Thread by @Oak_Observer

Packed chambers for special council mtg. Budget's already been a mess in media, & slow motion car wreck from when CMs were first warned of impending fiscal insolvency due to OPD overspending---AASEG sale or not. I expect this mtg to be very polarized w/much spectacle bad faith

https://twitter.com/hyphy_republic/status/1858924722211483746

Loren Taylor, a champion of police overspending is in house; also a lot of SEIU and IFPTE folks I recognize from other meetings. Leigh Hanson, Thao's COS is here as well; for some council members, this will be one of a handful of meetings left in a career that's spanned decade[s]

There's a couple of other items on today's agenda, but mostly background for the main event. I see only one tv news cam here

Surprised to find Janani Ramachandran will be absent from this meeting, has begun parental leave, per Bas.

First the Q1 cash management report. Kaplan notes "the fund has more in it than many of the prior years...[above] pre-pandemic." ...it's .0.01% higher per staffer...but its "very liquid and very short"

Gallo: "what do we have that we can spend" Gallo asks for a presentation for what is cash flow today, and challenges. [open question if Gallo has already been told this information several times given recent statements]

Gallo "we're way behind in terms of budget"...[Gallo was told weeks ago that OPD was overspending]

Finance Director Erin Roseman: "cash management report is a different slice of municipal corp of the City of Oakland...Port, closed police/fire retirement fund...1.9 B is a combo of City's resources, the Port's resources, former Redev, and portion dedicated to OPD/OFD retirement

Here's the table Roseman is talking about...the City pools its funds to invest, per Roseman

Back and forth about a forthcoming Budgetary Strategic Plan.

The strategic plan won't be presented until the first meeting of January: the staffer called it a "framework" and Fife says she wants to push back to have more than a framework.

Fife reminding public, OPD is not a council function "what is the administration's plan to help us with this...the way that we're talking about the conversation is extremely problematic"

Roseman: "The first half of the year we are in a cash flow deficit and we use interfund borrowing until the largest revenues come in in 2nd half of year....at any point we're marking that we are still in a positive state"

Cash on hand: 1.9 B in cash+investments on hand, 810 MM of that is City resources. This is all sort of ancillary to the budget discussion, it's a bank statement without a checkbook and budget to look at.

We're still on this cash management report, which is not giving us much information about the math of the budget, like I said its a bank statement with no link to the budget.

Just noticed that Reid isn't in the chamber, she's zooming in.

At pubic comment, some Spanish speaking residents have come to support the 5X program with Saba Groceries. She's a single mother who relies on the funds for healthy food choices in East Oakland

This convo has been going on for about five minutes, long enough to be about something.

On to the Q1 report, CAO Johnson gives a short prologue, giving rundown of current reductions since March, mentions "unapproved draft" inadvertently published, removed the "Ch 9" reference...was and remains "premature", does not diminish urgency of financial discussion.

Johnson: our responsibility is that we "do not understate or overstate" our fiscal condition

Bas and Johnson both mentioned the required "annual disclosure and securities training" about what constitutes permissable commentary about finances.

Finance Director Erin Roseman is giving the overview of the Q1 report; describing the"adjusted budget" which is the contingency budget, at 758 MM instead of 807 [w/AASEG sale]...currently projecting a 93 MM overspending shortfall by FY's end

The good news, if there is any, is that the other revenues in the adjusted budget are hewing closer to predictions.

Roseman: "RETT...last year's RETT was one of the biggest declines, so we take a deeper approach" to understand those trends.. expect a small decrease, tho there are more transactions...more transactions of lower value, RETT is trending lower than budget

BLT is performing above budget with increased collections

Sales Tax collection has decreased, driven by auto/building/construction...all categories are down, gas prices have decreased, with sales collection lower.

Budget Admin, Brad Johnson takes over on expenditures: will exceed by 93.4 MM, 12% higher than the adjusted budget. The two largest contributors, and two largest depts, OFD, 51.9 MM over budget, 16%; 34 MM on OFD

115 MM in negative at end of this FY if no action is taken. "this is trends based on actuals...this already incorporates vacancies, revenue trends, reimbursements for OPD OT....if we do not change course, we will be roughly $115 MM negative"

Brad Johnson: With last year's negative fund balance [13 MM], we have effectively tapped into our mandated emergency reserve..."we have already reached into our emergency reserve...this is the first time this has happened since we've had this policy"

Johnson: 'there are positive fund balances in other funds...but some funds are also negative"

Johnson: "we have a negative GPF fund balance that's accumulated from 2023-24, and we are projecting 93 MM overspending...limited time to take corrective action, it must happen this calendar year, before 12/31, for there to be enough time to change over course of FY...."

