Budget debate over, for now.

So the Council passed their budget adjustment last night and we get to stop worrying about it for a while. Well, for a little while, anyway. As time goes on and we either do or don’t receive the revenue we budgeted for, the Finance & Management Committee will have to make monthly adjustments.

But it’s over for now, and I, for one, am really happy about that. Dellums kicked off the discussion, and as usual, had nothing remotely useful or interesting to say. He went on about how, when he submitted his new budget, he provided an “unprecedented” amount of information to the citizens of Oakland, even though, well, making the budget public is not only well-precedented, it’s the law. Then he wasted more time by making generic little speeches about each individual Councilmember and how great they are (“I thank you for your candor and your discipline”) which, well, as someone put it to me during the meeting “He would have learned these characteristics about them a long time ago if he’d bothered to meet them before this week.”

Once that was over, we moved on to the budget proposals. As you might remember, the Mayor had previously submitted a budget that would eliminate $32 million of our $42 million deficit, and left it up to the Council to find the last $10 million. They’ve been discussing it over the course of the last few weeks, and last Thursday, Jean Quan and Ignacio De La Fuente presented a proposal they had come up with to close the gap.

So, based on feedback received between Thursday night and Tuesday, they put out a revised proposal, and of course Desley Brooks had put together her own plan. Poor Desley. So, despite my best efforts, I wasn’t able to get my hands on a copy of the plan Brooks was passing out, but based on her comments, it would have meant no shutdowns and it would have restored many of the cuts the Mayor had made to basic services like libraries and parks. My understanding (although, again, I didn’t actually see her paper) is that this involved additional cuts to the police department, based on the premise that everyone should share the pain.

Since the beginning of the budget discussions, Brooks has been criticizing the Mayor’s reluctance to cut the police budget, asserting that we should not sacrifice everything else in the city for the sake of public safety. At the initial budget workshop in October, she pointed out that the police keep telling us that they can’t solve the problem on their own, so based on their own statements, it makes no sense to sacrifice everything else to spare them. It’s a reasonable argument, and one I’m not unsympathetic to, but cutting public safety funding is politically unpalatable, and well, it just wasn’t realistic right now, whether or not forcing the Police Department to tighten their belts is the right thing to do. Alas.

Brook’s budget also relied on roughly $4 million owed to us by the DMV that we haven’t yet collected, but are expecting to. Brooks thought that money hadn’t been included in this year’s budget, and that once we added it, we’d have some extra funds to work with. Turns out it had been included in the budget after all. The DMV discussion went on for a while, with Brooks arguing that we were most likely going to collect more of the money than we had anticipated in the budget, and staff arguing that they had included projections in the budget based on the percentage we have traditionally been able to collect out of what’s owed. I felt bad for Brooks – it totally sucks to think you’ve found some money but then learn it isn’t there after all. But it would have been irresponsible to pass yet another budget based on overly rosy projections.

And then it was onto public comment. Arts funding advocates packed City Hall, bringing so many people that the Fire Marshal had push the crowds into overflow rooms. And like I said in a comment yesterday, if you can turn out a couple hundred people over a million dollars in funding, you win. The presentations overall were excellent. The speakers gave a series well-prepared, well-presented speeches, they were sympathetic, and stayed on message, arguing for the value of arts programming to Oakland’s youth and economy. If only all advocacy groups could be so well organized! It was truly refreshing.

The best part of the entire meeting came during the public comment, when this little girl got up with her Chinese string instrument (I think she receives training through the Purple Silk Music Education Foundation, a recipient of an Arts in the Schools grant) and playing the most beautiful, sweet, calming song. She came smack in the middle of the seemingly endless public comment, and it was exactly what everyone needed at that point. The only criticism I’d make is that since this all happened after the Council had already announced that they were restoring the grants, it probably wasn’t necessary to have two hours of speeches. Between the budget and an appeal about Aaron Metals, it all took so long that they had to postone basically the entire agenda. (This is the Council’s fault for putting the budget on the agenda of a normal meeting, instead of having a budget-specific meeting, BTW.) But overall, kudos.

