Jean Quan releases “budget” proposal

The wait is over! Well, sort of.

Oakland Mayor Jean Quan promised late last year that we’d see a proposed budget in March. And one day before the end of the month, we’ve gotten…well, not exactly a budget. She’s calling it a “budget framework,” which, based on a quick perusal, seems to be a nice way of saying “We’ll figure it out later.”

Information about the “framework” is available on the City’s website in the three documents. First, a memo from the Mayor (PDF) outlining the City’s budget problems. Second, a summary of potential cut options by department (PDF). Third, a list of the service impacts of previous budget cuts (PDF).

I am looking forward to reading the documents more thoroughly tonight (this is exactly what I needed to break out of my blogging coma!), and will post in more detail tomorrow. But there’s no reason you guys can’t get started now.

Here’s the overview from Quan’s memo:

The projected FY 2011/12 general purpose fund (GPF) decifict is $46 million, despite addressing over $170 million in shortfalls over the last several years. However, this deficit is likely to be much larger due to signs of 1) weakening revenues in the current fiscal year; 2) expected State and Federal budget actions; and 3) mounting health care, pension costs and increases in the cost of doing business. The projected shortfall grows each subsequent year as expenditures rise and revenues recede.

The current budgetary issues are widespread, touching virtually every government service Oakland provides. The policy and management decisions which must be made to stabilize the upcoming budgets will be among the most difficult ever faced by this City. Unlike any other time in our history, this process is going to necessitate nothing short of elected officials, City employees and Oakland’s residents working together to make the required tough choices and critical investments in the coming years. Furthermore the financial challenges are simply too great to be remedied by any one approach in one year and all budget balancing strategies must be on the table. The size of the projected deficit necessitates the following:

  • Staff reductions;
  • New revenues;
  • Restructuring of City departments
  • Prioritization of services and corresponding program eliminations;
  • Additional employee concessions; and
  • Creative collaboration between local, county, state, federal governments and the private sector.

She requests that the City Council provide her a list of their priorities in the budget by April 8th.

Describing her plan in ever so slightly more detail, she offers:

The Administration’s balanced framework for developing its Proposed Budget is as follows:

  • $20-$25 million in departmental reductions (Attachment A) represents over $30 million in potential reductions);
  • $11-$15 million in revenue increases, including approximately $11 million from an $80/parcel tax;
  • $10-15 million in employee concessions; and
  • $10-$15 million in various other balancing measures, such as land sales.
  • Total = $51 million to $70 million

Some of the budget reduction options for FY2011/12 with significant public impacts currently under consideration are listed by department in Attachment A (PDF). In addition to the items included in the attachment, City Administration is also considering various reorganizations and consolidations of City services and programs that require additional analysis and costing. These items include, but not limited to the follow:

  • Centralization of general government functions;
  • Consolidation of payment centers;
  • Civilianization of Police Internal Affairs and other functions;
  • Partnerships with other cities and other agencies;
  • Facilities consolidation (including libraries, recreation centers and senior centers);
  • Elimination of all City vehicles other than OPD, OFD and heavy equipment;
  • Merging of City departments
  • Increasing certain fees for services;
  • Transfer of Animal Shelter services to other outside agency;
  • Installation of cameras on street sweeping vehicles;
  • Moving City towards a “Cloud Computing” model (which would allow most city documents to be stored securely on the web, instead of desktops); and
  • Partnerships with OUSD, County, and other outside agencies for program efficiencies

Of note, the attached options may not be the ones proposed by the City Administration, and additional options may also be proposed that are not included on the list above or the attached departmental pages. This list is merely provided for Council’s information to make you aware of the magnitude of the problem, and no decisions are necessary at this time on any particular reduction or new revenue.

Reactions?

91 thoughts on “Jean Quan releases “budget” proposal

  1. Gene

    Oh, right…despite all the positive energy at the Oakland Running Festival, we still have problems to solve :-(

    I didn’t see any mention of alternatives if the $11 million / $80 per parcel tax doesn’t pass, eliminating 15-22% of the total. Despite a mystery poll showing support, it doesn’t seem guaranteed to pass.

    Even less likely to pass if people remember previous messed up attempts like Measure Y. Which according to Quan’s letter “By the close of FY2010/2011, Measure Y will realize a negative operating balance.” i.e., not only did the city not live up to the staffing levels, but it’s going to cost even more money than it collects to get those lower levels.

  2. MarleenLee

    The $80 parcel tax is no longer an option. The special election is not going to happen. The scheduling of a statewide special election was a precondition for Oakland putting this new tax on the ballot. Of course, Oakland being Oakland, no doubt they will pass a budget contingent on some parcel tax passing in November.

  3. Max Allstadt

    Marleen, the Mayor seems to want to put that parcel tax on a mail in ballot, or possibly on a later special election if Jerry gets his act together.

    As I’ve said before, I’m not opposed to the tax if we see some real cuts first. We’re not seeing that.

    I’m also not opposed to a ballot measure if there is a scientific poll showing it can pass. The mayor, to date, has refused to release her mystery poll, even though it is public record.

    The sunshine ordinance allows her to ask for an extension of 14 days, 10 days after a request is made. Sanjiv Handa tells me that he didn’t even get an extension request. His public records inquiry has been flat out ignored.

    Now, Marleen, I don’t suppose you know any attorneys who might be interested in filing a writ of mandate with Alameda Superior court, demanding that Mayor Quan live up to her legal obligations of transparency. Would you know anybody who might do that? Maybe?

