Fiscal Year 2013-2015 Special Budget Meeting

HONORABLE CITY COUNCIL AND OAKLAND RESIDENTS Subject: FY 2013-2015 Proposed Policy Budget Date: April 17, 2013 Page 6 In the coming year, we face a 21% increase in CalPERS costs, or about $18 million. Over the next five years, additional increases of about 50% are expected, and anticipated CalPERS reforms could drive costs even higher. The City must also prepare to pay increased costs for medical benefits above the estimated $41 million we now pay. These costs have increased by 39% per civilian employee since FY 06-07, and by 50% for sworn employees. While CalPERS has not published projected cost increases for 2014, the past increases are a reasonable indicator of anticipated increases in the coming years. These rising costs are currently projected to outpace the City’s economic growth and steadily rising revenues. 3. Dissolution of Redevelopment Redevelopment was a major tool that Oakland—like other urban centers in California—could use to turn vacant and underutilized properties into productive, tax revenue-generating and job-producing use. It 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. The elimination of Redevelopment in January 2012 created a $28 million hole in the City’s budget and eliminated a significant source of ongoing funding for affordable housing and blight abatement, including resource to combat graffiti and illegal dumping. Redevelopment had also been partly used to help fund police services in commercial areas slated for revitalization. Over the past year, the work to wind down former redevelopment agencies has been an enormously complex process for cities across the state. The California Department of Finance is currently reviewing the transactions and land sales that took place during that process and has disallowed a number of actions in other cities. Oakland is preparing for that possibility, and while we have fiscally prepared for these events, funds set aside to address this fiscal impact are funds that the City could have used for investment in desperately needed, one-time expenses (e.g., critical deferred maintenance to repair City buildings and roads, technology upgrades, and replacement of fleet and equipment). Strategies and Values We’ve worked to be transparent and collaborative. This is an open, community-focused process with the books open to anyone who wants to see the data. By letting everyone have unprecedented access to our budget data we know we can: (1) improve trust in the process, (2) create a budget that truly serves everyone, and (3) tap into the best ideas available by empowering everyone in Oakland to contribute their ideas and perspectives. In recent years, we reorganized to increase efficiency, reduced middle management, and in many cases cut services to the bone. We now face choices moving forward about rebuilding and restoring a few key services. While all City service areas require our attention, we have given particular focus to the areas of public safety and economic development. By building a safer Oakland and growing our economy, we will create a better foundation on which to restore and grow the City as a whole. We’re in this together. We will build on union partnerships and collaborate with City Councilmembers and the community. A series of town hall meetings will be held throughout Oakland to discuss the City’s fiscal condition and proposed Policy Budget, and the City Council will hold public hearings on the proposed budget.