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This story is an introduction to our Living in Debt series.
"Oakland is broke."
Interim City Administrator Lamont Ewell may have been the first city executive to say it out loud at a public meeting, but it's been well known for years that Oakland finances are in free fall.
Oakland's financial problems include a heavy debt load and flat to negative revenue stream. Even if the city manages to shrink its general fund debt, which is $58 million for the 2011-2013 fiscal period and $72 million for the next, Oakland is still looking at other serious problems that could hold down economic development for years.
For example, Oakland's old police and fire retirement system - PFRS - has an unfunded liability of $494 million. And as of June 30, 2010, the city had more than $138 million in negative fund balances.
Meanwhile, according to the city, Oakland needs roughly $1.6 billion for capital improvement projects.
All of this comes while the while the city's services are desperately needed by a large body of its citizens who are struggling through job loses, foreclosures and bankruptcies. Oakland's back is firmly against the wall and it must aggressively find ways to recovery.
But if the city is ever to thrive and become inclusive to all communities, it has three big issues it must successfully tackle: public education, jobs and crime.
In all three areas, there are signs of hope. The schools and city are collaborating in never before ways to deal with a range of issues, including crime. The Oakland Unified School District has a fairly new superintendent, local board control and slowly rising student test scores, On the job front, both the Port of Oakland and the city are putting greater energy behind developing the former Army Base, which once fully up and running, means thousands of jobs for the city.
It remains to be seen how long and in what fashion the city will recover from this horrible downturn. But, when it does, here may be the stories of how it began.
Special thanks to David Cohn and the Spot.us community for helping to make this project possible.
Actually the first official to publicly acknowledge that we are broke might be Lindheim at one of the Nik Nak City Council meetings. Don't remember his precise words, but he was quite matter of fact about it, and the city council members ignored his comment and went on about their business of the night.
In early January of 2011, Pat Kernighan at a Lakeshore community meeting on the budget was much more direct, in response to my question she essentially said that without some drastic improvement in revenue or cost reductions, we will be unable to pay our bills in about two years. People's jaws dropped. When asked why the council members hadn't told this to their constituents Councilmember Kernighan replied quite reasonably that they had tried to do so at some local hearings but no one wanted to hear the bad news. Her further point was that until their own ox was gored, libraries, parks, cops etc. residents did not want to make the hard choices needed here.
I suppose that viewpoint depends on what you see as the responsibility of an elected official, but like our fiscal situation, certainly not unique to Oakland pols.
Anyone who thinks the recent contract settlements will do anything more than delay the inevitable more than a year is drinking Mayor Quan's koolaid that the economy is just about to bounce back and all those new restaurants and a few refugee social networking startups will make it all ok here.
Actually the first official to publicly acknowledge that we are broke might be Lindheim at one of the Nik Nak City Council meetings. Don't remember his precise words, but he was quite matter of fact about it, and the city council members ignored his comment and went on about their business of the night.
In early January of 2011, Pat Kernighan at a Lakeshore community meeting on the budget was much more direct, in response to my question she essentially said that without some drastic improvement in revenue or cost reductions, we will be unable to pay our bills in about two years. People's jaws dropped. When asked why the council members hadn't told this to their constituents Councilmember Kernighan replied quite reasonably that they had tried to do so at some local hearings but no one wanted to hear the bad news. Her further point was that until their own ox was gored, libraries, parks, cops etc. residents did not want to make the hard choices needed here.
I suppose that viewpoint depends on what you see as the responsibility of an elected official, but like our fiscal situation, certainly not unique to Oakland pols.
Anyone who thinks the recent contract settlements will do anything more than delay the inevitable more than a year is drinking Mayor Quan's koolaid that the economy is just about to bounce back and all those new restaurants and a few refugee social networking startups will make it all ok here.
Most of the upscale restaurants and bars are opening here because Oakland does not require employee health insurance coverage, has a lower minimum wage, and offers much lower rents than popular sections of SF.
From the city's point of view, at least low wage restaurants pay taxes and collect sales tax that can go to funding services for residents, including impoverished residents. That's more than you can say for minimum wage paying, completely tax exempt non profits that maybe provide health insurance for their workers.
-len raphael, cpa
temescal