1 APPROVED AS TO FORM AND LEGALITY
________________________
CITY ATTORNEY’S OFFICE
OAKLAND CITY COUNCIL
RESOLUTION NO. ______________ C.M.S.
RESOLUTION DECLARING AN EMERGENCY PURSUANT TO
ARTICLE XIIIC, SECTION 2(B) OF THE CALIFORNIA CONSTITUTION
NECESSITATING SUBMISSION OF GENERAL TAX MEASURES TO
THE VOTERS BEFORE THE NEXT REGULAR ELECTION FOR THE
CITY COUNCIL
WHEREAS, the City of Oakland is facing a significant budget deficit and recent financial assessments indicate a severe and immediate fiscal imbalance, j eopardizing the City’s ability to sustain critical services; and
WHEREAS, the economic repercussions of the COVID-19 pandemic have profou ndly disrupted the City’s tax base and fee revenues, creating sustained financial challenges and limiting available resources for critical operations; and
WHEREAS, the City is currently experiencing one of the most substantial General Purpose Fund deficits in its history, requiring decisive action to prevent further erosion of fiscal stability; and
WHEREAS, as of the Fiscal Year (FY) 2024-25 Budget Balancing Agenda Re port, the City of Oakland’s projected operating budget deficit for Fiscal Year 2024-25 is an estimated $129.79 million; and
WHEREAS, the $129.79 million operating deficit is equivalent to a 34.60 % reduction in the police department’s General Purpose Fund budget; and
WHEREAS, the $129.79 operating million deficit is also equivalent to the combined elimination of the General Purpose Fund budgets of the following departments:
Race & Equity, Public Ethics, and Police Commission (100% of the overall budget reduction of each department),
Animal Services (97.71% overall budget reduction);
Workplace and Employment Standards (35.06% overall budget reduction) Violence Prevention (30.89% overall budget reduction) Parks & Recreation (29.49% in their overall reduction), Human Services (29.54% overall budget reduction),
Library (23.43% overall budget reduction),
Transportation and Public Works departments (22.84% and 1.32% respectively, of the overall budget reduction)
Information Technology department (14.96% overall budget reduction); and
WHEREAS, the City Council is considering balancing measures to amend the FY 2024- 25 Midcycle Budget (FY 2024-25 Budget Balancing Actions); and
WHEREAS, notwithstanding the City Council’s FY 2024-25 Budget Balancing Actions, the City will continue to have a structural imbalance because n ear-term expenditures for vital services and programs will continue to outpace the City’s revenue collections; and
WHEREAS, the City Council will be required to call a special municipal election in 2025, which will likely be held on April 15, 2025; and
WHEREAS, the City Council desires to submit to the voters at the next special municipal election one or more proposed ordinances to increase general ta x revenues in order to reduce the amount and extent of reductions in vital City services and programs due to the budget deficit; and
WHEREAS, if approved by the voters, the general tax measures will impos e or increase general taxes, as that term is defined in Article XIIIC of the California Constitution; and
WHEREAS, Article XIIIC section 2(b) of the California Constitution requ ires that the governing body declare an emergency by unanimous vote in order to place a general tax measure on a special election that is not consolidated with a regularly scheduled general election for members of the governing body; now, therefore, be it
RESOLVED: That the City Council finds and determines the foregoing recitals to be true and correct and hereby adopts and incorporates them into this Resolution; and be it
FURTHER RESOLVED: That the City Council hereby finds and declares that an emergency in the nature of a severe budget imbalance exists in the City of Oakland and that these conditions are projected to con tinue and intensify in the upcom ing fiscal years, which justifies placing on the ballot at the ne xt special municipal election, o ne or more general tax measures in order to increase general tax revenues to the City and protect vital City services and programs; and be it
FURTHER RESOLVED: That the facts justifying this declaration of emergency are a s follows:
A. The City of Oakland ended Fiscal Year 2023-24 with audited Gene ral Purpose Fund reserves of $22.3 million, based on a General Purpose Fund Emer gency Reserve balance of $70.2 million and negative unassigned fund balance of $47.8 million in the General Purpose Fund.
