Yet more pointless budget discussion tomorrow

On Tuesday, the Oakland City Council will once again meet to discuss reductions to the FY09-10 (this year) and FY10-11 (next year) City budget. If it seems to you like there are an awful lot of these meetings, well, that’s because there are.

The City of Oakland has been in pretty much continuous budget cutting mode since Spring of 2008. If that seems kind of ridiculous to you, it’s because it is.

Two year budgets

In Oakland, we theoretically adopt a budget every two years. This two year budget cycle should be a good thing for the City. It provides some measure of stability in service delivery and allows the Council to focus on other pressing issues in between budget discussions.

The adoption of a two year budget is, of course, no guarantee that nothing will get changed in the non-budget year. After all, nobody can predict exactly what revenues are going to look like a year in advance. If revenues turn out to be lower than anticipated, or expenditures turn out to be higher, then the budget will get re-opened after a year so the Council can make mid-cycle adjustments. That’s normal. If the adopted two-year budget was done properly, using realistic revenue and expenditure assumptions, then the mid-cycle adjustments should not be too dramatic.

Two week budgets

Of course, this whole two-year and mid-cycle budget process only works if you adopt, you know, realistic budgets. If you adopt a budget that happens to be “balanced” with imaginary money that you are crossing your fingers will somehow fall out of the sky, or if you, say, adopt a budget that, in addition to being predicated on fake money, is still not even balanced in the second year, then you’re going to have to go back and make changes a lot more often than that.

It also only works if you are willing to commit to, you know, balancing your budget when you find out just how little money you do have to work with. The Council received a set of dire revenue projections last fall that revealed multi-million dollar shortfalls in this fiscal year’s budget, and despite multiple meetings about how to deal with it over the course of five months, they have still not managed to adopt a budget that closes this year’s General Fund shortfall. Still! It’s outrageous.

District 4 Councilmember, Finance Committee Chair, and Mayoral hopeful Jean Quan got into this bizarre habit last fall of talking about how Oakland should start looking doing at five year budgets. Nothing against five year budgets or anything, but I’m sorry – what a freaking joke. How can you expect to do a five year budget if you can’t handle a two year budget? Hell, the Council for the past two years hasn’t even been able to manage a one year, or even six month budget.

The Council was, in fact, so obstinate in their refusal to adopt a realistic budget plan during the last cycle that by Spring of 2009, they were essentially operating with a two-week budget. To keep the checks from bouncing until the new fiscal year could begin, they ended up basically just shifting a bunch of costs into the next year’s budget, but only after toying with and rejecting a number of ham-handed budget hacks, like a last-minute proposal to close the City every Friday for the final six weeks of the year.

What’s on the table this time?

Councilmembers Jane Brunner and Ignacio De La Fuente have proposed that all elected offices be forced to take a 15% budget cut (PDF). At a meeting earlier this year, one of the budget balancing measures that had been proposed (PDF) was cutting 5.0 FTE from the City Attorney’s office. At the meeting, a number of speakers complained that it was unfair that the City Attorney’s office should be cut so much while the City Council was taking no cuts. So they decided to not do the City Attorney cuts at that meeting, and instead come back with this idea of cutting 15% from the budget of all the elected offices. Here’s what the savings from that would look like:

  • Mayor’s Office: FY09-10: $45,120, FY10-11: $270,733
  • City Council: FY09-10: $81,300, FY10-11: $487,774
  • City Attorney: FY09-10: $91,080, FY10-11: $546,486
  • City Auditor: FY09-10: $33,470, FY10-11: $200,826

Under the proposal (PDF), the City Council would eliminate 6.0 FTE, cutting the position of Legislative Analyst. The Mayor, City Attorney, and City Auditor would be tasked with figuring out on their own what to cut in order to realize those savings targets.

Is cutting 15% from everyone fair?

