It’s not a revenue problem. It’s an expenditures problem that is fueling another large budget shortfall in Oakland estimated to total $43 million over the next two years, said Finance Director Katano Kasaine.
Oakland’s general purpose fund is expected to run a $25 million deficit during the next fiscal year beginning on July 1, in addition, to another $18 million the next.
The current $600 million general purpose fund is already showing an estimated $6.3 million funding gap, Kasaine said during a special budget hearing Monday. If an uptick in the city budget does not occur before the end of the fiscal year on June 30, the dreary budget estimated for the next two years will worsen, she added.
General purpose fund expenditures are growing two to three times faster than inflation and revenue growth due to personnel costs and self-insurance claims,” Kasaine told the council.
“We believe expenditures are growing faster than revenues. We do believe this continues to have a lot of pressures on our core city services. We also know we have had a really good run in this market and the economy has been great, but everybody is talking about a recession,” said Kasaine.
However, she noted a possible downturn in the economy is not included in the budget overview.
Instead, pension costs continue to stymie the city’s budget. “This will continue to drain the general fund as long as we have this liabilities. This is where most of our money is going,” she said.
A fuller description of the city’s budget outlook is expected before Mayor Libby Schaaf proposes her budget on May 1, followed by amendments from the City Council around mid-May. A timetable offered Monday hopes to have a balanced budget ready for council approval on June 18.