Oakland, Calif. Plunges Deeper Into Debt

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Oakland's image as a tough, blue-collar city is getting even tougher as the city faces a $42-million deficit and other financial problems.

At least the Bay Area city's football team, the Oakland Raiders, are starting to try to turn things around by bringing in a new quarterback. The city government may need a similar revamp as it confronts ballooning pension costs that will push the its projected deficit to $58.7 million by July 2011.

The biggest portion of that budget shortfall is a debt payment of $43.9 million, due July 1, 2011, to the old Police and Fire Retirement System. The hefty payment would be more than 10 percent of the roughly $400- million city budget.
According to a San Francisco Chronicle story, Oakland voters will likely be asked in November to cut the deficit in half with a tax increase.

The Chronicle also said that Councilwoman Pat Kernighan was upset when the council refused to ask staff to prepare a report on the impending budget woes. "If that doesn't happen, you guys are crazy and irresponsible!" she exclaimed.

Tax revenues from sales, hotel and real estate taxes have been falling in Oakland, while investments that undergird the pension system have lost much of their value during the recession.

The Police and Fire Retirement System was created for employees of those departments who were hired before July 1976. There's only one active employee eligible and 1,194 retirees or spouses receive those benefits, the Chronicle reports. The plan pays up to 66.7 percent of salary. The salaries, however, aren't based on pay from the 1970s or '80s; they're based on current pay.

On top of all this, Oakland Mayor Ron Dellums has gone back on a promise he made last spring to take a 10 percent pay cut to help reduce the city's budget deficit. Dellums earns $183,000 per year as mayor, and he's trying to sell his mother's house in Oakland to pay off some back taxes.

His offer might not have done much to help bridge a budget gap in Oakland, but a symbolic gesture would be a good start for this city on the financial brink.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.

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