2025-city-of-oakland-acfr_final-123025.pdf

partnerships, library, recreational and cultural activities, public improvements, planning, zoning, and general administrative services. Economic Condition and Fiscal Outlook The City of Oakland continued to navigate a challenging post-COVID-19 pandemic economic environment characterized by an uneven and slower than anticipated recovery. In Fiscal Year (FY) 2024-25, economic activity remained below pre-COVID-19 pandemic levels, particularly in sectors tied to tourism, downtown commercial activity, and office occupancy. While these conditions presented ongoing challenges, they also underscored the importance of the City’s long-term strategy focused on fiscal discipline, economic diversification, and sustainable recovery. Several revenues closely tied to local activity and tourism, including transient occupancy tax (TOT) and parking tax trended downward reflecting reduced visitor activity and absence of parking revenue from baseball games following the departure of the Oakland A’s. Sales tax revenue also declined slightly reflecting continued weakness in consumer spending; however, a recently adopted sales tax rate increase, which will not take effect until next fiscal year, is expected to help increase sales tax revenue. Business tax revenues increased primarily due to the City’s enhanced recovery efforts targeting past-due business tax delinquencies rather than growth in new business activity. Despite challenges in tourism and business activity related revenues, Oakland’s underlying economic base remains strong. Real estate transfer tax (RETT) collections, excluding a one-time large property transaction, increased by 19%, reflecting continued activity in the property market. Assessed property values also continued to rise, supporting long-term stability in the City’s property tax base. Since FY 2018-19 General Fund property taxes and combined general and voter-approved property taxes exclusive of RETT increased by 29% and 33% respectively. For FY 2024-25, property tax collections decreased, but it was due to a reduction in the portion of the tax rate dedicated to pension obligations, rather than a decline in underlying economic value. Together, these trends demonstrate that Oakland’s broad and diverse tax base, anchored by continuing growth in assessed property values, provides a solid stable foundation for sustainable revenue growth over time. Unemployment rates remained moderate at 5.2% in June 2025, reflecting only a modest increase from 5.1% in June 2024. While citywide employment losses due to large-scale layoffs and closures increased from 623 jobs in FY 2023-24 to 1,286 jobs in FY 2024-25, these job losses were concentrated among employers associated with the departure of a major professional sports franchise. Overall, these figures compare favorably to the City’s experience during COVID-19 period and reflect one-time factors rather than a broad-based weakening of the local labor market. In the years immediately following the COVID-19 pandemic, the City’s finances were supported by significant federal relief funding. Between fiscal years 2020-21 and 2022-23, the City received approximately $188 million in direct federal subsidies, which were used to offset revenue shortfalls resulting from reduced economic activity. As economic activity has remained below pre-pandemic levels and federal relief funding has ended, these conditions contributed to the emergence of a structural budget imbalance. In response, the City implemented a series of corrective actions aimed at addressing structural imbalances, restoring reserves, and stabilizing its financial position. These actions include a hiring freeze, travel moratorium, reductions in discretionary spending, deferral of certain costs and contracts, voter approval of Measure A increasing the sales tax rate effective October 2025, enhanced enforcement of fines and penalties, audits and collection of delinquent business taxes, and increases to parking fees. Together, these measures have positively impacted the City’s near-term outlook and positioned it to better manage future economic uncertainty. iii