ONE FRANK H. OGAWA PLAZA • 3RD FLOOR • OAKLAND, CA. 94612
Office of the Mayor (510) 238-3141
Honorable Sheng Thao FAX (510) 238-4731
Honorable City Council and Oakland Residents:
We present the Fiscal Year (FY) 2023-2025 Proposed Budget, a plan to address significant challenges in a daunting budget environment while laying the groundwork for a stronger and more secure future. With this budget, we are preserving vital services, addressing our deficit responsibly, and taking important steps to transform Oakland’s City government so that we can better use limited resources to make our communities safer, support children and families, and promote economic development.
The City of Oakland is facing the largest budget deficit in its history. Current financial analysis projects the city to have an approximately $360 million shortfall over the next two fiscal years. This inherited shortfall is largely a result of two factors: the loss of federal pandemic funding and a reduction in revenue generated from the real estate transfer tax and transient occupancy tax.
To address this inherited shortfall, we are proposing strategic spending reductions with the goal of maintaining current staff and minimizing service disruptions. Unlike the budget crisis of the past, we have achieved a balanced budget without resorting to government closures or layoffs which disrupt critical services to residents.
Further savings will be gained through a realignment of City government to be more streamlined and efficient. These reforms will also have the benefit of fostering improved coordination between City departments.
While the General Purpose Fund faces a historic deficit, other funding sources have not been impacted - the Proposed Budget will leverage these sources to create a foundation for future growth, improved quality of life and economic opportunity.
Even in this environment, the Proposed Budget will make significant investments in affordable housing, Head Start programs, and infrastructure improvements. Above all, we are seeking to manage our fiscal situation responsibly while still supporting the priorities of City Council and our residents.
As shown in Table 1 below, the FY 2023-25 Proposed Budget totals $ 4,256,448,442 across all funds, including restricted funds and capital funds.
Table 1: Revenues, Expenditures & Full-Time Equivalent Positions
One Oakland Budget Process
The process for creating the Proposed City of Oakland Budget for Fiscal Year 2023 - 2025 began with a statistically valid community survey developed in conjunction with the City’s Budget Advisory Commission. This was followed by Mayoral and Council policy priority discussions and the release of the Five-Year forecast. We are able to present a balanced budget for FY 2023 - 2024 because we took a thoughtful and collaborative approach to identify solutions to our fiscal challenges:
Smart fiscal planning.
- Two years ago, we knew that one of the biggest challenges facing Oakland was a structural budget deficit. This was the motivation for the City Council to spearhead Measure T, which Oakland’s residents voted into law last year. This new progressive business tax will ensure companies that earn more pay more, while supporting Oakland’s small business. We are projecting $20 million in new revenue from this tax in Fiscal Year 2024-25, as well as additional revenue in the years to come.
- Additionally, we now have healthy balances in dedicated Special Funds that support the Departments of Planning & Building, Public Works, Housing & Community Development, and Oakland Public Library. We are going to put these funds to work over the next two years to make improvements that residents can see and provide family-supporting, stable jobs. As a result of this smart planning, the fiscal issues facing the City are primarily limited to the General Purpose Fund.
Leveraging the creativity and commitment of the public servants who work in City government.
- To prepare the FY 2023-25 budget, the Mayor’s and City Administrator’s Office worked closely with every part of City government to identify what departments need to deliver on their missions and provide the services that Oakland’s residents need. Where we needed to trim budgets, together we identified ways to do this that preserve services as much as possible and reflect Oakland’s values.
Close partnership with the City Council.
- We are grateful for a strong working relationship with the City Council, including a productive retreat in early March in which we discussed our shared budget priorities. This FY 2023-25 budget proposal reflects what is important to council members and to communities you serve across Oakland.
- Specifically, this budget prioritizes Council and community priorities, including: civilian crisis response; continued civilianization of certain functions of the Oakland Police Department; production of affordable housing and streamlining the permitting process; promoting clean and safe streets; supporting small businesses and revitalizing our downtown and commercial corridors; improving accountability within City government; promoting road safety and safety for kids as they are going to and from school; expanding programs for youth and families, including Head Start; improving our approach to providing housing and services to our unsheltered neighbors; and strengthening our information technology and cybersecurity infrastructure.
Following intensive problem-solving with the City Council and City departments, this FY 2023-2025 budget is a compassionate, responsible answer to our City’s fiscal crisis.
Setting Guiding Principles & Priorities
As we seek to achieve our goals, we are mindful of the values of the City of Oakland and our residents. These principles inform every proposal we make so that we might continue to move toward being an even more successful city:
- Centering Equity – Centering equity is an intentional effort to prevent exacerbating racial disparities and to reduce racial disparities wherever possible.
