Oakland Mayor Quan Press Conference On Budget And Redevelopment 2012

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The City of Oakland’s in a bad spot, and this blogger’s not sure if many people in Oakland understand exactly what’s going on. That’s why it’s important to look at the entire 31 minute press conference featuring Oakland Mayor Jean Quan, and then the two “sidebar” videos that are posted below. Oakland is faced with the very real situation of being forced to downsize its government to levels below what the people of the City of Oakland have called for.

From what Mayor Quan said in the press conference, the City of Oakland really didn’t see this coming so fast, and now have to reorganize its entire public system by court order. No, it’s not the City of Oakland’ fault; blame California Governor Jerry Brown for forcing the action that eventually led to a California Supreme Court decision.

Why?

Because Governor Brown has been under the impression that the State of California’s not getting its fair share of property tax revenue because some of it, and not the majority, is tied up in redevelopment project areas. Is he correct? No, but Jerry managed, once again, to pick the perfect time to back an idea that wreck’s California Government’s ability to provide services. He did it once in 1978 with Proposition 13, cutting property taxes from as high as 16 percent to a standard 1 percent rate state wide, and he’s done it again in ending redevelopment.

The Oakland impact is an estimated loss and creation of a budget gap of $28 million, and the loss of about 105 jobs (as known at this point). The new budget calls for $8.2 million in cuts this fiscal year, and a giant $20.3 million in cuts for fiscal year 2012-2013.

The new budget was also made in a total state of confusion, and that’s not to be insulting, but to be honest, and reflect what the Mayor herself said in the video. What the City of Oakland has to do is deal with not just determining what to cut, but also how much staff they need to basically run the City, and to continue working on current redevelopment projects.

See, the State of California didn’t leave room for money to be set aside for current redevelopment projects; it just said that the agency has to be cut, but the City can keep working on whatever projects it has in activity. That’s a bit crazy making, so now you get what the City’s going through.

For example, here’s Mayor Quan and Oakland Economic Development Boss Fred Blackwell talking about what will happen to the Oakland Army Base project:

And here’s Oakland Council President Larry Reid talking about how the planned “Coliseum City” will be impacted:

Here’s the press release that details the cuts planned by the City of Oakland, as of this writing:

