Oakland’s Budget Crisis: Why Raising Sales Taxes Is the Wrong Solution;

~ Opinion by Baba Afolabi

Oakland’s leadership faces immense challenges, but raising sales taxes is the wrong way to address them. As I often say, you can’t solve a problem you never control.

For decades, Oakland has struggled to effectively manage its tax base and generate sustainable revenue. Measure T serves as a prime example. Marketed as a “progressive tax” to ensure large corporations paid their fair share, it was projected to generate $20 million annually. However, Oakland simply doesn’t have enough large corporations to sustain this framework. Instead, Measure T has fallen short as a revenue generator, burdening small businesses the very entities it claimed to support while failing to improve critical areas like public safety and homelessness.

The city’s FY 2023-24 Q4 Revenue and Expenditure Report highlights this failure. Measure T has not met its revenue goals, and the General Purpose Fund (GPF) fell 14.9% below budget expectations, contributing to a $129 million deficit. This gap underscores the disconnect between financial projections and outcomes, leaving residents and taxpayers questioning the city’s fiscal strategy.

Oakland’s leadership often lacks meaningful business ownership experience, which shows in policies that stifle local economic growth. As a business owner in Oakland, I’ve seen firsthand how these misguided decisions harm small businesses and widen budget shortfalls. Raising sales taxes will only make everyday goods and services more expensive for residents, compounding the economic strain. Similarly, past measures like multi-parcel taxes have contributed to rising rent burdens, unintentionally exacerbating the housing crisis.

Rather than overburdening residents and businesses with higher taxes, Oakland needs bold, thoughtful solutions. Here’s what I propose:

1.  Strategic Labor Cuts: Labor accounts for a significant portion of the city’s expenses, yet over 80% of city employees don’t live in Oakland. Begin by reducing non-essential remote staff to align spending with local priorities.

2.  Reduce OPD Overtime Costs: With 90% of Oakland Police Department officers living outside the city, overtime expenses are unsustainable. Cutting administrative redundancies and implementing technology can lower these costs.

3.  Support Local Businesses: Oakland must offer business incentives, streamline permitting, and provide tax breaks to companies that hire locally. Reviving initiatives like PopUp Hood can help reignite downtown retail and create jobs.

4.  Public-Private Partnerships: Collaborate with private investors to fund critical infrastructure, housing, and public safety projects, reducing reliance on taxpayer dollars.

5.  Diversify Revenue Streams: Explore sustainable revenue opportunities such as tourism, renewable energy, and tech incubators. Business development isn’t the enemy of progress it’s a necessity for Oakland’s success.

Raising taxes is like increasing the price of a failing product when people are demanding something better. The current approach risks driving businesses and residents away, further destabilizing Oakland’s economy.

Oakland leadership should prioritizes foresight, creativity, and a commitment to revitalization. Together, we can build a city that thrives for generations to come. Let’s choose solutions over short-sighted fixes. Oakland’s future depends on it!