In the clamor over the arts grants, a lot of the other tough losses we’re facing got kind of overlooked, which I think is sad. A number of speakers showed up to voice support for senior services, the animal shelter, and the library’s adult literacy program, and they all kind of got lost in the shuffle.

Anyway, this is what we’re going to be doing to close the deficit, on top of the changes the Mayor submitted at the end of September:

  • Reduce the proposed City shutdown from one day a week to one day a month plus Dec 26-Jan 2: Save $3,860,000
  • Freeze non-sworn, non-emergency overtime: Save $175,000
  • Reduce FY08-09 Pay-Go by 50%: Save $950,000
  • Recommend Elected Officials voluntarily take 5% annual pay reduction: Save $58,555
  • Eliminate funding for parades, runs, and street festivals after January 1, 2009: Save $43,500
  • Eliminate Program Analyst II from Cultural Arts Program: Save $113,063
  • Eliminate personnel funding for Public Art Program, transfer personnel to Public Art Fund to continue the program: Save $318,003
  • Eliminate GPF-portion of Marketing, retain Film and KTOP: Save $354,008
  • Restore Senior Shuttle: Cost $180,000
  • Restore funding for 2 positions in the adult literacy program: Cost $102,667
  • Eliminate Human Resource Analyst (EEO) and Downgrade Manager, Affirmative Action: Save $153,693
  • Eliminate Oakland Convention and Vistors Bureau Contract: Save $325,000
  • Restore 3 Rangers, Eliminate Ranger overtime except for emergencies: Cost $260,261
  • Eliminate salary contingency reserve for Fire arbitration; Save $455,000
  • Decrease insurance and bonding set-aside: Save $200,000
  • Restore Animal Control Coordinator: $53,333
  • OPD must eliminate two $100k+ positions: Save $322,000
  • OPD: Reduce booking fee amount to $200k: Save $300,000
  • Move taxi inspections to Public Works and administrative functions to City Administrator, making one sergeant and two police officers available for other responsibilities: Save 26,183
  • Add .5 FTE Admin Asst to City Administrator for taxi administration: Cost $26,833
  • Fire Department eliminate Administrative Assistant I, II, and Emergency Services Manager: Save $229,717
  • Fire Battalion Chief (Training Director) downgraded to Captain: Save $26,833
  • Reduce Mayors office budget: Save $430,000
  • Eliminate Senior Supervising Human Resource Analyst, Principal Financial Analyst, and Principal Human Resources Analyst from Finance & Management Agency: Save $425,602
  • Eliminate from Parks & Rec: Program Analyst II part-time, downgrade various positions, eliminate additional $100k+ position: Save $393,529
  • Restore Graphics Design Coordinator to Museum: Cost $92,178
  • Restore positions for Tree Trimming services: Cost $300,000
  • Restore $75,000 for Bookmobile, transfers from books & supplies fund.
  • Eliminated bottled water, food, and flowers: Save $100,000
  • Eliminate Management Leave: Save $1.5 million
  • Eliminate Professional Development Allowance: Save $110,000-$125,000
  • Transfer funding from Public Campaign Finance: Get $226,600
  • Use one-time revenue from health benefit savings: Get $259,000
  • Lay off 11 additional FTEs: Save $720,189

So, again, all that’s on top of the budget cuts, including the 84 layoffs the Mayor had already submitted to the Council. Wherever it says “restore” or “cost,” those are changes to what the Mayor had submitted. They’re restoring positions to the budget that the Mayor had proposed cutting, not restoring positions that were already eliminated.

