City Administrator's Message

Honorable Mayor, City Council, and Oakland Residents:

We present the Fiscal Year (FY) 2023-2025 Adopted Budget, a spending plan to address significant challenges in a daunting fiscal and policy environment while laying the groundwork for a stronger and more secure future. With this budget, the City preserves vital services, addresses our deficit responsibly, and takes important steps to transform Oakland’s City government so that it can better use limited resources to make our communities safer, support children and families, and promote economic development.

Through the FY 2023-2025 Budget process, the City of Oakland has balanced the largest projected budget deficit in its history. Prior financial analysis projected the city to have had an approximately $360 million shortfall over the next two fiscal years. This shortfall is largely a result of two factors: the loss of federal pandemic funding and a reduction in revenue generated from taxes, especially the real estate transfer tax.

To address the shortfall the budget implements strategic spending reductions with the goal of maintaining current staff and minimizing service disruptions. Unlike the prior budgets, the FY 2023-25 is balanced budget without resorting to government closures or layoffs which disrupt critical services to residents.

Further savings are to 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 faced a historic deficit, other funding sources were not as severely impacted - the Adopted Budget leverages these sources to create a foundation for future growth, improved quality of life and economic opportunity.

The Adopted Budget makes significant investments in affordable housing, Head Start programs, and infrastructure improvements. Above all, it manages our fiscal situation responsibly while still supporting the priorities of Mayor, City Council, and residents.

As shown in Table 1 below, the FY 2023-25 Adopted Biennial Budget totals $4.26million across all funds, including restricted funds and capital funds.

One Oakland Budget Process

The process for creating the Adopted 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. The Mayor presented a balanced budget for FY 2023 – 2024 using thoughtful and collaborative approach to identify solutions to our fiscal challenges. The City Council used those same approaches when assessing, deliberating on, and adopting amendments. Those approaches were:

Smart fiscal planning.

• Two years prior the City assessed 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 ensures companies that earn more pay more, while supporting Oakland’s small business. Staff projects $20 million in new revenue from this tax in Fiscal Year 2024-25, as well as additional revenue in the years to come.
• Additionally, the City has maintained healthy balances in dedicated Special Funds that support the Departments of Planning & Building, Public Works, Housing & Community Development, and Oakland Public Library. The budget put these funds to use over the next two years support improvement that residents can see, and provide family-supporting, stable jobs. As a result of this smart planning, the balancing measures int the Adopted Budget were focused on 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 all parts of City government to identify what departments need to deliver on their missions and provide the services that Oakland’s residents need. leadership identified opportunities to trim budgets in ways that preserve services as much as possible and reflect Oakland’s values.
• City Council members also worked collaboratively with City staff in identifying further opportunities to improve upon the Mayors Proposed budget.

Close partnership between the Mayor and City Council.

• A strong working relationship between the Mayor and the City Council, including a productive retreat in early March where shared budget priorities were discussed was central to the budget development process. . This FY 2023-25 budget reflects what is important to council members and to communities they serve across Oakland.
• Specifically, the 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 under the Leadership of the Mayor, City Council, and City departments heads, the FY 2023-2025 budget is a compassionate, responsible answer current fiscal circumstances.

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 Adopted Budget includes the charge to investigate 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.

Reorganization of these departments will have a clear mission related to community priorities will save up to $2 million per year due to the consolidation of related services under one strong management team.

Addressing Our Budget Shortfall

The steps should enhance governmental efficiency and save taxpayer resources, however, to address our $360 million General Purpose Fund shortfall, the Mayor and Council needed to make strategic spending reductions. These reductions were carefully considered with an eye to minimizing impacts on services that residents rely on every day.

Prior to Budget adoption the City had approximately 300FTE General Purpose Fund positions that are vacant. Many of which were vacant for sustained periods of time. The Budget keeps many of these positions vacant through position freezes to allow us to maintain current employed staff and the services they deliver. Freezing hiring in vacant positions will save us approximately$133million over two years.

Budget Highlights

Community Services

Overview:

The Adopted 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 Adopted 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. The implementation of Measure AA will deliver significant additional resources to support Early Childhood Education and College/Career readiness.

• HOMELESSNESS SERVICES: The Adopted Budget will allocate $159 million in state, local and federal funds over two years in support of efforts to address homelessness including providing new shelter and housing options to support our unsheltered neighbors. The Budget 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 Adopted Budget will expand investments in effective community programs like Summer Town Camp which served over 5,500 youth in 2022.

Public Safety

Overview:

The Adopted 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 Adopted have been done with an eye to minimizing impacts on our communities and allowing us to add funds back should revenue forecasts improve.

• NEW POLICE ACADEMIES: The Adopted 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 Adopted 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 Adopted 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 Adopted Budget delays the rollout of a fire engine that had been previously approved. While increasing the number to candidates in the next Fire by 15 Additional Firefighter Paramedics.

• DEPARTMENT OF VIOLENCE PREVENTION: The Adopted Budget maintains baseline funding for the Department and preserves most of the temporary increased funding from the prior biennial cycle. An increasing number of shootings and homicides taking place in Oakland are rooted in regions outside of Oakland such as San Francisco. The City is working in partnership with other jurisdictions to create a regional approach to addressing gun violence.

• CEASEFIRE: The City intends 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.

• COMMUNITY SAFETY AMBASSADORS: The Adopted Budget includes $2million to support Community Safety Ambassadors and other Safety Improvements in the City Business Corridors.

Infrastructure and Economic Growth

Overview:

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 Adopted Budget includes more than $214 million in funds to build, repair and upgrade parks, recreation facilities, libraries, storm drains and non-road infrastructure.

• REPAVING OUR ROADS: The Adopted 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 Adopted Budget includes more than $7.7million 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 Adopted 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 Adopted 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.

Internal Services

Overview:

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 Adopted Budget adds $9.5 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 Adopted 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 Adopted 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.

Conclusion

The City of Oakland FY 2023-25 Biennial Adopted Budget addresses significant shortfalls in City resources while protecting services and streamlining and strengthening how City government is run.

This Budget was developed through a close partnership and collaboration between every part of City government including the Mayor and the City Council. The budget takes advantage of 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 the residents of Oakland in the coming years.

With this Fiscal Year 2023-2025 budget, the Oakland is laying a foundation to move forward with a more streamlined, proactive City government that can be a force for more housing, more safety, and more equity in Oakland.