  4. Frank Castro

    After a quick perusal she made one huge accounting error – she is factoring in $11 million as a result of the parcel tax. Government officials have to get past the idea of factoring in “potential” revenue when making budget forecasts. This is what got them in trouble in the first place.

  5. MarleenLee

    Max, unfortnunately for all of us, the trial court’s most recent ruling on my public records act cause of action (which cited well over 30 violations of the Public Records Act) means that the City can keep on going violating the law without any fear of repercussions. Oakland’s commitment to “transparency” is now officially a joke.

  6. Max Allstadt

    Were they late, Marleen, or just totally non-compliant?

    Maybe there’s room for a 2012 ballot measure that puts some teeth in the old law.

  7. livegreen

    I thought the Public Records Act was a State Law.
    Besides the courts, can the AG or anybody else work to enforce it?

    Marleen, I hope you appeal. Because they’re not going to stop f__ng around unless they’re taken to the mat at least once…

  8. Daniel Schulman

    It’s a pretty dismal picture.

    I was at a meeting the other night of mostly older people who have owned their homes a long time, and they were totally perplexed why people aren’t readily willing to pay more taxes. They just thought there was a disconnect in people’s understanding of the taxes they pay and the services they receive. It is hard enough to convince people to pay more taxes for better services, but the situation we see is a request for more taxes with promises of worse services. We are just being told that if we don’t pay more taxes, services will decline even more.

    At least people are starting to face reality. Hopefully we over the pandering campaign promises of some candidates who promised increased services & free parking without raising taxes.

  9. Jenn

    Unless some of the horrendous and dangerous potholes start getting filled, I will remain unconvinced that Oakland can get anything done in terms of basic services and would be unwilling to vote for a tax. Quan needs to start showing that she can run the city more effectively or she’ll never get a tax passed. No one wants to throw good money after bad.

  10. Matt C.

    Daniel, the older gent that I bought my house from paid under $1200 a year in property taxes. After the sale the house was reassessed and I pay over $5000. After all the utter shit that city employees dished me while trying to take a derelict property from the brink of demolishing to a respectable home, well, I won’t pay another dime in property tax. The city has got to change how they treat us -it’s deplorable.

  11. ralph

    I am not going to defend taxes. Frankly, I hate taxes and those who argue for more taxes probably aren’t paying enough and I include renters in that category. That being said revenues have plummeted and the city needs some type of backfill.

    But no one has made the case for new taxes and certainly no one has made the case for how these additional resources will allocated to valued services. In addition, the plan seems to be held together with spit and hope.

    I would like to see a comprehensive plan that sets the budget at a basic level of required services. I think it is time to get creative. For example a) eliminate annual step and merit increases and replace with an available pool of raises for high performing employees, b) OPOA contributions of 9% gradually reaching 13% in return for infrastructure and technology upgrades, c) either a suspend Kids First or return to M2O methodology, d) renters tax – to be included in rent effective date of passage (lessor collects in rent payment), e) the owner benefitting from P13, should be required to chip in some additional tax for prior yrs, and f) parcel tax to be applied to all again with P13 beneficiaries paying more and a reduction of tax parcel taxes as the organic revenues improve.

    The taxes most identify how they will be used.

    Can someone explain to me how ballot measure has a negative fund balance? Wasn’t the point to collect tax to cover a specified service with a known cost?

  12. Jenn

    How would a renter’s tax work? How would it be justified given that the renter does not own the property? Don’t rents in theory help to cover the property tax of the said property. Does any other jurisdiction have a rent tax? They usually have rent credits based on the theory that property owners get to deduct the interest on their homes on their taxes where renters don’t get to do that.

  13. V Smoothe Post author

    Dan –

    It’s fine to disagree with people’s positions, but it is also important to be careful about making assumptions. When we do this, it because easier to dismiss their opinions without thoughtfully considering them. I was at the same meeting, and I don’t recall most of the people there saying anything about how they’ve owned their homes for a long time. I’m not familiar with the homeownership situation of all the attendees, but in the case of every attendee where I do know it, they all purchased their homes in the last couple of years.

  14. Naomi Schiff

    This points to the need to revise the old Prop 13 structure which has a) burdened homeowners to the benefit of longtime commercial property owners and b) penalized the young or recent home purchaser to the benefit of the longtime homeowner. It is a statewide problem. Many municipalities are in the same jam, trying to fill in for a misshapen tax structure. It’s true that all the revenue measures add up. But what is worst about it is that these miscellaneous sums are layered on top of highly unequal taxes. And Chevron laughs all the way to the bank.

  15. Livegreen

    So much for Equality Under the Law. One more example of discrimination against youth, and the wealthier older generation pushing more costs on it’s progeny.

    Thanks for your sympathies Naomi.

  16. Daniel Schulman

    V – you are right! I should not make assumptions about the home ownership status of people I do not know. Still, my main point remains — people are starting to realize that we face unprecedented problems, yet they retreat to the same old talking points. On the one side, there is the “pay taxes, they are good for you” group, and on the other there is the “I pay enough taxes, I should be provided with better services” group.

    This type of rhetoric might minimally suffice when we discuss new taxes for improving services such as repairing roads, building new parks, or longer library hours. With the current situation, though, we will get none of those things. In fact, we are promised just the opposite – with new taxes, services will greatly decrease. We are told the alternative is a decline in services to a level unimaginable.

    I don’t have any answers here. I haven’t made up my mind on the proposals for new tax measures. I do not plan on doing so, until I have better language to explain my position to myself and others.