- Valuing the City Workforce – Preserving current city staff and prioritizing the wellbeing and professional development of our dedicated & talented workforce, especially during this difficult time and into the future.
- Strategic Thinking – Encouraging creative and innovative strategies to become a more efficient and effective City. Soliciting ideas for improvement Citywide regarding service delivery, organizational structures, internal processes, and utilization of technology, to become more efficient, effective, and equitable given limited resources.
More Efficient and Effective Government
The Proposed Budget includes a new reorganization of City Departments to help the government be more efficient and reduce costs.
- Homelessness services will be merged into the Housing & Community Development Department to allow for improved coordination.
- Intergenerational family support programs provided by our Parks, Recreation and Youth Development Department and Human Services Department will be combined into a new Department of Children, Youth and Families to provide more seamless services for families in all walks of life.
- The Department of Economic & Workforce Development will be merged into the Department of Planning, Building and Economic Development to provide a more streamlined approach to housing production and major project development.
Each of these new departments will have a clear mission related to community priorities and each will save up to $2 million per year due to the consolidation of related services under one strong management team.
This reorganization will be buttressed by an improved management structure in the City Administrator's Office. Departments with related services will be grouped into “channels” and report to or coordinate with a dedicated Deputy or Assistant City Administrator:
- Community Safety: Comprised of public safety departments such as Police, Fire and the Department of Violence Prevention. This channel will be focused on providing real and lasting community safety for all residents.
- Infrastructure and Economic Growth: Comprised of built environment departments such as DOT, OPW with community development departments such as Planning, Building and Economic Development. This channel will be focused on rebuilding and revitalizing Oakland’s infrastructure and economic growth.
- Community Services: Comprised of the new Housing Development and Homelessness Department, Department of Children, Youth & Families, Library Services and Animal Services. This channel will be focused on transforming the delivery of community services in Oakland.
- Internal and Compliance Services: Comprised of internal departments including Finance, Human Resources and Information Technology. This channel will be focused on supporting more efficient and effective government.
This reform will help resolve cross-departmental inefficiencies and improve accountability.
Addressing Our Budget Shortfall
The steps we outline will help us make the government more efficient and save taxpayer money but to address our $360 million General Purpose Fund shortfall, we must make strategic spending reductions. We carefully considered every reduction within this budget with an eye to minimizing impacts on services that residents rely on every day.
Oakland currently has approximately 300 of General Purpose Fund positions that are vacant. Many of these positions have been open for sustained periods of time. This budget proposes keeping many of these positions vacant which will allow us to maintain current staff and services. Freezing hiring in vacant positions will save us approximately$133million over two years.
We also understand that a hiring freeze alone will not be enough to completely fill a historic deficit. Therefore, in some departments we will allow attrition to occur - that is, if a position becomes vacant, we will hold on hiring a replacement until funding becomes available. In all cases, we do this with an eye to avoiding deeper cuts that can have a devastating impact on services. And we will prioritize hiring for these positions if revenue exceeds forecasts.
The Proposed Budget seeks to make major investments in key Oakland priorities like affordable housing and programs for youth while delivering more streamlined and coordination services to residents. To accomplish this, we are leveraging non-General Purpose Fund revenues to maximize impact.
- AFFORDABLE HOUSING: Voter-approved Measure U will form the backbone of over a $200 million investment in affordable housing over the next two fiscal years. This is the largest investment in affordable housing in Oakland’s history.
- HEAD START: The Proposed Budget will greatly expand Head Start programming, allowing for extended hours to better meet the scheduling needs of blue collar and/or essential workers who do not work standard business hours.
- HOMELESSNESS SERVICES: The Proposed Budget will allocate $108.5 million in state, local and federal funds to provide new shelter and housing options to support our unsheltered neighbors and it streamlines how the City approaches homelessness and housing and protects investments that provide services to over 4,000 people.
- CHILDREN, YOUTH & FAMILIES: The new Department of Children, Youth & Families will be focused on delivering programs, services and other resources to support at-risk and disadvantaged youth and integrated, intergenerational support. It will also create a one-stop-shop for recreational programming, making it easier for families and seniors to access the range of services they need.
- COMMUNITY PROGRAMS: The Proposed Budget will expand investments in effective community programs like Summer Town Camp which served over 5,500 youth in 2022.
The Proposed Budget will allow for better coordination of key public safety goals while continuing the civilianization of certain functions of the Police Department. Given that public safety departments account for _64% of the General Purpose Fund, it is not possible to close the budget deficit without making strategic reductions in these areas. The changes proposed have been done with an eye to minimizing impacts on our communities and allowing us to add funds back should revenue forecasts improve.
