Massive cuts likely to balance Oakland budget without Coliseum sale

The Oakland City Council is set to hold a special meeting to pass its budget on Friday afternoon.

In May, Oakland Mayor Sheng Thao submitted a proposed budget, which includes more than $100 million from the sale of the Oakland Coliseum property. But on Tuesday, the finance department submitted a revised budget proposal that does not include that money.

"It was technically presented as an alternative, but in reality, we know it is the only option," says Oakland City Councilmember Janani Ramachandran.

Ramachandran says it's fiscally irresponsible for the city council to build a budget to include the deal with no sale date insight. As she explains, the coliseum deal would have to close by September 2025, in order for this budget to work. She doesn't know if that's possible.

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"This is a large facility. This is a lot of money at stake, in a particularly volatile time in Oakland city politics. Investors are going to want to take their time and be wise before they put that money out here," says Ramachandran.

Excluding the sale translates into $63 million in potential budget cuts mostly to the city's general fund, which makes up about 40% of the overall budget. Of the general fund, close to 60% goes to Oakland's police and fire departments. Cuts may include 100 police jobs by freezing positions, closing four fire stations, and cuts to violence prevention programs.

Oakland Police Officers Association, or OPOA, responded to these cuts by calling it "dangerous to health and safety of Oakland residents and police officers."

Oakland Sergeant Huy Nguyen, President of the OPOA, says, "We cannot accept a budget that further cuts police, endangers citizens and officers, and will ultimately lead to bankruptcy for Oakland."

"Unfortunately, because of the time crunch, council's power is really being taken away in this situation. So we don't have time, effectively, to go through the budget, ask our questions, and propose amendments," says Ramachandran, who serves District 4.

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Ramachandran says the forecast is that Oakland will face a deficit for the next five years. One issue is that Oakland's general fund is heavily reliant on revenue generated by taxes. She says higher interest rates means home sales have slowed, which in turn mean less revenue for the city.

But she also point out that the city hasn't been aggressive in collecting business taxes.

"The city of Oakland has missed out on over $50 million dollars of uncollected business license taxes," says Ramachandran.

Professor Dan Lindheim, is the former Oakland City Administrator, who now teaches at UC Berkeley's Goldman School of Public Policy. He says Oakland's financial health may not be as dire as the numbers suggest.

"Oakland has about 400 other funds. And so the other things are not at difficulty. It is only the general fund," says Lindheim.

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But he says Oakland's leadership, dating back several years, should have been more prudent in spending tax revenues. That would offset periods of drops in revenue, such as now.

He points to a major reduction in real estate transfer taxes, which he says totals about $50 million, that would have gone to the general fund.

"All of a sudden, they are hit with this major reduction in revenue and it's just really hard to adjust quickly to that major reduction," says Lindheim.

Lindheim adds that bonds and parcel taxes aren't a solution either because that money doesn't go to the general fund.

Ramachandran says city council will likely ask for an extension to the June 30 budget deadline.