Fiscal Year 2013-2015 Special Budget Meeting

ATTACHMENT FY 2013-2015 BUDGET HIGHLIGHTS Page 3 Labor Market Activity Over the past year, 6,400 jobs were created in Oakland compared to 5,000 jobs created in the previous year. 8 The unemployment rate in the Oakland-Fremont-Hayward MD was 8.0% in February 2013, down from 8.6% in January 2013, and below the year-ago estimate of 9.5%. This compares with an unadjusted unemployment rate of 9.7% for California and 8.1% for the nation during the same period. The unemployment rate was 8.0% in Alameda County, and 8.1% in Contra Costa County. Two major development projects are expected to add significantly to employment in the City over the next two years. The construction of a new marine terminal and one million square feet of trade and logistics space at the former Oakland Army Base, which will begin in December 2013, is expected to create approximately two thousand new jobs over the course of its build out. In addition, Brooklyn Basin Development referenced above will create approximately 8,000 jobs over the six to eight year build out of the project, which will begin in spring 2014. At the same time, the City currently has about 1 million sq. feet of retail development underway which will have a positive impact on jobs, as reported by the San Francisco Business Times. Taxable Sales Activity The country’s major economic recession in 2008 has had a significant impact on retailing, and the sector is still recovering. In Oakland overall, retail sales had been relatively flat from 2001 to 2004, increased notably from 2004 to 2007, declined in 2008 and 2009, and have been increasing again in 2010 and 2011. Retail sales activity in 2012 is continuing to show improvement and on an upward trend. Eating and drinking and convenience retailing have shown the largest increases and strongest recovery, while department and apparel sales have lagged and have not recovered as quickly. Retail sales are anticipated to continue growing over the next several years as the economy and consumer confidence continue to recover and grow. Per HdL Economist Jordan Levine, auto sales activity is a good economic indicator for consumer confidence – in Oakland, auto sales are strong – all Oakland auto dealerships are part of Oakland’s top 30 sales tax producers. 9 III. OAKLAND WEATHERING ITS FINANCIAL CHALLENGES: 2008-2013 The City of Oakland is steadily emerging from the recession and collapse of the housing market in 2008. Since then, the City has addressed $318 million in budget shortfalls caused by sharp revenue declines and eliminated 720 full-time equivalent positions. Workforce and Community Service Reductions Over the past 10 years, the City’s workforce has shrunk by about 20% to an all-time low of 3,680 employees. Although the City has tried to sustain service levels despite diminishing staff and resources, the reality is that losing 20% of our staff has had a significant impact on service delivery. And yet, the demand for services has only increased as a result of growing community needs that are heightened during a recession. Adding to the challenge, we have preserved front-line services by dramatically cutting internal service departments such as information technology, finance, and human resources, which are critical to sustaining quality community services. We must seek a better balance moving forward between workload capacity and services delivered. 8 State of California, EDD 9 HdL Sales Tax Report 2012