- COORDINATION OF SERVICES: The new community safety channel will allow our public safety departments to better coordinate response and programming to help make our communities and families safer.
- NEW POLICE ACADEMIES: The Proposed Budget funds six police academies over FY 2023-2025, maintaining the current pace of academies. While some authorized but vacant positions will remain open, we are projected to have more officers in June of 2024 than we do today.
- CIVILIANIZATION: The Proposed Budget will move the Oakland Police Department’s Internal Affairs (IA) function to the Community Police Review Agency. This will allow independent investigators to look into matters related to internal affairs while the trained investigators currently in the IA unit can transfer to different units within the police department that are in need of officers.
- MACRO: The Proposed Budget expands investment in Mobile Assistance Community Responders of Oakland (MACRO), civilian responders who respond to a range of crisis that do not require sworn officers.
- FIRE DEPARTMENT: The Proposed Budget delays the rollout of a fire engine that had been previously approved and “browns out” one more fire engine on a rotating basis. The rotation will be set by the Fire Department with an eye on minimizing impacts, particularly to historically disadvantaged communities.
- DEPARTMENT OF VIOLENCE PREVENTION: The Proposed Budget maintains baseline funding for the Department. An increasing number of shootings and homicides taking place in Oakland are rooted in regions outside of Oakland such as San Francisco. We are working in partnership with other jurisdictions to create a regional approach to addressing gun violence.
- CEASEFIRE: We intend to audit the Ceasefire strategy including the role and efficiency of OPD, DPV, and community partners in the next fiscal year so that we might better anticipate and respond to the needs of our communities.
Infrastructure and Economic Growth
Many of the Departments in this channel are funded through sources outside the General Purpose Fund, allowing Oakland to make major investments in our future even during these difficult budget conditions. The reorganization will also allow departments to better serve our communities as we promote economic opportunity and cleaner and safer neighborhoods.
- UPGRADING OAKLAND: The Proposed Budget includes more than $213 million in funds to build, repair and upgrade parks, recreation facilities, libraries, storm drains and non-road infrastructure.
- REPAVING OUR ROADS: The Proposed Budget continues to fund the 5-year paving plan by allocating $73.9 million over the next two fiscal years for citywide street resurfacing projects.
- SAFER STREETS: The Proposed Budget includes more than $6.1million in programs to calm traffic, improve intersection safety and provide safe routes near schools to help us reduce traffic violence and save lives. It also includes $1.6 million over the next two fiscal years to implement the bike and pedestrian plans.
- CLEAN AND HEALTHY NEIGHBORHOODS: The Proposed Budget prioritizes the Keep Oakland Clean and Beautiful program that maintains and enhances the cleanliness, health, and appearance of streets, while cleaning over 1,200 homeless encampments annually.
- ECONOMIC GROWTH: The proposed reorganization will allow for better coordination of planning, building and economic development so we can streamline the process for bringing new jobs and opportunities to Oakland and better support companies that want to locate here.
Our reorganization will also allow for us to streamline and improve Oakland’s internal service delivery. By making these functions more efficient, we also make them more effective and responsive to the needs of residents and our City workforce alike.
- INFORMATION TECHNOLOGY: In the FY 2023-25 budget, we are building off of the $3.3 million that Council invested in last budget cycle to prioritize long-needed investments in the City’s information technology infrastructure. The Proposed Budget adds $10 million over the next two fiscal years to upgrade, modernize and harden our cybersecurity protections.
- HIRING BLITZ: Oakland currently has significant vacancies in non-General Purpose Fund positions including the Departments of Planning & Building, Transportation, Housing and Public Works. The Proposed Budget includes funding for a Human Resources team that will allow us to fill positions in departments that maintain and upgrade our built environment and promote economic growth and job creation.
- EMPLOYMENT OUTREACH: The Proposed Budget includes funding to allow the city to partner with local community colleges and high schools to host recruitment events and to connect our most vulnerable residents with opportunities to build a career in public service.
The fiscal crisis currently facing the City of Oakland will be limited in scope and limited in time – particularly if we enact a FY 2023-25 budget that protects services while streamlining and strengthening how our City government is run.
My office is grateful for the close partnership of every part of City government and the City Council to develop the solutions reflected in this budget. We have an opportunity to resolve long-standing issues – such as staff vacancies, insufficient investment in critical technology, and related services that are not consolidated under streamlined management – so departments can strengthen how they serve our city in the coming years. We have talented and committed public servants and we will attract more; this budget supports our City workforce so they can work hard and deliver for Oakland.
With this Fiscal Year 2023-2025 budget, we are laying a foundation to emerge from this crisis with a more streamlined, proactive City government that can be a force for more housing, more safety, and more equity in Oakland.