Measure Y and the Oakland Budget Mess 

Oakland's flawed police-funding tax also restricts the city's ability to trim public safety spending.

The City of Oakland already has trouble providing decent services to its residents, and things are about to get a whole lot worse. City officials are facing an $83 million budget deficit that they must resolve by July 1. And it's now apparent that they'll have to lay off hundreds of workers and shut down government offices more often. While some of the blame for the mess should be shouldered by politicians who don't have the courage to make tough decisions, Oakland's budget woes also are being hampered by one of the worst city laws in recent memory — Measure Y.

At a budget briefing with reporters last week, City Councilwoman Jean Quan, head of the council's Finance and Management Committee; Assistant City Manager Marianna Marysheva-Martinez, the city's budget czar; and Budget Director Cheryl Taylor laid out the grim realities of Oakland's fiscal nightmare. Marysheva-Martinez and Taylor are projecting that general fund revenues will drop by about $51 million next year, down from about $465 million in the current fiscal year. They blame much of the projected decline on lower tax receipts and the disappearance of onetime revenues from this year's budget. They also estimate that the city's expenses will increase by about $32 million next year because of rising salaries and spiraling health-care and pension costs.

City officials are quietly hoping to convince employees outside the police and fire departments to take a 10 percent salary cut. If the unions refuse, then city officials plan to shut down city government more often, thereby saving the equivalent on employee salaries. To balance this year's budget mess, city government already closes its doors thirteen times a year, in addition to formal citywide holidays. In short, Oakland's already below-par services are about to nosedive further, and the people who will suffer the most are low-income residents.

Clearly, city officials have leverage over some of the unions. If they want, they can threaten mass layoffs or government shutdowns to get the unions to play ball. But they have virtually no leverage against the police and fire unions — two of the city's biggest and costliest. The reason has to do with Measure Y. That 2004 ballot measure effectively prohibits the city from laying off cops and firefighters, explained Marysheva-Martinez, whom Mayor Ron Dellums hired earlier this year at the recommendation of former City Manager Robert Bobb.

The problem is that Measure Y established minimums for the numbers of police officers and firefighting companies that must be on the city's payroll. If the city fails to keep at least 739 cops and 32 fire companies, then it cannot collect an estimated $20 million in annual Measure Y parcel tax revenue from property owners. Although the city currently has more than 800 police officers, 63 of them are funded by Measure Y revenues. So if the city were to lay off any of those officers, the general fund would not benefit. In other words, the city simply can't afford to lay off cops. Doing so will either produce no savings or result in the loss of Measure Y funds (for more, see "Measure Y Is a Bad Law," 2/18/09).

So what does it all mean? Oakland cops and firefighters have almost no incentive to take pay cuts because their jobs are safe. You can't threaten to lay them off when they know you can't anyway. The city can't threaten to stop responding to crime and fires either. In short, its hands are tied. The only place the city has leverage with cops and firefighters is on overtime, but Marysheva-Martinez explained that both departments have cut back in their overtime usage, and additional large cuts have public safety ramifications.

Admittedly, threatening to lay off cops and firefighters right now would be extremely unpopular. There's no doubt that they have tough jobs, especially the police. But without the leverage provided by the threat of layoffs, then the city has to depend on the unions to voluntarily cut their pay. That seems highly unlikely. In fact, the police union is scheduled to receive a 4 percent pay raise next year. Oakland residents, by contrast, appear destined to pay higher taxes and receive fewer and fewer services in return.

Another problem is that Oakland's elected leaders have failed to use the bully pulpit to inform the public about what's happening and why. They also appear to be more worried about angering city unions than about coming to grips with one of the few viable solutions — significant employee pay cuts. Marysheva-Martinez and Taylor made it clear that a 10-percent salary cut for non-police and fire will fail to solve the fiscal mess. In fact, the projected deficit requires that the city slash spending up to 17 percent across the board to balance the $414 million general fund budget for 2009-10 fiscal year.

Yet after the meeting, Quan defended the 10-percent salary-cut proposal for nearly everyone other than cops and firefighters, saying that the unions will never agree to what's needed to avoid further shutdowns of city government and hundreds of layoffs. "They'll take layoffs before they'll take a 20 percent cut," she said flatly. Quan is expected to mount a run for mayor in 2010, and some of her likely support will come from labor unions, but she denied that her political aspirations are playing a role in her attempts to balance the budget.

Although Quan declined to divulge what's being said in the union negotiations, it seems doubtful that city officials have actually threatened massive layoffs if the unions won't take larger pay cuts. But if they have, and the unions really would rather decimate city services and watch hundreds of people lose their jobs, then the public has a right to know.

Also, it's not as if city workers can't afford it. According to Marysheva-Martinez, Oakland city employees make higher-than-average salaries compared to city workers statewide. As a longtime former union rep, Full Disclosure takes no joy in arguing for union wage cuts. But it makes no sense for a predominantly working-class city such as Oakland to pay its employees above-average salaries while gutting city services.

Correction: The original version of this story used out-of-date figures to describe how much Measure Y produces in annual revenues for the city. According to Mayor Ron Dellums' 2009-11 budget, Measure Y is expected to generate about $20 million in annual tax revenues for each of the next two years -- not about $12.5 million, as this story originally stated.

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