Friday, January 27, 2012

Tracking the Money

The city of Oakland is facing the loss of $28,000,000 from its general fund, caused by two outside events:  One, Governor Brown eliminated redevelopment agencies in this year's state budget, and Two, the state Supreme Court ruled that the "give-back" the Legislature crafted, which would have let cities and states "buy" their redevelopment agencies back, was unconstitutional.  So - there goes the Redevelopment Agency money.

Why is this causing such consternation in Oakland??  Because they were using the Redevelopment Agency money  for general operating funds, that's why.  In addition to the 159 people who actually work for the Redevelopment Agency, the city was using those funds to pay, or partly pay, for positions all over the city, including (this one staggers me) half the mayor's salary!  What??

Why do they do this?  I've seen this before.  In the early '70s, I worked for the San Jose Public Library.  At that time, Lockheed-Martin was a major employer (pre-Silicon Valley), the economy was booming, the bucks were rolling in.  (Also pre-oil shock.)  And the city of San Jose, having found that citizens were always happy to pass bond issues, had developed the habit of funding basic operations (among other things, the library) out of those bond issues - so as not to have to engage in ungentlemanly conversations about, you know, taxes.

Then Lockheed-Martin lost a big contract.  In the intervening 40-odd years, the details of the disaster have escaped me; but I distinctly remember that they laid off what seemed like half the Santa Clara Valley, and the next bond issue that came up for a vote died like a skunk on the freeway.  And suddenly the city had payroll obligations that it didn't have enough general fund money to meet.  And citizens who were even less likely to vote for new taxes than they had been when they were approving bonds.  I forget what gyrations they used to solve their problem; I didn't lose my job, the city of San Jose still has a library.  But this all came back to me when I heard that the city of Oakland was paying half the mayor's salary with redevelopment funds.  (If I keep repeating that, it's because I still can't believe they did that.)

The cases in the two cities are identical.  They couldn't get the taxpayers to raise taxes enough to pay for what they wanted to spend (and the San Jose case was before Proposition 13, they only needed a majority), there was this other money "lying around," so they used it.  They ignored the fact that, technically, the other money had another purpose they were legally required to use it for.  I would love to hear the justification for paying half the Oakland mayor's salary out of redevelopment funds.

The minimal good news out of all this, for Oakland today, is that the new City Administrator has devised a plan to consolidate services and remove duplications, including eliminating a number of "jobs" that weren't actually being performed by anyone, and will be able to correct the situation by laying off no more than 105 people (out of just over 3,000) and not closing any libraries or senior centers.

This is the first glimmer of fiscal responsibility I've seen in Oakland since before we elected Ron Dellums.  God bless Deanna Santana.  The mayor (and previous city council member) has tried multiple times to get citizens to vote for property tax increases, without success; and she didn't succeed because none of us trusted the city to spend the money in a responsible and prudent way. We all suspected the city government was full of duplicated services and overstaffed departments, and if we gave them more tax money they would just continue to throw it away.

The new budget is responsible and prudent.  I'm still not ready to vote for a property tax increase.  But if Ms. Santana stays around and continues to talk turkey about consolidation and simplification, some day I might consider it.

On the other hand, the city council hasn't accepted the new budget yet.  Maybe it's too soon to relax.

1 comment:

  1. K:

    The history of Oakland's decline is a long story, beginning way back at the start of the Depression, continuing after WWII, and culminating in the decay of the downtown--a trend similar to that which occurred throughout American urban centers in the 20th Century, and exacerbated in Oakland's case by a transformation brought about by Henry Kaiser's importation of tens of thousands of Southern workers--mostly Negro/African Americans--to man the Oakland-Alameda shipyards during the Second World War build-up. Look at the devastation of the downtown now. What do you see? A place that looks at least 50 years old, the husk of a former city gone to seed.

    Oakland was once a white middle-class American town, peaceful and quiet. As the minority population expanded, the middle and upper class folks began to leave, taking their money with them. Those who stayed--the rich and remnants of middle-class WASPS, voted down tax initiatives. Who wants to support a sinking ship? The city government became an adjunct of the welfare state. The class divisions widened. Jobs went away.

    How do you run a city on no money? In the larger context of "globalization" Oakland was like a footnote. It got the container cargo, while the Port of San Francisco nearly disappeared. Naval bases continued to close. Industry fled. Businesses fled. Oakland was slow to acknowledge the changing urban paradigm, and when it finally realized this, it was too late.

    I suppose the alternative to paying the mayor would have been to give him IOU's. Dellums, after all, was just cashing in his chips.