June 20, 2024

KJ Home

The Best Home for Creating Lasting Memories

Oakland to land in another budget deficit over few home sales

3 min read

OAKLAND — City officials may have resolved a historic budget deficit last summer without layoffs, but the core problems involved haven’t gone away.

Oakland is forecasting a $177 million operating shortfall by the end of the current fiscal year in June, with officials warning in a report that “most of the City’s revenue sources are trending downward” and won’t come near the projections laid out in the current two-year $4.2 billion budget.

Of all the revenue sources currently falling short of expectations, the most significant stream identified by officials is from a tax on property sales — a consequence of fewer homes changing hands in Oakland, likely due to high interest rates.

This is nothing new, given that a lag in real-estate transfer tax revenue compared to projections was the major component behind last year’s $360 million deficit.

It is yet another fiscal challenge for Mayor Sheng Thao, whose current budget plan — approved last June by the City Council — merged some departments and left numerous city staff positions unfilled, avoiding layoffs in the process.

And it continues a series of structural financial struggles within Oakland, as well as the city’s embattled school district, as they adjust to life without federal COVID-19 relief funds that kept many local governments afloat during the pandemic.

The new report — finalized by City Administrator Jestin Johnson and set to be presented next Tuesday to a committee of City Council members — is based on revenue totals from this fiscal year’s second quarter, which spanned October through January.

The Oakland Police Department, which historically has accounted for a significant chunk of the city’s budget, is this year’s biggest over spender, expected to exceed its budget by $28 million.

Much of the excess comes from officer overtime, especially in OPD’s special operations division, which the report attributes to a heavy investigative workload for sergeants and the time it takes to fill out paperwork to document deployments of military equipment and use of force by officers.

“Overall, the department remains committed to addressing violent crime while managing overtime expenditures and administrative burdens across different areas and units,” the report states.

But a bigger problem is revenue. The city’s sales tax is now expected to fall short of earlier projections by nearly $5 million, the business license tax by $9.5 million, and miscellaneous revenues by almost $6 million.

Those pale in comparison, however, to the real-estate transfer tax, where revenue has plummeted so low that the latest forecast indicates returns being $57 million short of what was budgeted — enough to account for 68% of the current projected deficit.

“The last time that (the tax) had a comparable drop to the one experienced over the past couple years was during the great recession of 2008,” the city report states.

link

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © All rights reserved. | Newsphere by AF themes.