FIVE-YEAR FINANCIAL FORECAST Fiscal Year 2017-18 – Fiscal Year 2021-22 City of Oakland FIVE-YEAR FINANCIAL FORECAST CITY OF OAKLAND Five-Year Financial Forecast Fiscal Year 2017-19 to Fiscal Year 2021-22 MAYOR Libby Schaaf MEMBERS OF THE CITY COUNCIL Larry Reid (District 7) Council President Annie Campbell Washington (District 4) Abel J. Guillen (District 2) Vice-Mayor Council President Pro Tempore Dan Kalb (District 1) Lynette Gibson McElhaney (District 3) Noel Gallo (District 5) Rebecca Kaplan (At-Large) Desley Brooks (District 6) ADMINISTRATION ELECTED OFFICERS Sabrina Landreth Barbara Parker City Administrator City Attorney Christine Daniel Brenda Roberts Assistant City Administrator City Auditor Claudia Cappio Assistant City Administrator Stephanie Hom Deputy City Administrator City of Oakland FIVE-YEAR FINANCIAL FORECAST AUTHORS AND KEY CONTRIBUTORS Christine Daniel, Sarah Schlenk, Margaret O’Brien, Assistant City Budget Director Revenue & Tax Administrator Administrator Kirsten LaCasse, Katano Kasaine, Bradley Johnson, Controller City Treasurer Assistant to the City Administrator Jonathan Segarra, Dawn Hort, Emma Virtucio, City Administrator Analyst Financial Analyst Business Analyst IV ACKNOWLEDGEMENTS Staff wishes to acknowledge the staff of the City Administrator’s Office, the Controller Bureau, the Revenue Management Bureau, the Treasury Bureau, Department of Human Resource Management, and the Planning & Building Department for the input provided, their oversight and their valued subject matter expertise necessary for the creation of this document. We would also like to acknowledge City of Oakland Departmental fiscal staff for their diligent work on behalf of the residents of Oakland and in 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 Purpose .................................................................................................................................... 1 Methodology and Assumptions .............................................................................................. 1 Key Findings ........................................................................................................................... 2 Revenues ................................................................................................................................. 4 Expenditures ........................................................................................................................... 6 Forecast Results Summary ...................................................................................................... 8 INTRODUCTION .......................................................................................................................... 9 Purpose & Development Process ................................................................................................ 9 Purpose .................................................................................................................................... 9 Development Process ............................................................................................................ 10 Technical Methodology ............................................................................................................ 10 BACKGROUND INFORMATION ............................................................................................. 11 General Information .................................................................................................................. 11 Form of Government................................................................................................................. 11 The City Of Oakland’s Role in Service Provision .................................................................... 12 Economic and Demographic Profile of the City Of Oakland ................................................... 13 Economic Profile .................................................................................................................. 13 Demographic Profile ............................................................................................................. 15 Principles of Government Finance ............................................................................................ 16 Budgets & Fiscal Years ........................................................................................................ 16 Operating Budget vs. Capital Improvements Program ......................................................... 17 Financial Reports & Actuals ................................................................................................. 17 Revenues ............................................................................................................................... 17 Expenditures ......................................................................................................................... 18 Assets & Liabilities ............................................................................................................... 18 Funds & Transfers................................................................................................................. 19 Department & Organizational Structures.............................................................................. 19 Overhead Rates ..................................................................................................................... 19 Internal Service Funds .......................................................................................................... 19 Budget Balancing, Surplus, Projected Surplus, Deficit, & Projected Shortfall .................... 19 Fund Balances & Reserves ................................................................................................... 20 REVENUES .................................................................................................................................. 21 Property Tax.......................................................................................................................... 22 Sales & Use Tax.................................................................................................................... 24 Business License Tax ............................................................................................................ 26 Real Estate Transfer Tax ....................................................................................................... 27 Transient Occupancy Tax (TOT) .......................................................................................... 28 Parking Tax ........................................................................................................................... 29 City of Oakland FIVE-YEAR FINANCIAL FORECAST Background on California Legal Revenue Limitations ............................................................ 30 Propositions 13...................................................................................................................... 30 Proposition 8 ......................................................................................................................... 30 Proposition 218 ..................................................................................................................... 30 Proposition 26 ....................................................................................................................... 31 Revenue Forecast Assumptions ............................................................................................... 32 Inflation ................................................................................................................................. 32 Local (Parcel) Taxes ............................................................................................................. 32 Property Tax.......................................................................................................................... 32 Sales Tax ............................................................................................................................... 33 Business License Tax ............................................................................................................ 33 Utility Consumption Tax ...................................................................................................... 34 Real Estate Transfer Tax ....................................................................................................... 34 Transient Occupancy Tax ..................................................................................................... 35 Parking Tax ........................................................................................................................... 35 Sugar Sweetened Beverage Tax............................................................................................ 35 Licenses, Permits, and Service Charges, Including Parking Meter Collections