Johnson: Actions must be immediate, and we are limited to what we can do... they must be reductions to expenditures..."we recommend that you seriously grapple with these...to avoid future negative fiscal consequences"

Johnson: "our baseline reflects an ongoing imbalance between what we expends and what we take in...we need to adopt a balancing approach...we need to rebuild our reserves, we need to use only ongoing resources for ongoing expenditures...services must be aligned with budget"

Johnson: If we wish to not trigger a "fiscal emergency" we need to add another 27 MM this year..." this report considers current trends, and exceedingly scary outlook at the federal level right now, the impacts to federal grant expenditures,

Johnson also noted a dire Fed outlook under Trump: impact of tariff across board is not noted here, what it will do to our expense costs "while I struggle personally w/impacts on proposed immigration policy... economic impacts on 10th of that action....none of thats factored in.

Johnson addressed Gallo directly: ...CM Gallo you've asked to let you know when you must take action, you must take action over the next month and a half to avoid insolvency

Bas goes first: "while the financial situation in front of us is very serious...the Council has provided direction to CAO on contingency" Bas says she wants to make sure what has already been cut and what is proposed in the authority of the resolution of contingency

Bas: "we have to continue addressing decades long fiscal deficits that we are all working together to resolve....we are higher because of higher interest rates, overspending in certain depts, and underspending from fed govt, and Prop 13..."

Bas says she wants to make sure that the new passed measures are included in the revenue assumptions, Measure NN, and wifldire...we have to be extremely aggressive around economic development.

Bas says she's requested an independent audit of revenue collection; "its important that we are able to agree as a council, admin, workforce, labor partners on exactly what the amount of the deficit is"

Bas: city will have an independent consultant to verify the deficit numbers. "we have to find the balance in delivering the services that our residents deserve"

Bas asks whether if any fiscal measurements were placed into effect because of contingency budget

Roseman reads list from the report, but Bas wants to know what reductions have actually been made, not menu of what was possible...things are still under consideration "reductions to OPD and OFD...the easy things have been implemented, taking expenditure power away from depts"

Roseman says that 27 MM in cost-cutting has been undertaken since September:...Johnson adds "we would have 27 MM more to balance if not for the actions already taken" good lord, the deficit is actually higher

Brown Out of fire stations has not yet been enacted/included.

Bas asks a list by date of what's already been done, so they know what might require council action

In response to a question from Kaplan, Roseman clarifies that the GPF reserve fund has negative funds due to ending last year on a negative, the reserve fund has to be replenished...

Kaplan: "I want to make sure that we address fiscal responsibility...and that we do not do anything to create more fear and distrust..."

Kaplan suggests taking funds from the self-insurance liability fund to the GPF reserves to top it off as a positive.

Kaplan makes the scheduling motion for that: amend to allocate up to 30MM from Self Insurance Fund and transfer to that to GPF reserve fund, which brings the fund back to 7.5% of the GPF---that would prevent the City Council from having to declare a fiscal emergency

Kaplan's motion places that item on 12/2. If it passes, it would mean the city does not have to declare a fiscal emergency, but still has to balance the huge deficit.

CAO Johnson is bringing legislation on 12/5 for cost cutting strategies.

Kalb: "do projections assume a continuation of spending by OPD/OFD...." Johnson says that it assumes the current trend, and the adjustment has to be made to current spending levels.

Kalb asks for a list of all FTE's [full time equivalents] that are partly funded by another fund and a list of newly created FTEs created over the past four years, vacant or otherwise.

Kalb asks if it were possible to downgrade the 7.5% GPF reserve that has to be put aside at the end of FY to 7%, what impact it would have and implications.

If we adjusted to 7%, it would be 4 MM of additional room to use in the GPF. Standards recommend a much higher GPD per Roseman, so they are actually below the standard.