B. The City of Oakland’s Consolidated Fiscal Policy incorporates a statutory requirement that General Fund reserves be maintained at 7.5% of General Pur pose Fund appropriations. Based on the FY 2024-25 Adopted Budget for the General Purpose Fund of $807.2 million, General Fund reserves should be at $60. 5 million, but were $38.2 million short of this requirement at June 30, 2024.
C. The structural budget imbalance prompted the City to declare a state of extreme fiscal necessity with the FY 2024-25 Midcycle Adopted Budget (Resoluti on No. 90326 C.M.S.) and the City suspended certain maintenance of effort pr ovisions in order to mitigate the growing financial challenges (Resolution No. 90327 C.M.S.).
D. The FY 2024-25 Midcycle Adopted Budget included an accompanying Contingency Budget that included temporary reduction measures to reduce the budget deficit if City did not receive revenue receipts from the sale of its fifty per cent undivided ownership interest in the Coliseum Complex (the “Coliseum Sale”) by a specific date.
E. As of the FY 2024-25 First Quarter Revenue and Expenditures rep ort, anticipated revenue shortfalls for FY 2024-25 include $58 million from the delayed Coliseum Sale, $7.69 million deficit in Real Estate Transfer Tax revenues, driven by reduced property transactions and lower sales values, $2.23 million deficit in T ransient Occupancy Tax revenues due to decreased hotel activity and reduced room rates, $1.20 million shortfall in Parking Tax revenues, and $0.08 million shortfall in Sales Tax revenues.
F. The City has taken significant measures in accordance with the Contingency Budget to mitigate the fiscal emergency, including imposing hiring freeze s for non-sworn positions funded by the General Purpose Fund, delaying new sworn trainee academies for police and fire departments, halting the execution of unfin alized contracts, and restricting discretionary travel.
G. The budget deficit has significantly impacted the City’s abilit y to provide essential services. The City has considerably reduced operational and maintenance expenditures to close the budgetary gap. However, these actions are a one-ti me solution as the City continues to face a structural imbalance where recurring expend itures continue to outpace recurring revenues. The projected revenue shortfalls ar e exacerbated by increasing public safety costs, rising operational expenses, an d reliance on one-time revenues.
H. The severity of the structural imbalance will likely necessitate additional reductions to City services Additional reductions to vital services may sever ely impact the City’s ability to provide essential municipal services such as street and public maintenance, planning and permitting, recreational facilities, and libraries . Curtailing critical essential services such as law enforcement and the fire departm ent, including paramedic services, risks increasing response times in criminal cases, cases of medical emergencies, fires, accidents, or natural disasters will impact the safety, health, and welfare of its residents.
I. Proposed tax revenues from general tax measures could reduce the extent of the cuts to vital City services. Absent a new source of General Fund revenue, the City’s ability to maintain staff and service levels is uncertain, despite the dramatic decreases in services and budgetary cuts, causing a threat to the public health, safe ty, and welfare of Oakland’s residents; and be it
FURTHER RESOLVED: That these circumstances constitute an emergency pursuant to Article XIIIC, section 2(b) of the California Constitution and necessitate that the Council have the ability to place the general tax measures on the ballot before the next regularly scheduled election for members of the governing body.
IN COUNCIL, OAKLAND, CALIFORNIA,
PASSED BY THE FOLLOWING VOTE:
AYES - FIFE, GALLO, JENKINS, KALB, KAPLAN, RAMACHANDRAN, REID, AND
PRESIDENT FORTUNATO BAS
NOES –
ABSENT –
ABSTENTION –
ATTEST:
ASHA REED
City Clerk and Clerk of the Council of the
City of Oakland, California