With soaring retirement costs and a projected $100 million annual deficit by Fiscal Year 2019-20, the City of Oakland is standing at a financial precipice that could thrust it straight into recession, writes Bay Area News Group’s Daniel Borenstein.
Without new income streams or budget cuts, the city now faces a projected $100 million annual shortfall by the 2019-20 fiscal year, a forecast 74 percent worse than just two years ago.
Some of that difference is due to using more realistic assumptions. But the city’s latest five-year projection still ignores payments on major debt and makes overly optimistic predictions about the strength of the economy…
Meanwhile, Oakland leaders continue pushing huge debt for employee retirement benefits onto future generations of taxpayers. The shortfall has increased in two years from $2.4 billion to about $2.8 billion, or an average $17,500 per household.
Borenstein has some harsh words for Mayor Libby Schaaf, who came in on a promise to right the financial wrongs of her predecessor, Jean Quan. Instead of reigning in spending, she expanded city staff. Now, even optimistic projections have city expenditures exceeding revenue by 10 percent a year come Fiscal Year 2021-22. That doesn’t even take into account some of the harsher realities surrounding health and pension benefits.
Read the column here.