Reid suggests that they should have taken the cuts in July [where the OFD would have been cut ahead of the firestorm last month]

Reid asked a lot of questions

Measure NN funds won't be in this current year budget, that's different than what I'd heard. 12/25 earliest. That's a blow to the math I've been seeing, 16 MM additional funding not available til next year

Jenkins now reminding CMs OFD Chief Covington's claims: "it would have been virtually impossible to fight five alarm fire in d6 & d7, we would have lost homes on Campus Drive. We also celebrated 7 weeks without a homicide in Oakland...w/out Coli, it would not have been possible"

Measure NN parking tax comes in this year, apparently, at 5 MM. Jenkins is asking about a special election to put a special sales tax increase ballot measure on a special March election to come in by July. It's very speculative at this point.

Deleted the last, the Coli wind-down question was cost to City to wind down Coliseum. Kaplan said that she was told by JPA Director that there would be no cost to City

Fife confirming that some revenues are coming in higher than expected and confirming that 83% of all depts would need to be cut if it's not cut in OFD/OPD

Bas confirming the 12 MM that came in negative as carry forwards from last FY, it was originally much higher, but those were discretional.

CM Kaplan schedules her action item that would transfer up to 30 MM from the Self Insurance Liability Fund to the GPF Reserve to make it whole, avoiding need to declare a fiscal emergency. Kalb noted he would only be up for 10 MM, not 30 MM, for example.

Kaplan said she'd discussed the item with City Attorney and the money is there.

Now in public comment, over 40 speakers. There will be a share of public speakers.

Will give some overview on speakers; but not all

George Spies arguing that cutting Measure U bond sales would actually cause higher costs in deaths, lawsuits, etc.

BPAC member, speaks of his friend who died by hitting a pothole on a bike on Skyline [which cost the city millions in a lawsuit]

OFD VP IAFF 55 Seth Oliver....the contingency budget isn't surgical, it simply takes an axe to services...cut waste not services

Loren Taylor, whose home was saved by OFD using a budget he doesn't support...has critiques about the way City budgets, but nothing very specific

Speaker's daughter was killed in a bike collision around Lake Merritt. She says the family did not pursue a lawsuit because they love Oakland. But they were promised there'd be upgrades. She says "changes put on hold due to an unavailability of measure u funding"

Julian Ware, VP Of IFPTE turned around the Finance Dept report and called the proposed cuts "feckless"...calling for the City Council to rally around their roadmap. [he used fecklessly three times, quite hilariously] ifpte21.org/wp-content/upl…

Kev Choice pleads for council not to cut arts and culture programs

The union's refrain today is "cut waste not services"

Supporter of the Film Rebate program asks council to use the Coli funds [when, she says, when the BOS passes the Coli sale]

Speaker notes that one OPD salary of $300K is the entire Meals on Wheels budget.

Several SEIU 1021 workers are here to ask for continued support for early childhood development, OPRYD and is an investment in violence prevention: "I'm about to lose my home in d3, and I don't know how I'll pay market rate rent"

DPW worker: cutting 25% of illegal dumping funds isn't going to help the budget, but it will hurt the city

Animal Control worker says that their equipment has been cut, they don't have washers/dryers to clean clothes covered in feces and urine; depts falling apart with budget cuts

911 operator: in response to claims that the union workers should take concessions, but notes past concessions; it is time for supervisors, managers to take the cuts, not workers "chop from the top"

City worker of nearly three decades, calls back to previous concessions: "We gave back 28 MM back to this city with the promise that we would not be back here again and we're here again"

IBEW worker of decades: "You can cut us all and it's still not going to be enough...please don't forget about us, we're willing to work with you...I been here too long, sometimes you just get tired of being sick and tired" [heavy applause on that]

Tony Daquipa asks the City to "chop from the top...please review all the contracts, rein in spending, collect the revenue that needs to be collected, chop from the top". Daquipa also castigated a country that has enough money for genocide but not housing

Kristin Schumacher of IFPTE 21: Budget is product of multiple years of overspending in just 1 dept...most of depts have already implemented substantial cuts, even w/AASEG, OPD would've overspent budgets...OPD lacks internal controls, would like to see CAO to get those controls"

Jennifer Findlay: "context I want to make sure you have...OPD spending is the answer here, there's no controls on their OT spending..." wants to point out that the County is holding up the deal.

That's it for public comment. There's no action item here, except for voting on Kaplan's scheduling motion. but there will be action follow ups in the first week of December. Kaplan also says that its important to plan for the bond issuance for Measure U.

Kaplan's motion passed. With the transfer, one small fire would be put out...but its not clear if it has enough support.

They also continued the Q1 report and the funds report.

Two committees were cancelled today, Public Safety and Life Enrichment. The public works meeting will start when this one is finished.

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