    Some of the ideas MOBN has been circulating about objective-based budgeting might have merit. Ralph seems to be proposing some new ideas. I also enjoy the in-depth analysis at ABO. Hopefully I will continue to find ideas that will help me come to a better understanding of the situation.

  17. Jim M

    Maybe a merger of services is possible. How about merging Oakland and Berkeley together. We could call the new city Berkland!
    The A’s will be renamed the Berkland Dodgers, and play at the newly renamed Cal Memorial Stadium. It will be renamed Dodger Stadium.

  18. Naomi Schiff

    A bunch of college kids (among them one of my daughters) from the East Bay who live in Brooklyn NY call it Berklynd. (Perhaps they like the familiar feeling of life in the cooler satellite town across a body of water from a glittering tourist city.)

  19. len raphael

    J, not really a renters tax, but an allowable passthru for living units covered by the rent adjustment program (rap).

    in practice, a landlord would only raise the rent (aka pass it thru) if the current rent was under market rate. otherwise tennant would exit.

    so a non rent controled unit wouldn’t be affected by the tax, until the effect of the tax is to raise rents through out oakland. not in the short run.

    essentially pass thru or not, a parcel tax is mostly an owner tax not a tennant tax.

  20. Marleen

    V, just because someone bought their home in the last couple of years does not mean that they aren’t benefitting from Prop 13. If you or your spouse us 55 or older you can transfer your old tax base to a new house (with some limits). But I will keep defending Prop 13, even though my taxes are way higher than theirs. On the Measure Y balance problem, keep in mind that City officials, despite all their fancy degrees (or not, in Quan’s case) struggle with basic arithmetic. They didn’t factor in annual raises or inflation. Then they stole around $15 million to fund non Measure Y recruitment and academies. Most recently they charged Measure Y $85,000 for on officer on a gang task force! Now they have 75 officers funded by Measure Y when it was meant to fund only 63. These people couldn’t even balance their own checkbook to save their lives. Not one more dime.

  21. V Smoothe Post author

    That’s actual a Prop 60 rule, Marleen, not Prop 13. And again, as far as I’m aware, the people Dan was referring to are not in that situation.

  22. Daniel Schulman

    Hey I already said I was wrong for making assumptions. Why you bringing me back into it.

  23. Naomi Schiff

    Marleen, are you defending the shrinking proportion of prop. tax paid by commercial property owners, at the expense of residential owners? Many of these are the same big companies that are evading federal tax by offshore banking maneuvers. Big corporate America is not paying its way. (Although it IS sucking up plenty of subsidies paid by us.)

  24. Max Allstadt

    People die, and their homes lose the exemption from escalation when they do. Right?

    Corporations are potentially immortal. Does prop 13 allow them to be exempt from escalations in property tax indefinitely?

    If it isn’t changed, will Disney be paying 1978 tax rates on Disneyland forever? Imagine what the inflation adjusted annual taxes would be on Disneyland by 2078. Virtually nothing. Hell, it’s probably already virtually nothing.

  25. ralph

    Newer homeowners are not punished by P13. It is only reasonable that the tax paid be based on the initial fair value of the property. Over time though newer home owners become establised homeowners and start paying less relative to their new neighbor, assuming no P60 relief.
    Yeah for P13 and P60. I will fight the good fight with Marleen.

    These commercial owners that Naomi seems to dislike, don’t that also include your local business owner who has a handful of commercial properties. Wouldn’t has taxes also go up. Doesn’t the local guy then allow small businesses to operate at reasonable cost level?

    Big corporations are not a bad thing. Last i checked they employ people. Some also provide free advertising to small local businesses. The US tax code permits the offshoring of dollars. If this allows a company to improve the quality of life in one country and expand markets and increase knowledge jobs here, then I am all for it.

  26. livegreen

    Like Marleen, I agree with the parts of Prop13 which puts a minimum threshold for passage of new Property taxes, for exactly the reasons we find here in Oakland: renters aren’t affected and so vote in the new taxes (often without even looking at whether it’s money well spent).

    On the other hand I disagree with the Prop 13 parts that skew towards our generationally wealthier elders (as opposed to either the younger generation or poorer elders), who use more services but expect their children to pay most of the taxes and expenses (not just for their costs, but all the other govt spending out there paid by Prop taxes).

    This is not old vs. young in a void. It is specifically with several other contexts and market based forces that are affecting younger generations as the U.S. declines in a way that it did not affect our elders at the height of U.S. power and wealth:
    -Older generations are wealthier than the younger generations. This is a new trend and decline in real incomes that has not yet sunk in.
    -Older generations in the private sector had many more benefits than the younger generations. This is in great part because of globalization and we’re now in competition with lower cost labor markets (uneducated AND educated).

    –The public sector has still held on to many of those benefits, but as a result of the above will be forced to make cuts because the private sector middle class is both shrinking and earning less.
    –Older generations are asking for benefits that (understandably) continue their high income standards they’ve come to expect into their “golden years”. But, of course, they don’t have to pay for them and (being a big voting block) no politician is going to tell them this.

    –Finally, real estate values are NOT growing, but shrinking. Not just from the height of the market, but even before that as home sale costs continue to decrease. So an increase in taxes of newest homeowners is not happening.

    Of course it might resume in the future, especially as rent costs increase and homeownership becomes more attractive, but that has yet to happen and will take some time.

