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OAKLAND — Faced with a crushing financial deficit totaling $265 million over the next two years, Oakland’s interim mayor has proposed a budget that includes dozens of layoffs and the freezing of hundreds of other positions.
The two-year, $4.36 billion budget plans to spare the city’s police and fire departments from further staffing cuts. But it also would close two of Oakland’s 28 fire stations, and it projects fewer overall sworn police officers than a voter-approved minimum would require.
The proposal released Monday by Councilmember Kevin Jenkins — who is filling in as mayor until Mayor-Elect Barbara Lee is sworn in later this month — moves away from what he called the “troubling past practice” of staking the budget against the city’s unfinished land sales.
The budget largely relies on assumptions of small increases in tax revenue over the next two years, reversing a trend of inflated revenue projections by city officials that first helped balloon Oakland’s yearly revenue shortfalls into a local financial crisis.
Still, the new proposed budget plans for $40 million in annual revenue from a parcel tax that would not go before voters until next June, assuming it even gets placed on the ballot.
Jenkins acknowledged he is betting on approval from an Oakland electorate that has steadily embraced tax increases in recent years. His memo notes that the tax would “provide ongoing resources for public safety services,” including technology and 911 system improvements.
“We are working very diligently to restore public safety in the city,” he said at a news conference Monday afternoon. “You see from the election that recently happened that residents are demanding that they want to feel safe in the city that they love.”
The budget would slash 80 jobs that are currently staffed, though city officials this week expressed optimism they could shuffle all but fewer than a dozen of those people to similar, now-vacant positions with the city.
In addition, more than 325 vacancies will remain unfilled, including 42 layoffs rolled out earlier this year amid the city’s financial struggles.
City officials did not describe which departments would be impacted by the job cuts.
Previous staffing cuts followed a tenuous budget process this past year that saw several delays to anticipated revenues from a $125 million sale of the city’s share of the Oakland Coliseum.
Any future money received from the still-unfinished deal will no longer go into Oakland’s general purpose fund, which pays salaries and other operational costs.
Another stalled land transfer, a sale of the former Raiders training facility that had been expected to generate $17 million, does not appear in the new proposed budget — further bucking the city’s trend of gambling on the hope of future revenue from offloading publicly owned properties.
City officials will need to cross their fingers on whether voters sign off the $40-million-a-year parcel tax, but former city administrator Dan Lindheim praised Jenkins for conceding uncertainty around the tax’s approval in the proposal’s accompanying memo.
“There’s nothing inherently wrong with including that estimate if you’re open and clear and explicit about it,” said Lindheim, who now teaches public policy at UC Berkeley, noting that city officials had slipped the Raiders facility sale into the folds of a previous budget.
Meanwhile, Jenkins’ budget would fund 678 sworn police officers in the upcoming two years — a figure below the 700-officer minimum voters approved last November. Six police academies and two firefighter academies are also budgeted. Police overtime costs are expected to be nearly $72 million over the next two years.
The fire station “brownouts” would rotate throughout the city, the interim mayor said. For example, the two stations in the Oakland hills that were recently closed for financial reasons will likely reopen over the summer fire season, while others facing lower call volumes will temporarily shut down, city officials said.
Jenkins stressed that four more fire stations would have closed had voters not recently approved Measure A, a sales tax increase which is expected to add $20 million to the city’s budget next year and $30 million the following year.
The budget proposal now heads to the City Council, which is expected to haggle over amendments and changes ahead of a June 30 deadline for passage. City staff also must hold public budget meetings in each council district for residents to offer their input.
The budget — which calls for $2.1 billion in spending from July 1 through June 30, 2026, and another $2.2 billion the following fiscal year — is largely contingent on federal funding remaining steady, even as President Donald Trump vows to gut federal spending in the coming years.
The proposal comes at a turbulent time for Oakland as the city grapples with a perilous budget crisis and an ongoing leadership void.
City leaders have warned the city faces a $265 million budget shortfall over the next two fiscal years, amid lagging revenues from taxes on real-estate transfers and business licenses, along with rising overtime costs for the city’s police and fire departments.
The deficit includes a $138 million shortfall during the next fiscal year — which runs from July 1 through June 30, 2026 — and a $127 million shortfall the following fiscal year.
Oakland isn’t the only municipality in the Bay Area to struggle financially. San Francisco faces a $876 million shortfall over that same two-year time period, while the city of San Jose is grappling with a $60 million shortfall in the coming fiscal year.
“These budget deficits didn’t happen overnight, and they will require both short-term and long-term structural solutions to solve Oakland’s budget challenges,” Lee, the former congresswoman, said Tuesday in a statement.
The budget’s rollout was, itself, a rocky process. Jenkins last week delayed its release by four days, citing “a period of transition following the recent election.” The announcement came two weeks after Finance Director Erin Roseman submitted her letter of resignation amid growing scrutiny over her handling of the city’s coffers.
Also missing recently has been any hint of the city’s latest five-year financial forecast, which is typically released in the weeks ahead of the mayor’s two-year budget proposal. City officials expect that document to be released by the end of the month.