The City Administrator has responded to the proposal with a rather strongly worded memo (PDF) advising the Council that their plan is not quite so fair as they appear to think it is:

Across the board reductions for all elected offices would be disproportionate and inequitable, given that each office has taken varying levels of GPF budget reductions since July 2008. In particular, some offices have already eliminated staff while others have not. FY 2009-10 and FY2010-11 reduction targets should account for prior GPF budget and FTE reductions taken since FY2008-09.

The memo points out that the way the budgets for the elected offices have been treated during the past two years of budget slicing varies wildly:

Similarly, since July 2008 in budget terms, and netting out transfers to other officers or funds:

  • the Mayor’s Office budget has been reduced by $.8 million or 30.7%
  • the City Attorney’s Office budget has been reduced by $1.8 million or 34.7%
  • the City Council office budget has been reduced by $.29 million or 7.7%
  • the City Auditor budget has increased by $.08 million or 5.6%

The memo continues:

To now make a 15% reduction for all elected officers neglects the reality that both the Mayor’s Office and the City Attorney’s have already made major staffing cuts and the Council has made only minimal budget reductions.

For the Council make 15% cuts now would still leave them far below the cuts (less than half) already made by the City Attorney’s office and by the Mayor’s office.

As such, there are two equitable approaches: (i) have the 15% cuts proposed for all elected offices be limited to just the City Council and by some lesser amount for the City Auditor; or (ii) have the Council cuts match the level of cuts already made by the City Attorney and Mayor, which would necessitate doubling the 15% Council cuts to 30% and then make much lesser cuts to other elected offices

The Administrator’s point about how the proposal does not actually demonstrate equity in budget cuts among elected offices is well taken. However, it fails to address the larger problem with the proposal, which is that forcing everyone to take equal cuts is a stupid way to close a deficit. Taking the same amount of money from everywhere assumes that every function of the City has equal importance, which it doesn’t, and that our existing budget prioritizes resources in the best way possible, which it also probably doesn’t.

Can we expect it to get better anytime soon?

HAHAHAHAHA!

Do I really have to say any more than that? I suppose I should. Okay, here we go.

I don’t know if it’s that people have short memories or that more people are watching the budget meetings these days, but in the days following each of the last two discussions, I had a number of people talk to me glowingly about the Council’s acceptance that it’s time to “get serious” about the budget. Some people praise the general attitude in the room, and other praise speeches from one Councilmember or another.

They always seem shocked when I just roll my eyes in response. They ask questions like “Why aren’t you excited that the Council is really dealing with the budget finally? You’ve been complaining about how they won’t for months!” Which is true. But for those who have followed the Council’s efforts to deal with the budget crisis for the last two years, this is a nauseatingly familiar song. It’s easy to talk about how it’s time to “get real” or “get serious” or “make tough choices.” Evidence of just how easy this is can be found by reviewing the video of basically every budget meeting in 2009.

Clearly, following through on those promises is a lot harder. One can’t help but wonder how serious the Council is collectively about balancing the budget when only one member even bothers to press staff at these meetings for follow-up and progress/feasibility reports about previously suggested revenue generating measures. (I’ll give you one guess which.)

So tune into to KTOP tomorrow to see the budget action, or, you know, don’t. There will be plenty more budget meetings over the next few months, and probably again over the next year, and nothing ever happens at them anyway. I mean, at some point, I suppose, something is going to have to happen. But who knows when that will be. Given the Council’s track record, I would not advise holding one’s breath.

37 thoughts on “Yet more pointless budget discussion tomorrow

  1. Mary Hollis

    Actually, I think the across-the-board cuts are a good idea for at least two important reasons.

    Why? It’s easy to implement

    First, the fact that it might not be “fair” (the criticism raised above) is actually a benefit. No two people on the Council or elsewhere are going to agree on what is fair anyway. Everyone has their pet favorites. So why not cut out all the pointless discussions and public meetings where an endless parade of self-serving speakers step up and argue why their particular job or office or service should be spared.

