This afternoon, Oakland Mayor Ron Dellums will be releasing his proposed budget for the next two years. If you pay any attention to Oakland City Hall whatsoever, you’ve probably heard an awful lot our $83 million deficit and how nobody has ever seen anything like this. Every department, every City service will have to be cut in order for us to close this completely unprecedented hole and we will all have to just chip in and suffer together through these hard times, what with that awful economy and all. So…if you think this is bad, well, you’re right. But also, I have some very unpleasant news for you.
It’s only gonna get worse, folks. Please, scroll down and take a gander at some of what we have to look forward to (PDF) next time we go through this little circus.
Measure Y: Remember, oh, last year, when the Mayor announced his brilliant plan to spend all the Measure Y reserve funds on police recruitment? And how some people were all, “Wait! That’s a really bad idea! We’re going to need those reserves in a few years once the tax revenue collected through Measure Y is no longer enough money to pay for all the Measure Y officers!” And then the Council just went ahead and approved spending it anyway? Um, yeah. Well, they were warned at the time that it was gonna cost them sooner or later, and with each passing day, that later becomes, um, sooner. Measure Y won’t be able to cover the cost of all its officers starting in FY11-12, and the General Fund is going to have to cough up the difference of around $3.84 million. And that subsidy is only going to get higher from there until Measure Y expires in 2014.
East Oakland Community Library: Perhaps you have heard some of the rumors swirling around about the City potentially shutting down some of our branch libraries to save money. I think it’s more likely that they’d go for reducing hours at all the libraries rather than shut down one or more whole ones, but it’s really not worth it to speculate at this point, since the Mayor’s budget proposal is being released in a few hours. Anyway, those rumors might seem particularly strange to you if you were aware that we’re currently building another branch library. That’s right. A new branch is currently under construction at 81st and Rudsdale, and that sucker is gonna open in like a year and guess what, it’s going to cost money to operate. Expected FY11-12 funding needed? $1.13 million.
East Oakland Sports Center: Along those lines, we’ve also heard talk about closing parks and/or recreation centers because we just don’t have the money. How odd, then, that we’re currently building a new sports center in East Oakland. We’re not sure yet what this is going to cost to run, but estimates seem to float around $0.5 million a year.
PFRS: Everything else is kind of negligible compared to this. Currently, Oakland’s police and fire employees get their retirement benefits through CalPERS like everyone else. But employees hired before 1976 got their retirement through Oakland’s own Police and Fire Retirement System (PFRS) (PDF). They paid (well, a handful still do, we have just a few active employees left under PFRS) a fixed percentage of their salary into the pension fund and then the City also contributes to the fund. Or was supposed to, anyway.
In 1997, we put off having to contribute to PFRS for a while by issuing $417 million worth of pension obligation bonds to cover our payments through 2011. I’m sure 2011 seemed like eons in the future back in the late 90s, but time always moves faster that you think it will, and here we are, with that deadline to start paying again just around the corner. And nobody has really given any thought to how exactly we’re going to do that. A year ago, we were expecting that contribution to be $39 million for the first year, FY11-12. But just like everything else, the PFRS fund took a nosedive last year, and back in March, Assistant City Administrator Marianna Marysheva-Martinez reported at a Finance Committee meeting that the current actuarial estimate for our 2011 payment is $56 million. Ouch.
In summary, what we’re looking at two years from now is a little over $61 million in brand spanking new costs out of the General Fund. To be very clear, those are entirely new expenses that we aren’t paying now. That figure does not include any increases in employee wages, medical costs, CalPERS contributions, debt service payments, or anything of the other many existing costs that rise with every passing year. Basically, it all means that even if the economy recovers completely in the next two years, we’re still completely screwed.
So no matter what you hear about the impossible task of balancing this year’s budget and how there’s no way to do it without cutting everywhere, please remember this. With a budget that is only going to get worse next time around, nothing that gets cut this year is going to come back, like, ever. So if there’s a service that you care about, the time to speak up and send e-mails and go to City Hall and throw a temper tantrum about it and get all your friends to do the same is now. Cause this “sharing the pain” that we keep being told everyone has to do? It’s permanent. And anyone who tells you otherwise is lying.