For the past several years, Oakland Councilman Ignacio De La Fuente has issued dire warnings about the city's finances to anyone who would listen. He led the effort to lay off eighty cops last summer when the police union refused to pay into its pension. He has raised the loudest concerns about the city's old retirement plan for police and firefighters. And he's repeatedly pushed for deeper cuts to city services and more concessions from public-employee unions. But then earlier this week, when the rest of the council voted to declare a fiscal emergency in the city, De La Fuente was the only one who refused to go along.
So did Oakland's finances suddenly rebound to De La Fuente's satisfaction? Hardly. Mayor Jean Quan and the council are grappling with a projected $46 million deficit. And at a special council meeting Monday night, Quan outlined a financial doomsday scenario that could strike if the state legislature goes along with Governor Jerry Brown's plan to kill redevelopment and Republicans in Congress get their way on proposed federal budget cuts. The cutbacks, Quan warned, could cost the city more than $100 million a year, taking a huge bite out of Oakland's depleted $400 million general fund budget, which has already been cut by more than $90 million in the past two years.
So how is that not a "fiscal emergency?" Well, understanding De La Fuente's decision to defy his colleagues requires a bit of background about what was at stake. It turns out that if there is one thing that concerns De La Fuente more than the city's financial mess, it's taxes. He adamantly opposes them. And the council's decision to declare a fiscal emergency was all about putting tax measures on the June ballot.
At Monday's meeting, Quan proposed to put three tax measures before Oakland voters: a parcel tax, a phone tax, and an increase to the city's real estate transfer tax. The parcel tax would raise about $11.2 million in revenues annually; the phone tax, about $8.3 million; and the transfer tax, about $1.6 million — for a total of about $21 million. Quan said layoffs and other city cuts would make up the rest of her budget package. "No one thing is going to save the city," she said.
But putting the phone and transfer tax measures on the ballot required a unanimous declaration from the council that the city is in a fiscal emergency. The vote was 6-1, with De La Fuente the lone dissenter. The councilman said the city had not yet made enough structural changes or cuts. As a result, he single-handedly blocked Oakland voters from having a say over whether to tax themselves more or force the city to make deeper cuts. The two measures would have required a simple majority to win, and De La Fuente's vote means that the city will have to slash at least $10 million more from its budget — in addition to the severe cuts Quan must propose.
De La Fuente, however, could not block the parcel tax measure. It didn't need unanimous council consent because it's considered a special tax that requires two-thirds approval from the electorate. In the end, the council voted 5-2 to ask voters to weigh in on the parcel tax, with De La Fuente being joined by Councilwoman Libby Schaaf. She argued that it was too much of a gamble for the city to spend $800,000 on a special election on the chance that two-thirds of Oakland voters would approve an $11 million annual tax increase.
The question, however, of whether there will be a June election remained open as of earlier this week. Late last week, Brown and state Democratic leaders expressed confidence that they would get the Republican votes needed to put the governor's proposed tax measures on the June ballot. But then on Monday, five centrist GOP state senators who had been negotiating with Brown announced that their talks had stalled. If Brown can't muster at least four Republican votes — two each in the senate and the assembly — then there will be no June election. If that were to happen, then Oakland may have to conduct a vote-by-mail election to enact its $11 million parcel tax.
Republicans complained that Brown was unwilling to compromise. Like the mayors of big cities throughout the state — including Quan — the GOP Five want to save redevelopment and tax enterprise zones. They also want to reform public-employee pensions and curtail teacher seniority rights. Brown's spokesman Gil Duran complained that there wasn't enough time to negotiate the GOP's "laundry list."
And in an effort that critics alleged was designed to bolster Brown's call for eliminating redevelopment agencies, state Controller John Chiang issued a report sharply criticizing them. Chiang questioned the expanded definition of "blight" in California, noting that the City of Palm Desert had spent $17 million on a luxury golf resort. Chiang also questioned San Jose's decision to pay parts of the mayor and city council's salaries with redevelopment money — a practice that Oakland also employs.
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