    Second, this is what a private business would do for cutbacks. You go to all the department heads and say, “Hey, your budget is 15% down for next year. Manage it”. That’s their job, to decide priorities and staffing levels in the area they are responsible for. So let them do their job. And if the manager won’t cut by 15%, fire him/her and replace with someone who will. Hell, I’ll go in and do it if they won’t.

    The money isn’t there and is highly unlikely to be there. The easy accounting games have all been played and played out. So let’s start wielding Occam’s Razor. And sure, people will squeal. But if nobody is squealing then the budget isn’t being managed, and V’s sad observations will remain true.

    Oh, and with all the time this will save, start figuring out how to budget for the vast, unfunded public-sector pensions and healthcare obligations. You know, the ones we ignore and pretend don’t exist.

  2. Patrick M. Mitchell (Patrick)

    The irresponsible manner in which the City Council deals with Oakland’s fiscal health (yeah, right) is nothing short of disgusting. When will someone on that board stand up and say what EVERYONE ALREADY KNOWS: there is only one way out, and that’s to get the public employee unions to agree to realistic pay, benefits and pension! I do not understand why the unions are not falling over backwards to get rid of the defined benefit pension-Ponzi scheme when it is patently obvious that there is NO WAY that Oakland will ever be able to afford to pay out what they expect. Hell, we can’t even afford to pay the ones who are still working! Of course, once China starts ramping up the dumping of US bonds, the dollar becomes worthless and we experience hyper-inflation, the $130000 they get a year in retirement won’t buy a loaf of bread.

  3. LoveOakland

    The cuts to the City Attorney are unlikely to be cost saving. When the city has to hire contract lawyers for work, it is much, much more expensive that in-house.

    BTW most city workers agreed to pick up a higher level of retirement costs plus take a 5% cut to wages. Income concessions total 10%. Not sure Police and Fire made concessions that big.

    City employees are not eligible for Social Security and those hired before 1984 are not eligible for Medicare.

  4. MarleenLee

    Giving every department a 15% pay cut is not necessarily how private businesses handle a budget crisis. I would say sucessful government agencies, and successful businesses, look more carefully at where they can trim the fat. Which people and programs are critical? Make money? Are efficient? Which aren’t or don’t? Shouldn’t those be the questions asked when making cuts? For example, the Mayor’s Office has an “education director.” This position never existed prior to Dellums, as far as I know, and the City does not run the schools, so there is simply no need for such a position. Positions like this should be first on the chopping block.

    As for the City Attorney’s office, I agree that hiring outside counsel is generally a lot more expensive than the City hiring its own in-house attorneys. But that office is not well managed. Why have four attorneys staff my Measure Y litigation? They always sent two (or more) attorneys to every hearing and deposition. That’s unheard of. No private law firm would be so inefficient. Oh, and how about defending and appealing lawsuits that they are clearly going to lose? That’s a huge waste of money too. Want the City Attorney’s office to save 15%? Tell them to do the right thing and settle my lawsuit!

  5. Bruce Nye

    Council has to make these reductions, or ones like them, as a matter of optics, even though the reductions do little to solve the problem. For FY 2010/2011, we’re talking about something like 4.3% of the budget gap, so although it doesn’t make any policy sense, if they want to focus on “fairness” between elected officials, fine, they can knock themselves out.

    There is a problem that is more overarching than even the pay/benefits one, and it’s this: Council does not ever address the budget problem globally, and neither council nor the public have the information necessary to make informed, global opinions on the subject. Instead, two weeks ago we had “Oakland Heritage Cultural Survey Night.” where much of the debate centered on the importance to the city of a single employee. Tomorrow night, we’ll have “City Auditor, City Council, Mayor’s Office, City Attorney Fairness Night,” where substantial amounts of time will be devoted to the political issue of making sure the four branches of government take similar hits. It sounds as though at a special meeting on 4/1, we’ll trot out “Neighborhood Services Coordinator Night.”

