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The current crisis

Each July marks the beginning of the new fiscal year for the City of Oakland when by law, Oakland City Council must either adopt a new two-year budget or a one-year mid-cycle revised budget by the first day of the month.  This being Oakland, the budget process is usually rancorous but even by those standards this year’s mid-cycle budget revision process set a new low standard that we hope is never matched. 

It all began in June when Mayor Sheng Thao submitted her proposed budget revision to the City Council later than normal.  Mayor Thao came to office in 2023 promising to boost hiring within city government but now found herself facing a massive deficit (projected this time at $177 million) for the second year in a row and now, as in 2023, she was searching for revenue so she could avoid cuts.   With commercial office vacancy rates among the highest in the country and interest rates too high to make it feasible to finance new construction, Oakland has been starved of revenue for a few years.  Just as it seemed that cuts were the only option, the Mayor’s Office announced that an agreement had been reached to sell Oakland’s 50% stake in the Coliseum site to the African American Sports and Entertainment Group for $105 million.  With this bird not yet in hand, the Mayor sent a proposed budget to City Council that counted $63 million from this yet-to-be-completed transaction, on the revenue side.   Not surprisingly, some members of City Council balked.

Recognizing that the sale may not go through, the Mayor’s Office prepared contingency plans —which would be triggered on September 1 if the city doesn’t receive some proceeds from the sale — and would require immediate budget cuts. Among those cuts would be to the police department, the fire department, the Department of Violence Prevention, the Mayor’s new film attraction initiative, the Convention Center, and much more. 

What followed a month of counterproposals, allegations, information, and misinformation before the eventual adoption, by a 5-3 vote on July 2, 2024, of a $2.2 billion budget for the 2024–2025 fiscal year.  Included in the revenue was the yet unpaid and potentially non-existent funds from the sale of the Coliseum

Voting against the budget were Councilmembers Janani Ramachandran, Noel Gallo, and Treva Reid, all of whom were concerned that the Coliseum sale might not go through and that the fiscal implications to the City of Oakland would be dire.  Most vocal in opposition was councilmember Ramachandran who said, “this budget process has been an insult to the people of Oakland,” and that “We are using the illusion of funds that haven’t arrived yet to balance a budget.” 1

What is the problem

In other cities in California, the City Council would not have been able to approve a budget that counted funds from an as-of-yet unrealized property sale and revenue and Make Oakland Better Now would like to see changes made to the Oakland City Charter that would make such actions impossible in the future.  

As has been demonstrated over and over, Oakland continually commits to spending more than it can, and as others have observed, this lack of fiscal restraint is built into Oakland’s system of governance.  Overcoming this flaw, therefore, won’t happen by electing new people to Council, it will take structural change.  Make Oakland Better Now would like to propose changes to Oakland’s governing structure to provide that restraint.  

What is to be done?

In Making Government Work:  10 ways city governance can adapt to meet the needs of Oaklanders the San Francisco Bay Area Planning and Urban Research Association (SPUR) noted that in its current form, Oakland’s chief fiscal agency, the Finance Department, part of the City Administration, and City Council regularly disagree on such basic issues as how much money the city has to spend, and how much revenue there will be in the future.  Furthermore, City Council can propose expenditures without identifying an existing funding source.  This is a basic flaw that does not exist in most other cities and it needs to be fixed.

The fix that SPUR recommends, and one that Make Oakland Better Now seconds, is for the amendment of the Oakland City Charter to create an independent Controller’s Office in Oakland, one that is separate from the City Administrator’s Office and that has the authority to do the following:  

• certify revenue and future revenue estimates  
• determine how much money the city has to spend 
• deny spending proposals if the funds are not available to pay for them   
• sign off on contracts between the city and outside entities
• oversee the city’s long-term financial obligations

To prevent political control of this important office, we recommend that this be an appointed position, that is confirmed by City Council, for a term that is longer than that of the Mayor, and that the budget for this office be set so that the controller cannot be defunded for political reasons.

1. Oakland passes budget, but big cuts are still on the table.  July2, 2024, 4:38 p.m.