So, what do I think? Well, mostly I’m just glad it’s over. I think that in their rush to appease various constituencies, the Council is using some money that the probably shouldn’t be. Relying on one-time revenues and dipping into contingency funds is one of the reasons we got into this mess to start with. That money certainly must be tempting when you’re faced with lots of angry citizens, it doesn’t seem like you need it right now but we keep reserves for a reason. Still, the Council had an incredibly tough job in front of them and they did the best they can. I disagree with some of their decisions and priorities, but none of this was an easy call, so I don’t begrudge any of it.

Moving forward, we will be adopting a new two year policy budget next summer. It’s time the City made a commitment to a thorough examination of our spending priorities, and in that spirit, I hope we can engage in a real six-month budget, zero-base budget process. I hope the Council will also work, during that process, to restore an appropriate level of cash to our reserve, which is currently at a point so low that it’s endangering our bonding capacity and credit rating. Even if it means cutting some popular programs or making long-term decisions that will anger the unions. Sometimes immediate citizen anger needs to be swallowed for the sake of long-term fiscal solvency.

11 thoughts on “Budget debate over, for now.

  1. len raphael

    Does transfer funding from Public Campaign Finance: Get $226,600 mean that local council race matching fund limits will be lowered?

    Was the last item, the 11 additional FTE’s left up to the mayor to decide?

    I thought i saw somewhere that revenue producing dept would be spared layoffs, but that might have been in JB’s position paper.

    Any committment to make public iterim financial info on at least a quarterly frequency?

    -len raphael
    temescal

  2. V Smoothe Post author

    Len –

    My understanding is that yes, the Mayor is expected to identify the additional 11 FTEs that will be cut. The matching funds won’t be lowered, they’re just taking the money out of that fund for now because we don’t have any elections right now. But money will have to added there at some point in the future. It isn’t revenue producing departments (almost all department produces some revenue) being spared, it’s revenue producing positions. So, for example, you wouldn’t eliminate someone whose responsibilities include collecting fines, because then you’d end up losing more money than you save.

    Any interim changes will go before the City Council’s Finance and Management Committee (I think they said monthly), and yes, the information will be publicly available.

  3. len raphael

    hmm, going by department rather than position, or maybe sub-department, would make more sense because revenue producing positions require support staff for them to produce the money.

    would a building dept engineer who did permit plan checking be considered revenue producer but the person who schedules inspections would not?

    or an inspector who follows up on blight complaints would not be revenue producer but inspector on construction permits would be?

    what’s the sense of how much jiggering between funds, reserves, and one time revenue squirts were involved in this last balancing?

  4. len raphael

    don’t recall seeing anything in dellum’s cover letters discussing additional calpers contributions? is that the fund that oakland pays into for non public safety only employees?

    I’m guessing that even if cops/fire have a different plan, it probably is a similar guaranteed benefit kind (thats been long extinct outside of public sector) which will need the city to make up the actuarial shortfall?

    wsj article today “The nation’s largest public pension fund said it intends to tap California public employers for more money if its heavy investment losses don’t reverse, a sign that more financial pain could be in store for state and local governments.

    The California Public Employees’ Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.

    Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state-employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year.”

    Any sense as to what the applicable wage base would be?l. if say half of the general fund budget is wages, that might be 2% of 500Mill = 10Mill . Wish there were a way to do a golden handshake with the Raiders.

    We need someone who knows oakland’s budgets to create a sensitivity model which we can access or download to test different revenue and expenditure scenarios as they evolve.

    -len raphael
    temescal

  5. J-man's Dad

    Local 55 members (sworn fire) pay 13% of their wages back to the city for their pers contribution (standard 9% employee contribution, plus an additional 4%). More than any other employee group. OPOA pays 0% (Previously negotiated in a long past contract). The city pays the employee part of their contribution (the 9%). In effect, a hidden 9% bonus. I’m not sure, but I think Locals 1021 and 21 pay between 3 and 7%. Clearly the city should compel or negotiate for the cops to pay something. When fire agreed to the additional 4%, about 7 or 8 years ago, the city assured us that all the other employee groups would soon (within a year or 2) be paying more of their PERS contributions as well. But not once in this entire budget process was it ever mentioned by the Mayor, Mr. Lindheim, or any of the council members. I guess OPOA has the real juice.

