SAN FRANCISCO — Oakland, California’s eighth-most populous city, may have to sell its convention center or securitize its parking revenues to close a projected $44.3 million general fund deficit over the next two years.
The city’s finance staff presented those options to the Oakland City Council Tuesday night after the city discovered that it would have an $18.9 million deficit in the current fiscal year and a $25.4 million deficit in fiscal 2010-11. The city’s also considering tax increases to raise more revenue next year.
The deficits are the result of a bigger-than-anticipated drop in revenues and overspending in the police budget. Sales taxes are expected to come in $6.7 million below budget this year, and transient occupancy taxes are forecast to underperform by $1.7 million.
City officials said they have little room to cut spending in the $421 million general fund budget after having already closed $133 million in budget gaps and laying off 125 workers over the past 11 months.
“The magnitude of the FY 2009-10 and FY 2010-11 projected deficits overwhelms the departments’ ability to absorb further reductions, while continuing to deliver service,” said finance director Joseph T. Yew and budget director Cheryl L. Taylor in a memo.
They are recommending that the City Council consider using one-time revenues and fund transfers to get the city through this year, while preparing tax increases for next year.
Among possible one-time revenues, the city could raise about $11.6 million by selling assets such as the Henry J. Kaiser convention center. In that case the city would have to pledge other facilities to replace the center as collateral on outstanding debt and has not yet decided if that’s the best way to go, Yew said.
For next year, the city could raise money by leveraging its parking revenues, as Chicago has done.
“The city could either issue parking revenue bonds or monetize city garages by leasing the future revenue stream to a private party,” Yew and Taylor said in their memo. “With either option, one-time revenue would be generated for the city, but the ongoing stream of revenue generated by garage and meter operations would be lost for the term of the bond or lease.”
They estimated that the city could raise $15 million if it issued a parking revenue bond. They did not say how much they thought the city could raise with a Chicago-style monetization of parking revenues through a long-term lease with investors.