    In the meantime it’s a fact that, for the reasons I’ve mentioned, a wealthier generation is paying less taxes and receiving more benefits than younger generations or their children. And because it is not their lives (their relationships, their lives or their retirement communities) they still see how great things are for them and their friends, but don’t know or see the challenges of those who follow (if they do with their children, that is on an individual basis, not as a group).

    And being baby boomers, they have a greater # of voters who (at least for now) vote their experience: the status quo.

    We definitely need parts of Prop 13 to maintain the hurdles to new Property Taxes. However the inter-generational differences and hurdles need to be eliminated so we’re all in the same boat. Finally, there needs to be an income component so Prop 13 and Property Taxes are not so regressive (for poor AND middle class older AND younger generations).

    Regarding Commercial, I have similar concerns to the above, and as Ralph, for small business…

  27. Max Allstadt

    There are other problems Ralph.

    For instance, due to prop 13, holding costs as a percentage of property value go down over time. That incentivizes land banking and stagnation.

  28. The Boss

    Max -

    Actually you’re wrong about the people dying thing. The lady who owned the house two doors down from me died. Her daughter inherited it, moved in, and has inherited the old prop-13 basis. Apparently it only goes up if you sell the property as opposed to inheriting.

  29. The Boss

    One other point on Prop 13. The problem with changing it now is you have people who have paid at a higher-than-normal rate for the past 10 or 15 years. that seemed like a fair deal because those people assumed that in the next 10 years or so they’d be at a below-normal rate, so things would sort of even out. If you raise them to current value, you completely screw them.

    My opinion is prop 13 should be altered to set a minimum assessment of something like 50% of current value. So, you do get some benefit for living in the house for a long time, but you don’t have absurdities where people are paying on a basis that’s 1/10 of current value.

  30. Max Allstadt

    Boss,

    Why not make the correction to prop 13 phase itself in over time, mandating no more than a certain percentage increase per year in the total tax liability on a property?

    Also, I think that it really would make the most viable reform of 13 is quite simple:

    Change it so that only one property per adult human being can be exempt from escalation. Couples would still be able to have a second home, but corporations and multi-property landowners would have to pay up. If that change was made, along with the phased in escallation, I think it could actually pass.

  31. The Boss

    Max -

    I’d support that probably. I’d also support this:

    * Eliminate the prop 13 2% a year cap, immediately raising people to market rate.
    * Maintain the 1% maximum millage rate
    * Allow people to defer taxes if they can’t pay them, and the govt gets a lien on the house
    * Constitutionally cap the income tax at 5%. Also, cap the corp tax at some reasonable rate.

    I believe that would create the proper incentives to invest and eliminate this absurd incentive for someone to buy a house and refuse to move because of taxes.

    Same goes for businesses — the incentive should be to buy and build new stuff.

  32. The Boss

    Wanted to add to my quick response to livegreen about GE, because I know few people will click that link.

    The reason GE paid no taxes is because of losses sustained in prior years. This is totally standard, and every country in the world allows businesses to carry forward losses for tax purposes.

    Imagine if you owned a restaurant that in the first year lost $100k as you set everything up. Would it be fair to make you start paying income taxes in year 2 on your first bits of income? The standard answer is “no.” And this is why GE paid no taxes.

    You can argue with this policy, but changing it would decimate a half century of tax jurisprudence and accounting standards, not to mention making the US even less attractive to businesses, tax-wise.

    I was pretty surprised The Daily Show dealt with this the way it did. It shows the IQ of that show is really slipping.

  33. ralph

    I am glad facts do not get in the way of a good story in the comments section. Thank god for people like The Boss.

    As for the dying and transfer of basis to the kids and gkids, the prop 13 basis remains but I thought the authority were subsequent prop. Essentially, families now enjoy a benefit that was once only enjoyed by corporations. Get rid of the benefit for one, get rid of the benefit for all.

    I might think that 1979 owners should pay more but I am in no hurry to change the system, As The Boss correctly points out, new owners expect to benefit from P13 in future years. Further, the elimination of the 55 transfer of basis is off the table. (This probably only affects people on the margin. I don’t think this is going to be the overriding consideration for most home sale decisions.)

  34. livegreen

    Thanks for the link Boss. I haven’t read through GE’s complete press release, but it does seem logical on the face of it.

  35. Chris Kidd

    Warren Buffet owns a home valued at $35,000,000 in Newport Beach. He also owns a home valued at $300,000 in Omaha, Nebraska. Guess which one pays the higher property tax? And we want to defend this?

  36. ralph

    Changes to P13, I do think that make sense: a) the P13 limitations should apply to one’s primary residence and primary residence only and b) a means test.

    Neither of these changes in coming though. I seem to recall two stories when P13 went to the voters – fixed incomers (aren’t we all fixed incomers) would not get kicked out of their house due to a rising tax bill and the state was under pressure to resolve educational funding inequities. Something tells me that the non-Warren Buffets in richer communities are not willing to pay higher taxes if their tax dollars are going to support some podunk town. If the increment stays local this may work.

  37. Dax

    Lots of facts and stories here that have little relationship to reality.

    Regarding Warren Buffets house in Newport Beach.
    I seriously doubt it is worth 35 million.
    In November 2004 Mr Buffet said it was valued at 4 million. I doubt its much higher now given the crash of the real estate market.

    Next, I wonder how many posters here realize that California’s budget crisis and that of the counties and cities would be WORSE this year, if it were not for Prop 13.

    You see, we all know the California Legislature and all local governments always spend right up to and beyond their expected revenues.

    If we did not have Prop 13 in place over the past 5 year property tax revenues would have gone off a cliff.

