing Oakland’s politicians talk about a budget crisis. And everybody should be forgiven if they’re numb to this whole discussion. But guess what? There really, really is a crisis, and it’s going to have a huge impact on all of us, particularly if we, as a city, don’t take action.
While I’m one of the leaders of Make Oakland Better Now!, I’m writing this post on my own behalf, and the opinions here are only mine. But my opinion is that every thinking person in the City of Oakland needs to focus on what the city’s current budget problems mean for all of us, and what we as a community can do about them. Without focus and united action, we will lose all hope of controlling our municipal destiny, including our ability to effect desperately needed improvements to public safety.
For the first time in my twenty-six years in Oakland, we have a Chief of Police who is energizing the city, the department, and our citizens with practical solutions to seemingly intractable crime problems. For the first time in anybody’s memory, we have police management prepared to tell us hard truths: that Oakland has to fix its gun, drug and crime problems before it can fix anything else. And now, the city tells us we are on the verge of a financial catastrophe so great as to threaten its ability to fulfill its most essential obligation: keeping citizens safe. What are we to do?
First of all, we recognize the problem. In talking to neighbors, folks in the community and political activists, as well as seeing what’s out there in the “blogoaksphere,” there are clearly lots of people in denial. Even among Make Oakland Better Now! members, there is a lot of belief that our problems could go away if we could just figure out more efficient and less wasteful ways of doing business.
I believe that the City of Oakland, like the Defense Department, General Motors, and virtually every other large organization, is very, very inefficient and wasteful. That is the nature of large organizations. Trying to eliminate all organizational waste is a noble goal and a fool’s errand. Instead, we have to deal in the world as it really exists. And in the real, Oakland world, I am convinced of the following:
- Out of the city’s $421 million general purpose fund budget, there really, really is a shortfall of nearly $19 million for the 2009 – 2010 fiscal year. There are many things to blame the mayor and city council for, but (a) the immediate shortfall probably isn’t their fault; and (b) whether it is or is not, the shortfall still has to be fixed.
- In his December 17 report to the council, City Administrator Dan Lindheim identified three primary causes of the shortfall:
- $10.8 million sales tax shortfall (in his report, Lindheim ascribes this to the “State-imposed correction to the ‘triple flip’ portion of the sales tax;” I admit to not knowing what this means, but in a meeting with him about six weeks ago, he told me the problem was an overall reduction in retail sales, particularly in the retail motor car industry);
- $4.5 million in budgeted, but not realized Coliseum ticket surcharge (at the same meeting, Lindheim told me this income item was always illusory, because nobody expected the teams to pay it without a lawsuit); and
- $4.29 million in overspending, “primarily in the Police Department” (I understand from other sources that there was also significant overspending in the mayor’s office, which Lindheim conveniently doesn’t mention; while this omission doesn’t say much for city transparency, the Police Department certainly is the largest player).
- Of the $421 million general purpose fund budget, all but $93 million is essentially mandated by Oakland’s voters or the officials they elected. Here’s how it works:
- $242 million is for Police and Fire services (that’s 57% of the general purpose fund). We enacted Measure Y, after the city negotiated a deal with the fire fighter’s union that if Measure Y passed, Fire Department staffing couldn’t be cut. So FD staffing is locked in place.
- Measure Y also added 63 officers, but provided that the funding for all of them would be lost if the authorized OPD sworn staffing went below 802. So if the city reduces authorized sworn police staffing by one officer, they lose the Measure Y money and have to eliminate another 62 officers. Which means that the city doesn’t save a dime on police salaries until it eliminates its 64th officer.
- $19.9 million is for Kids First!, a voter-enacted set-aside only somewhat ameliorated last summer.
- $9.06 million is for library services required under Measure Q.
- $14.9 million is for other local mandates previously enacted by the voters and grant match requirements (ok, that isn’t all the voters’ fault, but most of it is).
- $42 million – ten percent of the general purpose fund budget – is for debt service. Remember that when somebody tells you a bond issue doesn’t cost anything.
- And that leaves $93.14 in pin money for the city. Except that $15.6 million of that is for “self-insurance liability” – the city’s settlements and judgments. I suspect the city could probably stand some risk management auditing to figure out ways to reduce this figure, but the fact is, cities get sued, they have to settle cases, and if they don’t, they get hit for judgments even bigger than the potential settlements. So I see no way to eliminate this category of expense.
- And $26 million is for “essential internal services.” Now I’m prepared to assume that some of this is actually a waste and slush fund, but, on the other hand, some of it is police and fire department radios, and those seem kind of important. So I’m not quite prepared to shut that whole category down, although I realize it needs some looking at.
- After we cut the City some slack on the “self-insurance liability” and “essential internal services,” there’s still a thumping $56 million left in other city programs and services that we can readily use to balance the budget, right?
Well, not actually. Here’s why: As I write this post, it’s December 23, 2009. The City Council will next meet on January 5, 2010, and I’m not even sure it will meaningfully address these problems at that meeting. Even if it does, there seems no chance any cuts will take effect before February 1, 2010. The fiscal year runs from July 1, 2009 to June 30, 2010. If the Council actually attempts balancing the budget out of the $56 million available to it, by February 1, $30.4 million will already have been spent. So out of all the city programs and services available to potentially close the budget gap of $19 million, there will be a grand total of $26 million available from which cuts can be made.
To put this in perspective, the entire Park and Recreation general purpose fund budget is $11 million. If the city decides to close the whole department down February 1, it probably realizes a savings of $4.6 million.
How about the Human Resources department? Its budget is $4.5 million for the fiscal year. So there’s maybe $1.9 million left if we shut the whole thing down come February 1.
Then there’s the mayor’s office. If you’re like me, you think we haven’t gotten a dime’s worth of value out of the mayor’s office in the last three years. Suppose we have him close shop too? Sorry, not much impact: Annual budget is about $2.4 million. If we save all of it after February, 2010, we save a thumping $998,000. And since we’re beating up on the politicians, let’s close down the City Council, too. No more salaries, staff, nothing. Total savings: $1,476,000.
So, let’s look at how we do at closing the budget gap just by slashing and burning our way through Parks and Rec, HR, the Mayor’s office and the City Council:
Park and Rec savings: $4.6 million
Human Resources: 1.9 million
Mayor’s Office: 1.0 million
City Council: 1.47 million
Total savings: $7.97 million
Nice start. All we need to do is find another $11 million and we’re all set until July 1, 2010 – when the gap becomes $25 million.
Is there another way? There’s got to be. With V Smoothe’s kind hospitality, I’ll put up another post in a couple of days (probably after Christmas), and look at what just might be a politically practical solution.