FIVE-YEAR FINANCIAL FORECAST Fiscal Year 2015-16 – Fiscal Year 2019-20 City of Oakland FIVE-YEAR FINANCIAL FORECAST CITY OF OAKLAND Five-Year Financial Forecast Fiscal Year 2015-16 to Fiscal Year 2019-20 Mayor Libby Schaaf Members of the City Council Lynette Gibson McElhaney (District 3) Council President Rebecca Kaplan Larry Reid (At-Large) Vice-Mayor Larry Reid (District 7) Council President Pro Tempore Dan Kalb (District 1) Noel Gallo (District 5) Abel J. Guillen (District 2) Desley Brooks (District 6) Annie Campbell Washington (District 4) Elected Officers Administration Barbara Parker John A. Flores City Attorney Interim City Administrator Brenda Roberts Donna Hom City Auditor Interim Assistant City Administrator Kiran Bawa Budget Director City of Oakland FIVE-YEAR FINANCIAL FORECAST AUTHORS AND KEY CONTRIBUTORS Donna Hom, Kiran Bawa, David McPherson, Interim Assistant City Budget Director Revenue & Tax Administrator Administrator Bradley Johnson, Margaret O’Brien, Sarah Schlenk, Assistant to the City Principal Revenue Agency Administrative Administrator Analyst Manager Michael Kek, Andrew Best, Kirsten LaCasse, Assistant to the City Principal Revenue Assistant Controller Administrator Analyst Osborn Solitei, Anil Comelo, Katano Kasaine, Controller Human Resources Director City Treasurer Alexandra Orologas, Kip Walsh, Chantal Cotton, Assistant to the City Human Resources Assistant to the City Administrator Manager Administrator Michael Neary, Dawn Hort, Madhukar Kumar, Assistant Director of Financial Analyst Treasury Analyst III Public Works ACKNOWLEDGEMENTS Staff wishes to acknowledge Mr. Henry L. Gardner and Mr. John A. Flores for their tireless leadership and wisdom during the development of the Forecast. We would also like to acknowledge the staff of the City Administrator’s Office, the Controller Bureau, the Revenue Management Bureau, the Treasury Bureau, and the Department of Human Resource Management for the input provided, their oversight and their valued subject matter expertise necessary to the content and creation of this document. We would also like to acknowledge our external consultants and partners in other jurisdictions for their expertise, assistance, and support. Finally we would like to acknowledge Departmental fiscal staff for their diligent work on behalf of the residents of Oakland and support of their Department’s operations. City of Oakland FIVE-YEAR FINANCIAL FORECAST Mission Statement The City of Oakland is committed to the delivery of effective, courteous and responsible service. Citizens and employees are treated with fairness, dignity and respect. Civic and employee pride are accomplished through constant pursuit of excellence and a workforce that values and reflects the diversity of the Oakland community. City of Oakland FIVE-YEAR FINANCIAL FORECAST Table of Contents EXECUTIVE SUMMARY ............................................................................................................ 1 INTRODUCTION .......................................................................................................................... 8 Purpose & Development Process ................................................................................................ 8 Purpose .................................................................................................................................... 8 Development Process .............................................................................................................. 9 Technical Methodology .............................................................................................................. 9 BACKGROUND INFORMATION ............................................................................................. 10 General Information .................................................................................................................. 10 The City Of Oakland’s Role in Service Provision .................................................................... 11 Services Provided to Residents of Oakland by Service Provider ......................................... 11 A Demographic & Economic Profile of the City Of Oakland .................................................. 13 Economic Profile .................................................................................................................. 13 Demographic Profile ............................................................................................................. 13 Principles of Government Finance ............................................................................................ 15 Budgets & Fiscal Years ........................................................................................................ 15 Operating Budget vs. Capital Improvements Program ......................................................... 15 Financial Reports & Actuals ................................................................................................. 16 Revenues ............................................................................................................................... 16 Expenditures ......................................................................................................................... 16 Assets & Liabilities ............................................................................................................... 17 Funds & Transfers................................................................................................................. 17 Department & Organizational Structures.............................................................................. 18 Overhead Rates & Internal Service Funds ............................................................................ 18 Budget Balancing, Surplus, Projected Surplus, Deficit, & Projected Shortfall .................... 19 Fund Balances & Reserves ................................................................................................... 20 REVENUES .................................................................................................................................. 21 Background on California Legal Revenue Limitations ............................................................ 31 Propositions 13...................................................................................................................... 31 Proposition 8 ......................................................................................................................... 31 Proposition 218 ..................................................................................................................... 31 Proposition 26 ....................................................................................................................... 32 Revenue Forecast Assumptions ................................................................................................ 33 Inflation: ................................................................................................................................ 33 Local (Parcel) Taxes: ............................................................................................................ 33 Property Tax: ........................................................................................................................ 34 Sales Tax: .............................................................................................................................. 34 Business License Tax:........................................................................................................... 35 Utility Consumption Tax: ..................................................................................................... 35 Real Estate Transfer Tax:...................................................................................................... 36 Transient Occupancy Tax: .................................................................................................... 36 City of Oakland FIVE-YEAR FINANCIAL FORECAST Parking Tax: .......................................................................................................................... 36 Licenses, Permits, and Service Charges, Including Parking Meter Collections ................... 37 Parking Citations, Fines and Penalties .................................................................................. 37 Interest Income, Miscellaneous Revenue ............................................................................. 37 Internal Service Revenue ...................................................................................................... 37 Grants & Subsidies ............................................................................................................... 37 Interfund Transfers................................................................................................................ 38 Transfers from Fund Balance................................................................................................ 38 Revenue Forecast Summary ..................................................................................................... 38 Outcomes by Category of Revenue and Growth Rate by Fund ............................................ 39 EXPENDITURES ......................................................................................................................... 41 Background Information 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