Oakland’s Fiscal Crisis Means Budget Cuts Are Coming, Even With the Coliseum Sale

Oakland’s fiscal crisis appears to be reaching a tipping point after its contingency budget was triggered this month, and the city is on track to continue overspending, according to a City Council committee meeting on Tuesday.

The city’s precarious position is partly due to a revised agreement on selling its share of the Oakland Coliseum, which delayed payments it relied on to patch over $60 million of a massive budget shortfall.

When the council passed that budget in July, it included a contingency plan with cuts to public safety and a hiring freeze should the sale funds not begin to come through by September. During a finance and management committee meeting on Tuesday, the city attorney’s office said that since those parameters have been met, the contingency budget is going into effect, but it’s still uncertain when those cuts would go into place or whether some could be avoided.

“The contingency budget that was referenced in the council’s midcycle budget resolution is in place, and there has not been any other legislation that has superseded that,” a representative for the city attorney’s office said.

One of the contingency measures is a travel and hiring freeze for non-public safety positions, which the city began to put in place in March ahead of the budget deadline, according to Mayor Sheng Thao’s office. Jobs are still being posted, though — five were put up by the city this week, and there are currently 31 listings on the city’s site.

The contingency plan also calls for brownouts, or rotating shutdowns, of five fire stations and cutting the number of sworn police officers from over 700 to 610 through attrition, but Thao told KQED that the council would decide whether to make those cuts after receiving the city’s first-quarter fiscal report in mid-November.

“That’s an opportunity for the City Council to actually make changes and make those decisions that they want to, which is browning out fire stations and lowering the number of officers,” she said on Forum.

Thao spokesperson Casey Pratt said that once the council gets the first-quarter fiscal report, it “can choose to responsibly recalibrate based on the full financial picture” with “a lot more clarity on the Coliseum deal funds.”

Under the original $105 million Coliseum sale agreement with the African American Sports and Entertainment Group — the developers buying the property — Oakland received a $5 million payment upon signing and was scheduled for payments in September, November and January, totaling $58 million. The remaining $42 million was due by closing in June 2026.

The city’s new agreement maintains that initial $5 million but shifts other payments later — and bumps up the total price to $110 million. A $10 million payment due in November is in escrow, and a remaining lump sum of $95 million is due in May 2025. The money will stay in escrow until the deal closes, but after Nov. 9, the city will keep it even if AASEG pulls out.

That agreement accelerates the closing date so that all of the funds would be received by the end of the current fiscal year, but it doesn’t change the budget resolution that the council passed in July, which said that if any of the original payment dates are missed, the contingency budget is triggered.

During Tuesday’s meeting, budget administrator Brad Johnson said discussions about cuts under the contingency budget will take place in November.

Some major cuts will likely have to be made. Johnson said the city overspent in the final quarter of last fiscal year and is on track to overspend again this quarter. Council members will need to consider what Oakland can and cannot “live without” before that November discussion, he said.

“We ran a real operating deficit last year. We really did go into our reserves by $80 million, and that in the long run is unsustainable,” Johnson said. “We’re already overspending in the current year. We’ve met the criteria for triggering what needed to be another $63 million in reductions.”

Council members at Tuesday’s hearing questioned how they could prevent potential deep cuts to public safety services — especially after the Keller Fire in the Oakland Hills over the weekend.

Fire Chief Damon Covington warned that with brownouts, the department’s quick response to protect homes wouldn’t have been possible.

“We came within 200 yards of Campus Drive,” Covington said. “Very little math will tell you that we would have probably lost those homes on Campus Drive at a minimum.”