    As it now stands perhaps only 1 house in 5 has applied for a reduction in assessed value so they could then pay less property tax.
    Were we in a situation where there was no Prop 13, then 100% of homeowners would be applying for and getting large reductions in their assessed value.

    Overall property taxes would dive by perhaps 40%.
    Instead, current property tax receipts are down very little.
    Why? Because most home owners are still below their true market value, so they not only don’t get reduced property taxes but the get a 2% increase each year.
    I’d have to check, but I’m not sure there is any reduction in property tax revenues overall.

    Now, my good friends, do you really think if Prop 13 were NOT in place that cities, counties and the state would have huge rainy day funds to offset a 40% dive in property taxes.

    Indeed, Prop 13 is one of the few things that is saving the butts of cities, counties, and the state during this fiscal downturn.

    You should thank your lucky stars that the moderating influence of Prop 13 was in place these past few years.
    Without it, municipal layoffs and school layoffs would be many times what they now are.

    Beware of what you wish for.

    Politician’s spending habits will almost always be irresponsible. That will not change.
    If state and local spending had only been limited to population increases and a inflation adjustment, then this state and the cities would not be in such dire straights.

    There was a HUGE leap in state spending during the first 3 years of the Davis administration.
    After adjusting for inflation and for population growth, you still had a “real” increase in spending per capita of 25% in 3 years.

    For those who understand math, that is simply GIGANTIC.
    Only the huge cuts we now face, are bringing true spending (inflation adjusted) per capita to where it was in the early 90′s.
    Did you think state government was too small in the early 1990′s?

    Don’t overlook the huge changes.
    Example….Oakland’s instant leap in pensions of 35% overnight?
    Now we have problems…. Duh?
    They’ve only begun to weigh on the city budget. Just you wait.

    Heck, I heard Gavin Newsom on KGO today.
    Even he says we need huge changes in the pension plans.
    Yet show me the city council member or Jean Quan who is even approaching that problem other than trying to get the police to kick in 9%…

    Everyone is kicking the can down the road while they get their undies in a bunch about the old whipping boy, Prop 13.

    Prop 13 is saving our behinds these years.
    Giving us a steady solid dependable source of revenue.

    My, my, my!

    PS… when, oh when, will Marcie Hodge ever file her campaign finance report for the mayors race?

    She is hiding something for sure.

  38. Chris Kidd

    Not to mention that the 2/3 tax rule in Prop 13 actually promotes irresponsible government.

    Passing a proposition that requires a certain set-aside or spending floor in the state budget: majority vote. Passing a proposition that actually has a mechanism to pay for what we’re getting: 2/3 vote.

    Prop 13 is a bunch of disparate elements thrown into a single proposition and only seems to have a smooth fa├žade simply because it’s been a part of CA political reality for so long. There’s ample opportunity to spin off smaller policy discussions centered on the weaker sections of Prop 13 and thin the herd, so to speak. As soon as you make it abundantly clear that homeowners won’t be effected, you’ve split off the largest interest group that would defend Prop 13.

  39. Max Allstadt

    Actually, localizing the revenue stream for things like schools and public safety is one of the great obscenities of our age, if you ask me.

    It has a lot to do with the balkanization of American metropolitan areas. It exacerbates income inequality. It also sets up poorer municipalities to be exploited by richer ones more easily.

  40. MarleenLee

    Wow, the conversation really got derailed on Prop 13. Chris, of course you can find anecdotes to support an argument of “unfairness,” but I think it is unfair that families who bought their homes for $20K, that then supposedly appreciated to $200k, actually were forced to move because they couldn’t afford to pay the taxes. That’s really unfair. If it hadn’t been for Prop 13, my parents, living on one modest income with two kids, could have likely suffered the same fate.

    A house is an investment. Like stock. If you bought Google at $100, and somebody else had to pay $600, is that unfair? No. Also, being taxed on the supposed “value” of the house has to be questioned. The “value” of some houses a couple of years ago was $600K because of a “bubble” and insane speculation. Now that same house is valued at $300K. What is the real value? I think prices in the Bay Area are still overvalued. I think it is totally unfair to tax somebody based on, essentially, hysteria in the housing market, that the person may never benefit from because they don’t actually sell and realize the gain. Oh, and Prop 13 is still overwhelmingly popular in California.

  41. Max Allstadt

    I think the reason this thread got derailed is pretty simple: the Mayor didn’t make any decisions about the budget, so we can’t talk about her budget priorities.

  42. ralph

    Dax,
    Stop trying to introduce facts. To add more color to the Buffet story back in ’04 the market value on the 70′s Laguna Beach property had a mkt value of $4MM and the 90′s Laguna Beach property has a mkt value of $2MM. His tax bill was $10K less on the 70′s property. (I assume what WB refers to as Mkt is the assessed value.)

    According to some, the annual appreciatioan for Laguna Beach since the 90s is roughly 9%. Based on this, the 90s purchase has a market value of ~$8MM. Theoretically, the 70s home could be worth $35 – $40MM but it would require average annual appreciation of roughly 9% since date of purchase.

    Prop tax revenue for the yr ended 0605 was $234MM, FYE: $358MM, FYE: $359MM

    There is probably some argument that without the cap, property values would not have risen as much. But this is only one item that factors into home prices and I am not sure of its relative importance.

  43. ralph

    Max,
    What would be the problem if people like established buyers who complain about the unfairness of the P13 on newer buyers were to pay more but their taxes went to the local coffers. Let it be decided at the local level. Communities that do not want to pay do not need to put the measure to the voters. Communities such as Oakland where established owners want to pay more and newer buyers have no problem with established owners paying more so long as newer owners are not subject to the same bill later in life, why not. The state could still level the funding for schools.