    In connection with the special budget meeting last month , the OMCC urged the council to start presenting the budget in a way that allows citizens to see, function by function, the level of service that could be provided at different levels of funding (letter is available here: http://tiny.cc/omccletter). That way, everybody could tell what would happen to a particular function if the city reduced funding levels by reducing personnel, by reducing personnel costs, or otherwise, or, presumably, by increasing them. The 800+ page budget document, while it does contain a lot of numbers, is not amenable to this kind of analysis. For many voters, and, I suspect, for council, presentation of the information in this fashion and a global look at what the city can and cannot do at current funding levels would make decision making painful but not all that hard.

  6. Mary Hollis

    Marleen

    I’d agree that all not all cuts made in the private sector are undiscriminating. You can cut unprofitable business lines or focus cuts more on cost centers than profit centers, and so on.

    But I’ve also seen across-the-board cuts too. And I’m advocating this on simplicity grounds. We can “just do it” without endless self-defeating debate about whose job/department is more important than whose.

    Most good lawyers would not want to work for a municipality. I’d guess the ADA’s, PD’s and City Attornies are second-rate. Paying more on purely an as-needed basis could easily save money. As could not passing dumb laws that we know are going to get pulled in the Courts.

    LoveOakland,

    Sorry, not buying it. City workers have benefits out of all proportion to their pay scales which themselves need to be cut. Concessions made so far are mere token gestures.

  7. MarleenLee

    Mary, I disagree that lawyers in government service are second-rate. (District attorneys and public defenders actually work for the counties, not the cities). Some are the smartest, best educated, most dedicated people around. Keep in mind that judges also work for the government. They don’t do it for the money, that’s for sure. But I can’t say I’ve been impressed by the Oakland City Attorney’s office.

  8. Mary Hollis

    Marleen,

    Good point about those working for the County. I’ve never quite figured out how the City’s finances impact the County, and vice versa.

    And yes, I doubt we could cut any Judges anyway. Wouldn’t they be County as well?

    I tend to think that the mercenary nature of the law profession ensures that the best minds will seek the highest rewards but, yes, I’m sure there are a few noble yet competent lawyers in public service. Sounds like they don’t trouble the City Attorney’s office much though.

  9. Frank Castro

    Marlene, I agree with that the example you mention about 2 or more attorneys showing up for a deposition is incredibly inefficient. In the private sector you would have to justify this on the monthly billing to the client (and clients in the private sector are closely scrutinizing their bills line by line) I don’t believe such scrutiny is involved at all with the City Attorney’s office. After all, who is the client that should be performing the scrutiny?

  10. len raphael

    LoveO, please give more details on city retiree medical benefits. You point out that employees hired before a certain date don’t get medicare. But don’t they get a much better plan that’s free to them upon retirement and pays for all their dependents? With medicare it’s easy to run up thousands of dollars in unreimbursed costs per year. Plus many docs won’t take medicare, so you have to pay the difference between what they charge and what medicare reimburses.

    medicare pays 0 towards dental. What about Oakland’s ?

    How much did/do various categories of city employee contribute to their current and post retirement medical and dental costs? I assume if they weren’t covered by medicare they weren’t paying in the medicare employment taxes.

    Oakland employees i’ve talked to, never gave details but mentioned the benefits were embarrassingly excellent.

    -len raphael
    temescal

  11. livegreen

    I believe this is about the third time in as many ABO discussions that LoveOakland has mis-stated City workers have accepted 10% cuts in income.

    I don’t mind that L.O. is a member of a City Union, but at least should get his/her facts strait and stop saying a Retirement Contribution is = to Income. It’s not Income until it’s taken as such.

    And the other 5% should be clearly stated as a temporary cut in income. Since they’re not working for that anyway, it in no way should be misconstrued as a cut in either salary or benefits. It is neither.

