Oakland Could Face $62 Million Budget Shortfall Due To Pandemic, Police Overtime
OAKLAND (CBS SF) -- Cuts to services could be coming as Oakland faces a possible $62 million budget shortfall, city leaders said Monday.
Main drivers of the shortfall are police overtime spending and reduced tax revenues because of the COVID-19 pandemic.
The predicted shortfall was estimated before this latest surge in coronavirus cases, which has led to a new shelter-at-home order that went into Monday in Alameda County.
"The fiscal impact of the pandemic was swift and there is an immediate need for service or expenditure reductions," said Margaret O'Brien, interim director of finance for Oakland, at the city's Finance and Management Committee meeting Monday.
O'Brien presented a report to the committee that said spending must be curbed below projected revenues. That difference could be $62 million by June 30, the end of current the fiscal year if nothing is done.
Oakland is among many cities across the United States suffering financially due to the pandemic, she said.
"This is really just hitting every city," O'Brien said. "We are not special here."
She said taxes are expected to be down from what was expected when the mid-cycle budget was adopted, and the receipt of about $4 million from the Federal Emergency Management Agency is uncertain.
Business taxes are expected to be down $4.75 million, hotel taxes are forecast to be down $4.44 million and parking taxes are expected to be down $3.28 million.
Sales tax and real estate transfer tax revenue also have dropped during the pandemic.
The largest source of increased spending is the overtime for the Oakland Police Department. The city has spent $35 million was on non-reimbursable police overtime, exceeding the budget for overtime last year.
In a memo, interim police Chief Susan Manheimer cited many reasons for the use of more overtime, including a 47 percent year-over-year increase in homicides, requiring more proactive crime reduction strategies and time for investigations.
Oakland saw its 100th homicide on Monday, the most since 2012 when homicides and shootings started dropping.
Manheimer also said not enough money exists in the police overtime budget to avoid exceeding it. That conclusion was drawn by City Auditor Courtney Ruby in a 2019 report on police overtime.
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