    For budget fun you might want to try aligning the spending with the 6 priorities. I believe somewhere in the first few pgs you can find 6 priorities they have been the same for the last few budgets. But when you go to the department budgets there is no alignment with priorities. I would love to see this added to the budget as it will be easier to figure out what the trade-offs are. All the budgets are internally focused and really should have an external focus.

  44. len raphael

    Understandably governments want a stable source of revenue, which real estate tax usually is, compared to income tax or to a lesser extent, sales tax.

    local govts dont care a fig about the impact of such taxes, only how much and how stable are they. and which political interest groups are affected.

    justifying taxing tangible property such as real estate instead of say intangible property such as stocks/bonds (Florida and many European countries tax those) gets into one of those how many angels on a pin discussions.

    More interesting comparing taxing property vs consumption vs income. btw, as long as we’re on the topic, why not bring back the California inheritance tax? That was repealed about 20 something years ago.

    At one point, a couple of decades ago, California collected “personal” property tax on business inventories. Now they just collect on equipment and supply inventory.

    Personally, i’d prefer to see confiscatory inheritance taxes and very low income, consumption, and property taxes for individuals. For businesses, some property tax but use an average rate for what other similar countries have to stay competitive.

  45. len raphael

    wierd isnt it that you hear about various neighboring cities all taking drastic fiscal action. But in Oakland, its a strange combo of hand wringing and prayer (like those Trib articles interviewing grieving families of homicides), or cheery obliviousness like JQ’s.

  46. annoyed

    Time to start contracting out some police services to the Sheriff’s Dept and or consolidating some functions with other police departments. Oakland needs better police services and we cannot afford our police department, which has no intention of compromising on anything. Morale is low, officers are leaving in droves, the chief’s days are numbered, no more academies are planned so it’s time to develop a new law enforcement model for Oakland. This is one of our costliest budget items along with OFD and it’s time to see how Oakland can maximize police services and minimize cost.

  47. len raphael

    Annoyed, wouldn’t think there’d be the dramatic costs savings for oakland from consolidating public security with neighboring cities/county compared to what the smaller cities like SL, Hayward, Fremont could achieve by consolidating without Oakland.

    if there are cost savings, those cities probably would see it a cost shifting to them from Oakland, instead of cost reductions from economies of scale.

    no substitute for first cutting compensation, layers of management etc, here. Then the other cities might not resist consolidation with us (yeah, sure).

    i think we need the holy grail of revenue sharing from a commuter tax on commuters to SF and SJ, getting allocated back to bedroom communities like Oakland.

    That won’t be sufficient because of our disproportionate share of unemployed residents, but a start and an alternative to raising parcel taxes astronomically.

    -len raphael, temescal

  48. annoyed

    I’d like to see if there are cost savings for having the Sheriff’s Dept police special events, etc. No reason to be paying astronomical overtime to OPD if the Alameda Sheriff can do it cheaper under contract.

  49. JB

    Annoyed– Actually, the City charges third parties a burdened rate (overtime + O&M) to use OPD at events. Therefore, far from losing money, the City makes money on such events. Furthermore, when the City turned the airport over to the sheriff’s office, it lost $8M a year from the Port (about as much as Measure Y/BB now covers for police costs). Finally, as far as contracting out, Oakland police officers and Alameda County sheriff’s deputies make equivalent salaries (with the deputies also receiving lifetime medical), so contracting out here and there would not generate cost savings.

  50. ralph

    Isn’t special event is typically paid for by the event. I think most cities require the event to carry the freight and it only makes sense. For the most part the event only benefits those who attend and they should be required to pay the operation costs through entrance fees.

  51. len raphael

    JB, there must be upper management, facilities, communitications servers, software and other hq cost savings from consolidating? certainly for smaller cities.

  52. len raphael

    clarification: standard commuter tax is imposed on the incoming individual or business perfoming services in a city. we don’t want to do that for oakland because we need all the inbound, sales/use/biz/property tax generating commuters we can attract.

    we need sf and sj to share their tax revenue with us based on oakland residents who work in those cities generating more tax revenue for those cities than they cost those cities in services.

  53. Ravi Olla

    Folks, there are cost comparisons. Oakland with about 650 cops spends about $220 million each year on OPD. Cincinnati, a city of similar size (400K) has 1100 cops and spends about $133 million a year on cops. Cincinnati is also a model for community policing and police reform generally.

    Oakland’s cops are expensive for a number of reasons. First, a high crime rate, especially violent crime, which demands lots of overtime (like 10% of the police expenditure instead of the national standard of 6%); second, a poor (to put it mildly) auditing/accounting system–we don’t know where our money goes and we don’t know whether it’s being spent efficiently (this is citywide not just OPD).

    It’s true that starting cops make more in Oakland than in some other cities, but in other cities cop salaries rise very quickly in the first few years (which they do not in Oakland).

    Having too few cops also costs money. It means more stressed-out, overworked cops likely making more bad decisions. You’ve all heard of John Burris, no?

    High crime is a powerful disincentive to economic development and growth in Oakland. This is where it all comes home.

    At the heart of the matter are the oblivious Oakland City Council and Mayor. Few of them have ever held a clear thought in their noggins. Few of them have ever stepped in and envisioned a better Oakland and defined priorities (Mayor Q’s favorite statement: “Oakland has many priorities” which means that we have none). Virtually no management or leadership skills in evidence in City Hall.