FOR IMMEDIATE RELEASE
January 23, 2012
City of Oakland Releases Amended Budget Proposal for
FY 2011-13 in Response to Redevelopment Agency
Elimination 105 Positions May be Cut to Close $28 million Annual Deficit
Oakland, CA — This afternoon, Mayor Jean Quan and City Administrator Deanna J. Santana will release an amended policy budget for fiscal years 2011-13, to balance the budget following the loss of Redevelopment funding and a California Supreme Court ruling that set February 1, 2012 as the dissolution date of Redevelopment Agencies statewide.
For the City of Oakland, the loss of Redevelopment funding creates a potential annual budget gap of about $28 million. Until the Court’s ruling, the City’s budget was balanced for this fiscal year and next. Yet the elimination of Redevelopment funding forced the City to re-open the budget and make significant reductions to achieve a balanced budget. As a result of the deadline set by the Court, the City has had only a few weeks to complete a budget-balancing process that normally takes about eight months to complete. It is also forcing the City to act out of sequence, without the usual and necessary community and workforce engagement that typically accompanies budget decisions, especially decisions of this magnitude.
Without Redevelopment funds, the City is not in a position to keep doing business as usual. This new reality presents an opportunity for the organization to retool itself through practical reorganizations, department consolidations, and merging functional services where a natural nexus exists. It is through this process that the Administration has been able to minimize service reductions and preserve positions to support those services.
In total, this Proposed Amended Policy Budget will result in a loss of approximately 105 full-time equivalent (FTE) positions. To achieve a balanced budget, this proposed budget eliminates $8.2 million in FY 2011-12 (February-June 2012), and approximately $20.3 million in FY 2012-13.
Mayor Quan said, “I recognize that this out-of-the-ordinary budget process has placed stress and confusion on the organization. However, without an action on the part of the State Legislature, we must ensure compliance with the Supreme Court decision and achieve a balanced budget by February 1. The City does not have funds or reserves to keep doing business as usual. We are proposing a way to maintain as many services as possible with a leaner, more efficient City organization. We are relieved that we can do so with fewer jobs lost than we had anticipated.”
City Administrator Deanna J. Santana said, “As difficult—and administratively overwhelming—as this process has been, we believe that we have advanced a proposed budget that maximizes public services, preserves the greatest degree of jobs, and reorganizes this organization to one that is aligned to its resources and best structured to provide quality services to our residents and neighborhoods. We look forward to the opportunity to present this budget for the City Council’s consideration on January 25 and 31.”
The following is a summary overview of the proposed changes to stabilize the City organization, plan for the future, and provide service within our limited resources.
Essential Services Preserved
The Proposed Amended Policy Budget preserves essential services by streamlining and consolidating functions and reorganizing into more traditional local government organizational structures. Below are highlights of the services that are preserved or reconfigured in this proposal:
• PreserveLibraryservicesinwhole.
• PreserveHumanServicesinwhole.
• Preserve Public Safety services in both Police and Fire, in whole for sworn and to a great extent for non-sworn staff. Consolidate certain administrative functions in OFD and OPD to promote efficiencies in public safety administration.
• Reorganizethe CityAdministrator’s Office to assume the administrative responsibilities of the Successor Agency, and to formally establish the traditional leadership areas needed to manage a large enterprise of our size: budget/fiscal management; operations; and, labor/employee relations.
• Dissolve the Community & Economic Development Agency (CEDA).Functions are either no longer completed by the City, or decentralized to one of four new offices: o Consolidate the Planning Division and Building Services Division into an Office
of Planning & Neighborhood Preservation, which better reflects the mission
and goals of these services. o Convert CEDA Housing Services into an Office of Housing & Community
Development, which will provide primary staff support for Housing Successor
Agency activities. o Establish a new Office of Economic Development to ensure that the City’s
economic development priority has adequate resources and is focused on business relations, retention, attraction, and development. This newly formed office will be positioned to grow as legislative activity emerges that supports economic development in light of the dissolution of redevelopment.
o Establish a new Office of Neighborhood Investment to transition from a Redevelopment Agency to a functional unit focused on implementing qualifying projects outlined in the Enforceable Obligation Payment Schedule (EOPS) and to support Successor Agency activities as detailed in the EOPS report that accompanies this proposed Budget.
• Decentralize and reconfigure the Parking Division to more closely align its individual operating units with competencies in various departments.
• Consolidate Risk Management and Benefits under the Department of Human Resources Management, and transfer Retirement to Treasury.
• In FY 2012-13, consolidate key administrative functions in the Finance & Management Agency, Department of Human Resources Management, Department of Information Technology, and the City Administrator’s Office into a traditional Administrative Services Department. This will reduce duplication of effort that currently exists in the City, develop consistency in administrative functions, and lead to efficiencies and financial savings.
• In FY 2012-2013, consolidate the Office of Parks & Recreation and Department of Human Services, along with other like services such as the Neighborhood Services Division, to create a new Community Services Department entirely focused on direct service to residents.
Other Proposed Budget Reductions
In addition to the budget reductions as a result of organizational restructuring, the FY 2011-13 Proposed Amended Budget proposes to eliminate functions, positions, and non-position expenses across most City agencies and departments. The proposed reductions are across many City funds, not just the General Purpose Fund.
␣ Mayor and City Council: Reductions are proposed in both offices in an amount equal to 40% of the redevelopment funding previously appropriated to each office.
␣ City Administrator: Reductions in Administration, KTOP, and the Oaklanders’ Assistance Center.
␣ City Clerk: Eliminate one vacant administrative position.
␣ City Attorney: Transfer positions to align the distribution of staff with the services they actually provide. A total of 5.89 FTEs will be moved to other funding sources. At the same time, a reduction target has been proposed in an amount equal to 40% of the redevelopment funding previously appropriated to the Office.
␣ Finance & Management: Freeze the Agency Director position in coordination with the consolidation efforts of the Administrative Services Agency. Absorb many of the duties previously performed by CEDA administration in a more centralized payroll, accounting and budget role. Eliminate the Parking Director position and replace with an Administrative Services Manager, who will manage Parking Enforcement. Transfer Parking Enforcement to OPD.
