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Oakland faces an alarming fiscal decline because Mayor Sheng Thao and the council majority have failed to responsibly manage the city budget and address unacceptably high crime rates.
It’s time for a housecleaning of Oakland’s elected leadership. The first step is recalling the mayor. In an upcoming editorial, we will make recommendations for the City Council seats on the Nov. 5 ballot.
This is the city’s most critical election in at least a generation. At stake is whether the city will continue along its current self-destructive path or correct course before reaching insolvency.
We don’t make the recommendation to remove Thao from office lightly. Recall should be used only when a leader is failing in the job. Thao has crossed that line.
It was clear when then-Councilmember Thao ran for mayor in 2022 that she was not prepared for the job. In our interview with her then, she demonstrated a stunning lack of knowledge about basics, including details of a tax increase she voted to put on that year’s ballot.
Nevertheless, voters elected her mayor — albeit by a margin of less than 1 percentage point. The recall decision should not be an election do-over. It should be based on how she has performed in her nearly two years in office. And, on that point, it’s hard to ignore how inept she has been.
Fiscal mismanagement
Two years in a row, Thao has proposed budget plans, mostly adopted by the council, that fail to address the city’s structural deficit. With a current annual general fund budget of about $800 million, the amount that ongoing expenses exceed revenues is more than $100 million a year
In the first year, Thao touted that her spending plan closed what officials described as the largest budget deficit in city history without layoffs. Put another way, the mayor’s budget postponed difficult decisions that could alienate her labor supporters.
To help close the gap in the current second full fiscal year of her term, Thao counted on $63 million in one-time money from the sale of the city’s interest in the Oakland Coliseum — a reckless use of capital funds to pay for ongoing expenses. It’s a move akin to selling your house to pay your monthly bills — a step one should take only in the most desperate of times.
Moreover, the sale deal that Thao insisted was done keeps changing. It’s not clear that the money will come in time to avert a serious cash shortage.
As for addressing the structural shortfall, Thao and the council majority have decided to postpone that decision yet another year — digging an even deeper hole from which to climb out of.
Soaring crime
Meanwhile, there’s no sign that Thao grasps the full significance of, and economic fallout from, the city’s crime, which surged last year to levels far higher than at any time in the past two decades.
Thanks in large part to Gov. Gavin Newsom sending CHP officers into Oakland, the data for the first half of 2024 shows improvement. But the state assistance is a temporary fix.
Even with the outside help, serious and violent crime in the first half of this year was still significantly higher than the same periods for 2020 and 2021. And the city’s population-adjusted crime rate continues to far exceed that of the other two major Bay Area cities, San Francisco and San Jose.
Moreover, Oakland’s crime data almost certainly understates the magnitude of the problem. It doesn’t include incidents when victims don’t bother to call police because they know the chances of an officer showing up in a timely way are small.
The badly understaffed Oakland Police Department is near the lowest number of sworn officers in a decade, and response times remain unconscionably long.
In January 2024, the average time for an emergency call was 48 minutes. That compares to 14 minutes pre-pandemic for the same month in 2019. By June of this year, the response time was 33 minutes, compared to 12 minutes in June 2019.
Response times for less serious calls are similarly much worse than they were five years ago. The average response time for a non-emergency call in June was about 15 hours, roughly double the time for the same month five years ago.
Economic fallout
Residents are deeply worried. Polling shows that 90% of likely voters are very or somewhat concerned about crime in the city, 60% think it’s getting worse, 46% have considered moving out of Oakland because of crime and 62% think the city should have more police officers.
As crime surges, businesses like Hilton Oakland Airport Hotel and In-N-Out Burger have closed, the latter saying crime in the city forced the first outlet shutdown in the company’s 75-year history. And as Kaiser Permanente shifts more than 1,000 employees to Pleasanton, it’s warning its downtown Oakland workers to not go out for lunch.
The value of office complexes is plunging as foreclosures mount, a problem not unique to Oakland. But the East Bay’s largest city is also finding that downtown housing projects, planned and recently constructed, are in financial trouble.
Crime is dragging down Oakland’s economy, which in turn holds down tax revenues and makes it harder to afford needed officers to fight crime — creating a downward spiral that the Thao administration has failed to confront.
The budget shortfall the city faced in 2023 was created in part by a $50 million one-year decline in the real estate transfer tax, the amount the city charges when property changes hands.
That decline can be blamed on sales and property value slowdowns, which, in turn, can be attributed to high interest rates and Oakland’s declining desirability as a place to locate.
The real estate transfer tax is the city’s most volatile revenue source. Rather than plan cautiously, Thao, in her first spending plan, assumed that transfer tax revenues would come roaring back.
Instead, revenues declined further, leaving the gaping hole that she is papering over in part this year with the one-time money expected from the Coliseum sale.
To be sure, the worst years of the pandemic, which provide the genesis for many of the business closings, predate Thao’s mayoral term. But Thao has failed to face the financial reality that’s been left behind, budget responsibly, make tough decisions that might alienate labor allies, and prioritize police protection.
History repeats
Voters should note one of the first steps the council majority has directed the city administrator to take this fiscal year if payments for the Coliseum sale fail to come through: Delay beginning of training academies for new police officers.
The city has been unable to keep up with filling the vacancies created by departures and retirements. Delaying academies would only make matters worse.
But the move is not surprising. Despite a severe shortage of cops on the street, Thao has never prioritized more police. Back in 2021, when she was a member of the City Council, she and her allies rebuffed then-Mayor Libby Schaaf’s request to increase the number of training academies to speed up police hiring.
It was a telling moment. Only later in the year, as Thao prepared to run for mayor, did she and her allies on the council reverse course.
Now, three years later, police training academies that are critical for bolstering the number of cops on the street are vulnerable again.
Factors not considered
In arriving at our decision to support the recall of Thao, we do not blame her for the departure of the A’s, the last major professional sports team to leave the city.
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The team wanted enormous public subsidies for a new housing development and ballpark project. The negotiations Thao inherited from Schaaf were doomed to failure because they would have never produced a fair deal for the city.
That said, Thao’s subsequent payment demands from the team for an extension to play at the Coliseum while the A’s built their Las Vegas ballpark were exorbitant and helped ensure the team’s early departure to a substandard field in Sacramento.
Our recommendation to remove the mayor from office is also not linked to the FBI raid on her home as part of a federal investigation. Thus far, there has been no public evidence that she is the target of that investigation.
Even without consideration of the A’s departure and the FBI raid, Thao’s performance as mayor has provided plenty of evidence to merit recall.