    Prayer, unfortunately, won’t help all that much. Maybe recalling all of Oakland’s electeds might open an eye or two.

    But what would the peeps here complain about then?

  54. Livegreen

    There are two other reasns for high OPD costs here: high cost of living inthe Bay Area, and unending competiton between Bay Area PD’s to get lateral transfers.

    The latter is supposed to b less expensive than Police Academies, but I’m starting to wonder if it really is.

  55. Mry

    I think at this point, it would be tough to get laterals. The word is out that it’s horrible here, we would end up with the hot potatoes that no other department would pick up. As far as laterals being less expensive, who knows, but SFPD is about to snatch up some of ours…..

  56. Dax

    Part of the problem with Oakland’s police department costs is that current police officers get far more in compensation, even after adjusting for inflation, than their predecessors did in 1990, 1980, 1970, and 1960.
    Police officers and firefighters now live much more well off relative to their fellow citizens than they did in past decades.

    I’d say, you’d have to reduce overall total compensation by 25% or so to bring today’s Oakland officers in line with what similar officers made in the 1960-1990 era.
    (That, after adjusting for inflation)

    Now, all Oakland employees make more than back then, but police and fire have had exceptional boosts relative to inflation.
    Some of it is in salary, but also in benefits and pensions.

    Everyone knows this. Several years ago, before the recession even began, you had some 8,000 to 12,000 people lining up for applications for about 20 openings in the fire department.

    Hey, here is a novel thought. How about the next time the city negotiates a contract with its non-safety employees, it proposes a 40 hour work week?

    Imagine that, a 40 hour work week?
    I know, I know, they’ll conflate that proposal with Wisconsin.
    Everything, every reasonable adjustment proposed is going to be labeled Wisconsononiun.

    Some people are boycotting Wisk laundry detergent just to show solidarity.

  57. Livegreen

    Right. I’m just adding to the historical reasons Ravi gave that Oakland PD comp has been high. If SFPD is about to poach some more of ours that points to continued compensation.

    However I’d like to know why similar nuclear arms race hasn’t happened in other crowded Metropolitan areas (such as the Northeast) like it has in the Bay Area.

    We are never going to be able to pay as much as SF, so what is the solution?

    I think we have no choice but to pay what we can afford, charge cost for any Officer who leaves before training/Academy costs are mitigated (as is reportedly done now) and hire Officers who r either local or have a historical connection to Oakland.

    I don’t know, however, if this will solve the dual problems with lateral transfers. I also hope the Mayor will explain this conundrum to Judge Henderson in their reported negotiations (whether the Judge cares or not we shall see…).

  58. Livegreen

    Aplying Dax’s point on Public Safety Compensation to a related matter, retirement benefits: If we can’t pay for PFRS now, how are we going to pay for more expensive, more recent hires?

  59. ralph

    LG,
    My gut says that the NE is not like the Bay Area. First, I think the supply of potential candidates is greater. Second, I don’t think any of the major cities compete with as many major cities as Bay Area PDs do. Third, the issues change the nature of the job.

    Lateral transfers should in theory as LG indicated be cheaper. Paid and trained by someone else. No academy no washouts. I recommend that SF, Oakland, Hayward, et al do combined academies. They all need the same training and no sense in each city carrying the entire freight especially when you consider that the potential supply is declining. Fewer births and more potential candidates serving in the US Armed Forces.

  60. Mry

    @LG, I’m not even sure Sf pays more than we do, that’s not even the point. Our PD is leaving to go wherever they can, they just want out. I can’t blame them.
    The toughest city to work in, and is becoming more anti police every day.

  61. Livegreen

    Is the “$10-15 million in employee concessions” compared to last fiscal year, or compared to the Mayor’s revised starting point that does not include the current furlough days?

    On page 6 of the Mayor’s memo it says salaries increase by $8.2 mill for FY11-12 due to excluding business shutdown savings (=furloughs)…that have not been assumed to carry forward.

    Besides being a weird negotiating tactic, does this mean the $10-15 million in employee concessions she plans is from the projections she’s laying out now (furloughs canceled), or last year’s budget (furlough’s included)?

  62. len raphael

    LG, i’d have guessed that part of why bay area police compensation racheted up compared to the East Coast, would be the higher hiring standards around here: we prefer to hire cops with college degrees, writing skills, etc. instead of just flat foots.

    That doesn’t explain why OFD seem to be paid more here also, so maybe that ‘professionaliaton” of police theory is baloney.

    The rumors are that younger cops are leaving or trying to. If true, it’s probably the best of them who will get jobs elsewhere.

    You don’t want to be the first major city here to cut cop compensation when you have one of the worst overall working envoirments also re politics, citizen and politician atipathy, violence, staffing.

  63. ralph

    The college degree is probably not that big of a factor. From what I recall, East Coast cities also like degreed officers. Being an officer is less about force and more about understanding people. I think psychology was a popular degree for hiring depts.

  64. Ken O

    One of my friends from HS who was OPD moved to Pleasanton recently. Far less headaches for probably the same amount of work/pay. Why not?

    Oakland should be subdivided into the smaller cities it formerly was. That way decision making will be “closer to the ground” and easier for all to understand.

    It’ll happen eventually anyway. In some ways, it always has been that way, or already is that way.

    My suggestion may be dumb, or too simplistic, but simple can be good. Complexity is what gets – and has gotten – us in trouble.