␣ Information Technology: As part of the Administrative Services Agency consolidation, freeze the Director of IT position. Transfer 1.3 FTEs to other funds and reclassify some positions. No position reductions other than the Director are proposed.
␣ Human Resources: Eliminate two Human Resources Manager positions.
Provide funding for the Equal Access language and interpretation contract, as well as staff training and support, at a fraction of the level that was previously provided.
␣ Police & Fire Services: Sworn positions and essential public safety functions are being preserved, in line with the Mayor and Council goals. However, to reduce costs and increase efficiency, a consolidation and reduction of some administrative positions are being proposed in this budget. In addition, the number of Neighborhood Service Coordinators is reduced from nine (9) to five (5), and the Neighborhood Services Division would move to the proposed new Community Services Department as part of the consolidation of the Office of Parks & Recreation and Department of Human Services.
␣ Library Services: No branches will be closed and no service hours will be impacted.
␣ Human Services: A number of budget-balancing measures are proposed, including reclassifying positions, eliminating the Youth Commission staffing, reducing administrative support, and eliminating the 211 Program subsidy. All Community Housing staff remains until at least July 1, 2012, at which time the program funding structure will be evaluated and any proposed changes will be presented to Council. Eliminate the Department Director position.
␣ Parks & Recreation: Preserve the essential Parks & Recreation programs and services. However, measures required to balance the budget include the elimination of 6.77 positions through the adjustment of Recreation Center hours and the reprogramming of the San Antonio Recreation Center and Davie Tennis program. Annual subsidies for the Oakland Zoo, Children’s Fairyland and Hacienda Peralta – whose contracts are administered by OPR – are being decreased by 40%. The subsidy for the Jack London Aquatic Center is being eliminated entirely.
␣ Public Works: A reduction of 23 FTEs is proposed across several different funds, including the elimination of the 7 FTEs previously funded by redevelopment, as well as Administration, Facilities, and Equipment. The reductions will cause the shift for illegal dumping to be reduced from 7 days/week to 6 days/week. Response times to service calls for illegal dumping will increase from 3 business days to 4-5 business days. The freezing of vacant positions in the Equipment Fund may cause slower vehicle turn-around.
␣ Community & Economic Development: Eliminate CEDA and reconstitute as the Office of Economic Development, Office of Neighborhood Investment, Department of Housing & Community Development, and the Department of Planning & Neighborhood Preservation. Approximately 45% of CEDA Redevelopment staff will be retained as part of the Successor Agency to complete the wind-down of projects. A total of 42 FTEs are eliminated from the former Agency for FY 11-12 and an additional 2 FTEs in FY 12-13.
␣ Non-Departmental: This category has limited discretion due to the nature of its expenditures, as most of the budget is for debt and lease obligations, and transfers to other funds, including Kids First. Balancing measures within Non- Departmental include a 40% reduction to both the art grants and the Symphony in the Schools programs.
Implementation Timeline
January 18 January 23
January 25 January 31 February 1
February 3 February 6 May 1
Background
City issues layoff notices citywide to provide 10-day notice Mayor and City Administrator submit budget-balancing proposal
to City Council City Council presented with budget-balancing proposal City Council considers proposal and approves a balanced budget Redevelopment Agency dissolved; all assets and close-out activities transferred to Successor Agency Layoffs take effect Begin implementation of Adopted Policy Budget for FY 2011-13 Deadline for Oversight Board to be established
On December 29, 2011, the California Supreme Court upheld two bills that were part of the State of California’s efforts to close its significant budget deficit last year. In its ruling, the Court upheld ABx126, which eliminated Redevelopment Agencies throughout California. It also struck down ABx127, which would have allowed redevelopment agencies to remain in operation as long as they made payment to the State. The Court’s ruling set February 1, 2012 as the dissolution date for Redevelopment Agencies, and left no mechanism for reinstatement.
These are unprecedented circumstances. Like many California cities, the City of Oakland had anticipated the possibility that the Court would uphold the bill eliminating Redevelopment Agencies, and had put aside funds accordingly to pay the State to remain in operation. Yet the Court’s decision to strike down the option to pay took cities across the state by surprise. As a result, California cities are faced with the Herculean task of dismantling complex Redevelopment Agencies in just under five- weeks’ time, an unreasonable yet unavoidable timeline.
In Oakland, the Court’s ruling will have a devastating impact—not just on the Community and Economic Development Agency, which is primarily charged with carrying out our Redevelopment activities—but on the entire City. Geographically about half of Oakland is located in a Redevelopment area, so Redevelopment funds have been used to support staff, projects, and programs throughout the City organization.
Redevelopment is the only tool that Oakland—like other urban centers in California— can use to turn vacant and underutilized properties into productive, tax revenue- generating and job-producing use. It has also served as a catalyst for private investment to breathe life into areas burdened with deteriorated buildings, environmental contamination, and aging infrastructure that would otherwise lay vacant and nonproductive.
Budget-Balancing Categories
The Mayor and City Administrator evaluated budget-balancing options in four categories to contain costs and minimize ongoing service cuts:
1. Cost Containment—Immediate measures that the City can put in place to contain expenditures in an effort to minimize on-going service cuts included 5% budget reduction proposals from City agencies and departments, and implementation of an immediate moratorium on hiring City employees and in purchasing non-essential purchases.
2. Labor Concessions—Initiated communication with all bargaining groups to explore additional compensation concessions or other cost reduction measures, subject to the meet and confer process, where applicable. No bargaining group affirmatively responded to the City’s request.
3. Revenue Enhancement—As part of the FY 2012-2013 Amended Budget, in summer/fall 2012, the Administration proposes to evaluate the City’s fees, rates, and charges to present the City Council with adjustments that achieve 100 percent, or a higher rate of, cost recovery. Staff will be mindful of the balance between affordability of rates, fees, and charges for residents and the need to seek a higher return of revenue.
4. Alternative Service Delivery Options—This category outlines organizational restructuring, service reductions or eliminations, and alternative service delivery methods that are recommended to reduce costs and achieve a balanced budget.
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Stay tuned for more on this.

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