    I sure hope the CC is setting themselves up as an example to prepare for further cost-cutting…

  12. len raphael

    Budgeting on a cash basis instead of “accrual” as most cities and counties do except for NYC, is a license to the council and the mayor to play shell games from year to year. they’ll happily ignore expenses that come due just after elections or their retirements, and can announce with straight faces and crossed hands, that they’ve “balanced the budget”. it is illegal for publicly held corporations to issue cash basis financial statements (other than limited exceptions) because it is misleading to use cash basis for large complex organizations.

    -len raphael
    temescal

  13. Ralph

    len, i meant to ask you this the last time you posted cash basis, but i was under the impression that the city does use accrual acctg. the problem is the off balance sheet liabilities

  14. len raphael

    they use a rube goldberg version of accrual accountng that is legit for muncipal govennments (and for all i know, county and state govts) to use.

    so maybe a more accurate prescription would be for oakland to adopt for budgeting purposes only, the same generally accepted accrual accounting principles that private sector and non governmental non profit organizations are required to use when those entities issue audited financial statements.

    eg. when enron omitted the huge liabilities of certain partnerships that it’s execs controlled, that was off balance sheet stuff that fell within the letter but not the spirit of the gaap rules.

    But not even Enron would have dared omit huge unfunded pension obligations, as muni govts such as oakland do. I don’t know enough about accounting for pension obligations, but i would guess that auditors for private sector and non profit orgs would not sign off on financials where the assumed rate of return for the pension funds were as high as they were for muni govt financials.

    So as not to hurt Oakland in the muni bond market, we could start by just insisting on this for budgeting, so as not to spook the lendors when we’re obviously insolvent on a gaap accrual basis. And arguably not a “going concern” without a massive federal bailout.

    my point is that budgeting using standard muni governt accounting methods is budgeting with one hand behind your back and both eyes shut.

  15. Dan Rossi

    Mary,
    Second rate lawyers? Thems fightin” words! Many of my colleagues in the City Attorney’s Office went to top law schools (Harvard, Stanford, Boalt, NYU, Yale, Hastings, UCLA, if you’re into the elitist thing) and came into the office with lots of experience, so they had plenty of options. Believe it or not, some of us are not interested in working for the big private firms and went into law because we like public service (even at lower pay).

    Len,
    My retirement medical benefits will give me something like $420 a month, which would cover maybe a third of my family’s medical insurance. I’m not complaining, but you should know retirement medical is not all covered. Right now, City pays for Kaiser for active nonuniformed employees, employee picks up the difference between Kaiser and his//her plan.

    Livegreen,
    All I know is that my paycheck is 10% lighter than before, so, yes, there was a pay cut. Not all pay cuts are in the form of a salary reduction. (Yes, half of that is in furlough days, so we at least get the time off.) And no pay increase since 2007.

  16. len raphael

    Dan, is there a link to the city’s explanation of health insurance coverage for different classes of retirees? you’re saying that it’s a set dollar amount of reimbursemnt or set dollar of premium reimbursement? is there dental coverage?

    in your case, would you also qualify for medicare? so in effect the city’s plan reimburses you for the cost of a good medicare supplemental plan?

    -len

  17. MarleenLee

    Dan – too bad some of your colleagues don’t share your interest in “public service.” If they were truly interested in serving the public, they’d use their advocacy skills to try to convince their “clients” that fighting against implementation of Measure Y is not in the public’s best interests. At a cost of what I currently estimate to be over $200,000 to the City, so far. Ironically, at tonight’s MYOC meeting, your colleague was asked point blank how much the MY litigation had cost the city so far, and he wouldn’t answer. He should know. I bet he did – he just didn’t want to admit it. Stanford law degree notwithstanding, I was not impressed.

  18. DontBotherDelores

    Can someone explain why the Auditor’s budget went up? I could be mistaken but I thought that Ms. Ruby sent out a worrisome email far and wide a few months ago claiming that the Oakland City Council was cutting her budget and stopping her from doing her job. What is it again that she does?