  6. das88

    I was hoping people can help clarify the DMV and FTB money that Brooks kept talking about.

    I am not sure, but I don’t think Oakland actually gets money from these two state agencies, but rather, they provide lists of people who owe the city money. For example, I was a bit negligent in paying my business license tax for the first couple of years. The city knew I had a business because it was reported on my state income taxes. The FTB in effect ratted me out to the city (don’t worry I’ve paid all of my fines and been legit for years). Similarly I think the DMV just helps the city match people to vehicle license plates so they can go after parking tickets, etc.

    Am I understanding this correctly or is Brooks talking about something else?

  7. justin

    It will be interesting to see how the cut to the Mayor’s Office actually gets enforced. If the Strong Mayor form of government allows the Mayor-protected City Administrator to ignore Council direction, how will the Council ensure that these cuts happen?

  8. len raphael

    JMdad, what would the employer contribution be for the same depts? is it a full matching amount? Would the city be on the hook to make up 100% of the actuarial shortfall in CalPers for OF as well as the other depts?

    -len raphael

  9. ConcernedOakFF

    Len-

    I think that who makes up the shortfall is determined in each contract. For example, when we changed to a different retirement age, the Union negotiated to have the members of the union pay for the “make-up” in return for changing the age. This was to make up the actuarial shortfall. However, J-man’s Dad may be more informed than myself (since I do not know who it is)….

  10. J-Man'sDad

    Len:
    The employer contribution is not a matching contribution, it’s a varying amount. Some years, like during the late 90′s dot com boom, the city paid nothing. Most years they pay some amount, depending on factors such as the performance of the PERS Portfolio. The city does, no matter what, have to make up the shortfall in the employee contribution (i.e. the OPOA’s 9%). Again, Fire is the only employee contribution rate in which the city not only pays nothing, they actually make money, the extra 4%, which is SUPPOSED to pay pers, but for all intents and puposes probably just dissapears into the general fund.

  11. LwC

    So, now we’re here at a budget crisis, again, and little has changed. The Council has NOT taken their 5% cut. And, say what you want about Brooks’ abrasive and one-note tactics, but she recently brought up a good point that rather than look at ways to do business differently, the City is just managing the budget with slash and burn, employee and service cutting. There are other ways to make cuts, such as through efficiency. But, that requires a paradigm shift, and if the same managers are left to make the same decisions, how will that happen?

    The problem now is that the City is trying to put some non-negotiable pieces on the table that neither solve the problem nor evidence good faith, since the threat of calling impasse (which means the City makes unilateral decisions about all terms in a contract) has been liberally threatened. I say they are not acting in good faith because there is no attempt to reach the desired outcome – for example, reducing personnel costs by $X – but rather are pushing “non-negotiable” strategies to get there, such as cutting the City’s contribution to retirement FOREVER.

    Now, I personally might not even mind that. After all, not everyone is a lifer, and given the retirement fund’s decline, maybe I’d prefer to hide my money in the mattress, anyway. What’s super irritating is the fact that the contribution is MANDATORY, which means every employee will receive an effective 5% paycut (to cover the City’s current contribution) now… and who knows if anyone will get their retirement benefits later? I say, let me opt out of the system, period, especially if I have to foot the whole bill.

    Something more flexible and responsive to economic conditions, such as the furlough policy, which would be reversed when/if the economy recovers and people demand full service, again, is a more appropriate response to the supposed problem, which is a budget shortfall in the here and now. As to long-term solutions, cutting services and employees to do them (and money with which to pay them) is not the best strategy. Ever.

    Leadership. Leadership. Leadership. Who’s steering this thing?