  65. Max Allstadt

    Ken,

    If that idea was to be implemented, there’s only one way it would work out: Upping a lot of responsibility for basic services to the county.

    County fire, county sheriff, county public works, and county public health would all need to dominate in that context, or we’d create far more inequity than we already have. Imagine if West Oakland had to pay for it’s own cops with only tax revenue from West Oakland. We couldn’t afford it.

  66. Barry K

    Is Quan’s $80 pick-your-pocket parcel tax grab going to occur on a mail-in ballot costing the City about $250,000 to hold? Or, will the Council wait until the next General Election.

  67. livegreen

    What especially reassures me about the proposed budget solutions is the $20 million variation between the high and the low…

  68. len raphael

    some large part of the complacency of our local officials and the voters about our muni and state financial problems is a variation on the “too big too fail” federal policy that obama and bush used to justify the financial bailouts.

    problem is that people are are so out of touch with voter sentiment outside of the blue cities, they know that in worst case Congress will come to our rescue.

    California dreaming.

  69. Theresa

    Today’s Council budget retreat was … interesting. After the third slide in her presentation, Jean Quan immediately focused only on the general fund, ignoring 1/2 the city’s total budget. Yes, most of that is grants and categorical funds, but the truth us a lot of them offer some flexibility in how the money is spent. And every staff member added under a restricted grant gets pension and benefit payments made from the general fund, so they become part of boosting overall headcount and compensation.

    Between 1995 and 2005, Oakland’s employee payroll more than doubled, and average salaries went from $4,483 to $7,397 in a 10-year period (the $4,483 adjusted for inflation would have been only 5,746). Oakland had the highest average compensation per employee of any city i the USA – more than new York, LA, San Francisco, etc., so it’s not because of cost of living. In the past 40y ears, Oakland city staff has grown by almost 50% overall, while the population is about the same. And the problems of drugs and violence were awful in the 80s – remember the crack cocaine epidemic? So almost all the new staff hired are doing something other than public safety. And because they are at extraordinarily high salaries. they drive pension costs up exponentially as well.

  70. Dax

    Theresa, I like your presentation.
    This is the type of data that is completely missing in public discussions.

    You certainly won’t hear it from employee groups and council members won’t bring it out for fear of offending some group.
    Lastly newspapers won’t publish it, either because they don’t have it, won’t make the effort to find it, or think their readers won’t understand “numbers”…

    Now, I was wondering where you got the
    1. Number of employees history? 40 yr
    2. 1995-2005 average salaries
    3. Which inflation index did you use?

    Is there a study anywhere online that includes this data?

    The Tribune could easily publish a little USAToday type chart or graph to help the public see the reality instead of only hearing the refrain “Cuts, cuts, cuts, cuts….down to the bone”

    Oh yes, do you or anyone else know when Oakland’s regular employees shifted to 37.5 hours work weeks?
    I don’t know if it was put in place in the past 10 years or long before that.

    That is like a 6.6% raise.

    Or its like getting 1.43 days off a month compared to a 40 hour week.
    Or like a constant monthly furlough day EXCEPT you get paid for it.

  71. Barry K

    Dax, Theresa’s points were from a 2009 US Dept of Commerce review of the top US cities with the highest paid municipal salaries. Oakland was #1.

    Regarding furlough days, Quan promised nearly two years ago (another public budget meeting) that City employees would still earn credit towards pensions and benefits on furlough days, but, just not paid on furlough days. (In other words, they still earn and get “paid” not to work.)

  72. Theresa

    Thank you, Dax. I posted similar data in the sfgate.com story about the budget retreat yesterday. The number of employees comes from the city’s own budget documents and US Census. The data was also published on this blog on 24 July 2005. Average salary data is from the US Statistical Abstract, table 453. CPI is for the San Francisco Bay Area.

  73. Barry K

    Previously posted on ABO- “”A City that has the highest paid municipal workforce (PDF) of any large city in the country, and that awarded employees cost of living increases over six years that amounted to 10.1% more than CPI (PDF) has no business whatsoever asking voters to hand over anything else. The Council is in a tough position, no doubt, but they simply have to start learning to make do with what they have.”

    Here’s the link to the .pdf with the census data listing Oakland as #1!

    http://www.census.gov/compendia/statab/2008/tables/08s0453.pdf

  74. len raphael

    Somehow I’m not seeing the point of all the energy spent on the putative parcel tax poll. Whether a politician says she had a dream that a tax would pass or her allies paid for a poll, either way it’s politician noise. Since when was any poll, let alone a poll assumedly done on the cheap, reliable on a volatile issue like this?

    If it’s the principle of public records, why chose this violation to take a stand?

    When the Trib decides to take an editorial stand on Oakland, my reaction is to disagree because as an institution they have generally failed to inform the public of muni issues other than education ones.

    -len raphael, temescal

  75. Patrick M. Mitchell

    But len, you’re missing the point. Quan is attempting to DIRECT PUBLIC POLICY based on this oft-quoted poll. It’s a case of put up or shut up, because it involves our money.

  76. MarleenLee

    This whole issue about not disclosing polls is nothing new. I did a public records request for a parcel tax poll a while back (I’m pretty sure it was about Measure BB, but it might have been Measure N) and I got the same response – private poll, you’re not entitled to it. I’m glad that this issue is highlighting the lack of transparency, but the City’s failure to comply with the Public Records Act is far worse than this issue. The Public Ethics Commission has been holding a series of hearings regarding the ongoing issues. I hope some of you start going and speaking your mind on these important issues.