  19. livegreen

    Dan, Oh I see. Because you have to pay 100% of the employee contribution to your retirement benefits, that is a pay cut. Makes sense now.

    Except it was never income before or after. It’s “retirement benefits”.

    If you don’t want to contribute, maybe you can give the money back? Because while your complaining about a 5% increase in benefit contributions, & 5% cut with furloughs (during which you can at least spend time with family or friends) our family income in the private sector has decreased by about 50%.

    For which I’m working just as hard, or harder, and don’t get to spend any more time with my kid. & the feeling I get from you as a City Public Servant is, you could care less, you just want what’s due you…

    Except the City has a BUDGET C-R-I-S-I-S. What’s your alternative?

  20. CitizenX

    Figures lie and liars figure. Lindheim’s letter suggests that the City Attorney’s Office has taken a 34.7% cut over the last few budget rounds. But, if one looks at the attached detail, one can see that 20 FTE’s and over $4 million of the Attorney’s budget were transferred to the Self-Insurance Liability Fund in the 2009-2010 budget. Because this substantial portion of the Attorney’s budget was moved from the General Fund, the subsequent cuts appear unduly large.

    The Self-Insurance Liability Fund (S-ILF) has a negative fund balance of over $21 million and it is not getting any better (see the report on Negative Funds on the 3/23 Finance Committee agenda). How is the S-ILF funded, you ask? By TRANSFERS FROM THE GENERAL FUND.

    So, in order to reduce City Attorney General Fund budget, the City transferred those costs to the S-ILF, which is, in turn, funded by the General Fund. The Dellums administration and City Attorney obviously think that the residents of Oakland are incredibly stupid.

  21. V Smoothe Post author

    Livegreen, I find your continued insistence that City employees did not take a pay cut completely bizarre. You can complain about the way the pay cut was implemented all you want, but the absolute reality is that every non-sworn employee is taking home, on their paychecks, 10 percent less money than they were a year ago.

    I’m very sorry that your household has seen a steeper pay reduction than that, but I really don’t appreciate the way you continue to nastily belittle the sacrifice that City workers have made. A 10% cut, especially for those who were barely making ends meet in the first place, is a very significant drop in pay, and it has made a lot of people’s lives a whole lot harder.

  22. Mary Hollis

    Dan,

    No disrespect or nothing, of course.

    But I never met any employee who didn’t say he was outstanding, dedicated, professional etc etc. and certainly not any of the endless litany of speakers at public meetings who line up and tediously espouse how valuable they are.

    This ultimately isn’t about how good you are or are not. It’s about the fact that we can’t afford you on your current pay and benefits regardless. So if your department, along with all others, has to cut by 10%, then cut the employee that is the least outstanding, dedicated and professional.

    V,

    The issue isn’t whether or not any 10% cut already suffered is real or imaginary. The question is whether it is enough. Given the horrendous deficit, and given the fact that public sector salaries and benefits are still deemed attractive from the POV of many reasonable people, then it becomes legitimate to consider taking off another 10% if that is what it will take here.

    Everyone is a great employee. Everyone is dedicated. Every service is vital. Every sperm is sacred. But if the money isn’t there, it isn’t there. We either cut less now or we cut more later. I don’t see a third choice and certainly not an easy choice.

  23. MarleenLee

    What about step and column increases? Were steps and columns frozen last year? If not, then most City workers did get a raise. And the “no raise since 2007″ for the City Attorney’s office would also have to take into consideration step and column increases. I doubt step/column has been frozen since 2007.

