Oakland Published a Report Saying the City Is on the Brink of Bankruptcy

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Posted on 11/26/2024 8:58:50 PM PST by SeekAndFind

I've written recently about the serious budget problems with San Francisco's schools and its public transit system. But things appear to be even worse in nearby Oakland. Last week the city accidentally published a budget report on its website which said the city was in danger of insolvency unless serious cuts were made immediately. 

One report, published early Friday morning in connection with a City Council agenda, warned Oakland must take immediate action to “maintain the solvency of the General Purpose Fund and avoid the Chapter 9 process.” 

The report, which had the signatures of the city’s top officials on it, also warned that “Fecklessness and failure to take dramatic and immediate steps to reduce expenditures will almost certainly result in insolvency.”

Hours later, that report was pulled down and a similar report with the same numbers but less dire language was uploaded to replace it.

Someone uploaded this document to the city’s legislative website early on Friday. Later in the day, someone swapped it out for a different report that excluded references to insolvency and bankruptcy.

No matter how you phrase it, Oakland is in trouble. The source of the problem is the spending on police which went up because of overtime necessitated by a big spike in crime over the past two years.

Almost all this overspending will be by the police and fire departments. Despite taking steps to reduce spending in departments, staff wrote that “reductions in the OPD and OFD budget are now unavoidable to effectively address the current year shortfall.” The report noted that avoiding cuts to public safety would require effectively eliminating 83% of non-police and non-fire expenses. Specific reductions to OPD and OFD have not yet been determined.

Not coincidentally, the spike in crime started right after Oakland voted to defund the police in 2021 but cutting $17 million from the budget. This year, crime is finally headed down compared to the peak last year but the budget crisis probably means the city will need to declare a fiscal emergency which could result in cutting the number of officers to a new low. The head of the police officers union has already warned that Oakland PD is approaching staffing levels that will be unable to handle 911 calls as they come in.

According to the Oakland Police Officers Association, there are two scenarios: one to cut the force down to 678 from 712 officers or all the way down to 628.

"I can't see a solution on how we can effectively handle crimes and respond to calls in the city," said Huy Nguyen, OPOA President.

Police unions always want more money but 628 officers does seem like a pretty lean force for a city of 436,000 with an ongoing crime problem. And it's not just police. City firefighters are also going to be cut.

The city has already taken steps to cut expenses, including a hiring pause for non-sworn positions and a freeze on two police academies.

Further efforts could include the closure of fire stations or a pause on the operations of fire engine crews. For now, all department heads are being asked to propose ways to close the budget deficit...

The police department is projected to overspend by $52 million, about 16% of its budget, while the fire department is projected to overspend by $34 million, or 21% of its budget. The overspending in both departments is a result of overtime, according to city staff.

The city had a plan for dealing with this crisis, which was to balance the budget using funds from the one-time sale of the Coliseum. However, for that to work the city needed the money before the end of the year and right now it looks like that's not going to happen.

Even if the plan did work, using the sale of a major resource to balance the budget is a terrible idea. What are you going to do next year when those one-time funds aren't available? It looks like we're about to find out.

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1 posted on 11/26/2024 8:58:50 PM PST by SeekAndFind

To: SeekAndFind

2 posted on 11/26/2024 9:16:44 PM PST by drypowder

To: SeekAndFind

3 posted on 11/26/2024 9:16:46 PM PST by cableguymn (They don't want peace they want skeletons )

To: SeekAndFind

4 posted on 11/26/2024 9:17:17 PM PST by Governor Dinwiddie ( O give thanks unto the Lord, for He is gracious, and His mercy endureth forever. — Psalm 106)

To: SeekAndFind

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