OAKLAND Layoffs are now formally on the table, and the severe sacrifices that municipal officials have long promised to address a historic local financial crisis are finally here.
According to a recent report issued on Friday, city officials are considering up to 91 layoffs in the early months of next year; however, it is unclear how many of those layoffs will actually be demotions or transfers of employment to the city’s port authority.
If the layoffs are implemented, they will further solidify the effects of Oakland’s dire financial situation, where the police department has continuously over its budget on overtime expenditures and high interest rates have destroyed tax income, including from home sales.
Additionally, a new analysis from the city administrator’s office and budget team notes that although federal relief money during the epidemic temporarily alleviated the city’s issue of outspending its earnings, they also postponed essential structural adjustments.
According to the report, the City’s financial difficulties are the consequence of structural deficiencies that have grown over a number of years.
Due to debt servicing and other financial obligations from the previous fiscal year that ended in June, officials are now predicting a structural deficit of $129 million by the end of this fiscal year, which is a $14 million increase from previous projections.
Part-time employees and those recently hired at higher salary would be the main targets of the cuts, which might still be avoided if the biggest labor unions in Oakland agree to negotiate a pay decrease.
In addition to the brown-out of four fire department stations, they would include the full-time equivalent of 17.5 non-sworn police department positions, 29.5 public works employees, approximately 9.5 human services posts, and 6 IT department employees.
Pending union negotiations, the possible cuts would go into force early the following year. However, administrators are planning to implement baseline cuts immediately, without first consulting the city council or labor organizations.
These include the following: grants for cultural arts programs will be cut; overtime pay, including for police officers, will be throttled; two police academies will be eliminated, leaving the city without any training facilities for new cadets; two fire stations will be browned out, and another station is currently being built.
On Monday, the council will decide whether to transfer up to $38 million from other funds—such as those for affordable housing and the city’s self-insurance obligations—to its General Purpose Fund, which primarily covers running expenses and wages.
In addition, city officials must determine whether to take $9.6 million out of the emergency fund, which at the conclusion of the previous fiscal year was worth almost $70 million.
Members of the city council have frequently been at odds with one another as a result of the full-blown financial crisis, including over whether proceeds from the sale of city assets should be used to offset the crippled budget.
Mayor Sheng Thao’s late-game move of selling the city’s portion of the Coliseum for $125 million did not prevent her from being recalled by 60% of voters last month, and officials are no longer budgeting any proceeds from the sale.
Council President Nikki Fortunato Bas, who is also leaving office after being elected to the Alameda County Board of Supervisors, is the city leader most actively involved in internal budget discussions, along with City Administrator Jestin Johnson and Finance Director Erin Roseman, according to officials. Thao will be leaving office in the upcoming weeks.
Roseman’s study, which was unintentionally released by the city last month, warned that Oakland was in danger of going bankrupt and charged municipal officials with continuing to spend money carelessly.
After the report was taken off and replaced with one that just cautioned against insolvency—the financial situation that results in a formal bankruptcy proceeding—a significant national agency reduced the city’s credit rating by two levels.
The proposed cuts, however, were not taken lightly by Oakland’s labor unions.
In a study that called on city officials to better enforce taxes in order to battle the deficit rather than considering staff layoffs, IFPTE Local 21, which represents the city’s engineers, architects, and other professionals, sharply pointed out police overspending.
In a statement, the police officers’ union blasted city authorities for Friday’s assessment, stating that the closure of training academies and layoffs will lead to a public safety catastrophe in Oakland.
Reporter Shomik Mukherjee covers Oakland. You can reach him via email at [email protected] or by phone at 510-905-5495.
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