  24. Patrick M. Mitchell

    Ummm…I’ve seen the pay schedule for City of Oakland employees. If a 10% pay cut “has made a lot of people’s lives a whole lot harder”, it is in that they have to trade down to a less expensive Mercedes Benz. Furthermore, it is going to be a heck of a lot harder than that when the City is forced to lay them off by the hundreds. As a taxpaying homeowner in Oakland (which I know you’re not, though I do realize that you’re employed by the City), I understand livegreen’s frustration and anger completely. Yes, it is unfortunate that anyone is furloughed and made to actually contribute to their retirement. But, and this is a big but, MOST CITY EMPLOYEES SHOULD NEVER HAVE BEEN PAID THAT MUCH IN THE FIRST PLACE. If they were being compensated at the level of their average Bay Area public employee counterparts, I imagine our budget problem would largely vanish.

  25. Ken O

    City of Oakland employees live richly.

    I’m tired of gucci glasses-wearing unionized City of Oakland workers shouting at me in a threatening manner in front of city hall during budget meetings that they have a mortgage and family to take care of.

    What the F do I look like — an open wallet for the richly compensated city worker to pilfer? F off.

    http://www.flickr.com/groups/citi_live_richly/

    What’s going to happen between now and 2025 is that these unionized CoO workers will have their expectations dashed so utterly, like the rest of their fellow Bay Area residents. Social Security, Medicare, Pensions — all these will be lost. Just as happened to older folks in the former Soviet Union.

    70 years of the American Dream Illusion… shattered. Like a downtown Oakland window during a riot. Or a downtown Houston window during a hurricane.

  26. Ken O

    The pain comes from the breaking of expectations, of the social contract.

    Less so from the lower remuneration itself. Not that less is not less. It is.

    The reasons for the city defaulting/BKing will be for reasons Patrick states above. All due to too many people and not enough natural resources to support them.

    I forgot to add 201Ks and housing values to SocSec-MediCal/Care-Pensions above. But that’s already happened. I’m sure we’ll see the stock markets crash HARD again this year or 2011 at the latest. Pump and dump.

  27. Ken O

    A sworn OPD employee told me this year that sworn OPD employees took a 15% pay cut as of June 2009. They still earn more than other cities such as NYC I believe — not sure why NYC pays so little. You get what you pay for.

  28. livegreen

    V, First this info comes from info you have posted before. Second I never belittled anybody’s sacrifice. All I’ve said is that it’s not a 10% cut in either salary or income (depending on how somebody phrased it). It’s 5% temporary cut & 5% correction in benefits contributions (which has IDLF has said, was half the Employee Portion of the contribution paid for by the City).

    If I take 5% of my income and put it in a SEP or employer sponsored retirement fund, that doesn’t mean I got a cut in income or pay. It means I invested it for when I retire. It’s still income.

    I use our family only as an example of how those in the private sector have suffered a lot more. I know several others, in a middle class area, that have lost both incomes and had to sell their houses or been forclosed on. And what has happened in poorer areas?

    Yet the only proposals for City workers (the highest paid in the nation, and paid 10% above CPI as you have documented) is temporary. & the only other proposal on the table is to give those of us in the private sector another Property Tax.

    The only reason I’ve had to make this correction several times is because City Employees have mis-spoken about receiving a pay-cut when it is not. Fine I’ll stop correcting them every time they doublespeak. But that doesn’t mean it’s not doublespeak.

  29. Ken O

    How are other US cities? (Sneak preview of Oakland attractions)

    NY Daily News: FDNY Facing 1,000 Layoffs, Closure of 62 Fire Stations
    http://www.nydailynews.com/ny_local/2010/03/11/2010-03-11_big_ax_looming_at_the_fdny_threat_of_1000_layoffs_closing_of_62_fire_companies.html

    Toldeo Blade: Toledo Likely to Face a Financial “State of Emergency”
    http://toledoblade.com/article/20100307/NEWS16/3070305/0/COLUMNIST39

    UK Telegraph: Single Family Homes in Detroit Selling for Less than $10
    http://www.telegraph.co.uk/news/worldnews/northamerica/7427691/Detroit-family-homes-sell-for-just-10.html

    And fun fact time….

    “China — executing another of its nuclear options — cut its holdings of U.S. debt in January for the third month in a row, the Treasury announced yesterday. Chinese holdings fell $5.8 billion during the month, to a mere $889 billion.

