Facing a looming budget shortfall of $62 million, Oakland Mayor Libby Schaaf announced measures to stave off fiscal crisis that include 10-day furloughs and delayed pay raises for senior staffers.
More cuts will follow, she said Thursday in a grim letter to city employees describing the pandemic’s impact on Oakland’s tax revenues.
“The COVID-19 pandemic has upended our lives, dramatically changed how we deliver city services, decimated our national and local economy, and created a massive $62 million hole in our city budget,” Schaaf said.
Staffers not represented by labor unions must take 10 unpaid days off and defer any raises for the next six months under the cuts announced by the mayor and City Administrator Ed Reiskin.
Other measures include a freeze on hiring, reduction of overtime and discretionary spending and curtailed use of temporary employees.
“The COVID-19 pandemic has upended our lives, dramatically changed how we deliver city services, decimated our national and local economy, and created a massive $62 million hole in our city budget.”Mayor Libby Schaaf
In addition, the mayor is calling for city departments to aim for budget cuts between 10 to 20 percent over the next six months.
On the present course, the city’s general fund will steer into the red before the end of the fiscal year and even emergency reserves will be depleted, the mayor said.
“The city will not be able to fund essential services or respond to emergencies like an earthquake or natural disaster,” Schaaf said in the letter to staff.
The mayor emphasized that even if the general fund becomes insolvent, bond payments would not be affected, and all debt service will be paid as scheduled.
More cuts expected
More cost-cutting measures are set to go before the Oakland City Council on Wednesday.
“If we wait until next fiscal year to address the shortfall, the cuts would be catastrophically deep, and we will be forced to make cuts that could be avoided by acting now.” the mayor said.
Earlier this month, interim city finance director Margaret O’Brien told a council committee that taxes are projected to be down and $4 million expected from the Federal Emergency Management Agency is uncertain.
Business taxes are expected to be down $4.75 million, hotel taxes are forecast to be down $4.44 million and parking taxes are expected to be down $3.28 million.
Sales tax and real estate transfer tax revenue also have dropped during the pandemic.
The largest source of increased spending is the overtime for the Oakland Police Department. The city has spent $35 million on non-reimbursable police overtime, exceeding the budget for overtime last year.
In a memo, interim police Chief Susan Manheimer cited many reasons for the use of more overtime, including a 47 percent year-over-year increase in homicides, requiring more proactive crime reduction strategies and time
Manheimer also said not enough money exists in the police overtime budget to avoid exceeding it. That conclusion was drawn by City Auditor Courtney Ruby in a 2019 report on police overtime.