    China is — by a long shot — still the world’s biggest holder of U.S. debt. The Treasury mistakenly reported Japan had taken the honors last month. Sorry, not a mistake… they are just “revising” the tally. Oy…

    One other worthy detail: Net foreign purchases of private corporate bonds fell $24.8 billion in January, the biggest fall on record. Perhaps we’re missing something, but that sounds like a big fat vote of no confidence in the current state of American industry.”

  30. Robert

    KenO, the 15% cut claimed by the OPOA, to be polite, appears to be incorrect. There was a ‘pay cut’ of about 10%, which of course means that retirement contributions are also reduced. The OPOA is claiming that this is a further 5% reduction in pay, when it obviously not, since that retirement contribution does not go into the worker’s pockets. This adjustment in retirement contribution serves only to keep the future retirement pay in line with the current pay scale of the employee.

    Second, based on published information, the 10% ‘pay cut’ itself is only a deferral of promised raises in 2009 and future years. Unlike other city employees, the police did not actually have smaller paychecks, only an agreed to elimination of future annual (not step) raises.

  31. Ralph

    len, my bad, where you wrote budgeting, I read financial statements, which are prepared on a modified accrual basis. In cases where the city should use accrual basis for its like corporate enterprises it doesn’t.

    For budgeting they also some hybrid basis…but I am too lazy to dig through the city’s financials to get the exact terminology

  32. len raphael

    Ralph, the execs of private entities and large non-profits would go to jail if they issued public financial statements and public budget documents using the same accounting methods, assumptions and conventions that municipal officials are allowed by law to issue.

    -len raphael
    temescal

  33. Mary Hollis

    Talking about bankruptcy I wonder how many of you know that in Vallejo’s recent bankruptcy, even though they have laid off cops and firefighters, defaulted their creditors and reneged on municipal bond interest and redemptions, the $84 million pension pot for their workers remains fully in place.

    That’s right, even under BK it hasn’t been touched. It makes you wonder just what has to happen to rid ourselves of the crippling, unfunded, open-ended defined benefit albatross that isn’t even factored into Oakland’s current budget deficit.

    And all this endless debate about whether the city staff have really had a 10% cut or not? So what? What matters is what further cuts do we need to remain solvent? We’re starting from where we are now. The past is irrelevant.

  34. Ralph

    Each is using the recognized accounting treatment applicable to their entity. So yes, if a public traded company issued statements using modified accrual there would be a problem and there would be a bigger problem if the auditor gave it an unqualified opn.

    I haven’t read all the lit on modified accrual, so I can’t opine on it. but since unlike publicly traded companies, the city’s budget is open to the public, I do think there should be more transparency in the budgeting process and its method of preparation should probably conform to how the city reports its financials.

  35. LoveOakland

    In response to Len’s question on health benefits for retirees and Medicare:

    Many local governments are not in Social Security and/or Medicare. Those employees are covered either by a local retirement plan (like Alameda County’s) or CalPERS, the state retirement system.

    Oakland is not in Social Security and was not in Medicare until 1984.

    The retiree health benefit for city employees (not Police and Fire who have different coverage) is about $425/mo. It has not increased for 7 years and is not expected to increase in the forseeable future.

    When a City employee retires, they receive $425 per month towards health coverage or 100% of the cost of basic Kaiser – whichever is less. For employees hired before 1984 this is it, no Medicare.

    For city employees hired after 1984, the same applies except that when the retiree becomes eligible for Medicare, they receive $425 per month towards Medicare Part B coverage or 100% of the cost of Kaiser – whichever is less.

    BTW, thanks for comments by Len, Robert, V and Dan – interesting and thought provoking

  36. len raphael

    After our most recent coconut game move of selling property to Redevelopment Agency, how much money is left in ORA legally available for it to buy more city properties ? what are the restrictions on say selling City Hall itself to ORA.