Oakland's surplus mirage sets the stage for a $34 million tax increase

This six-minute video explainer is based on our parcel tax exposé, “44% of Oakland’s proposed $34 million tax increase would go to union payouts,” published on February 22. We invite you to check it out, and share your thoughts.A full transcript of the video is also provided below.Thank you.— Oakland Report editorial boardYou can read the full text and primary source evidence in our exposé here:Video transcriptWelcome to the explainer.Today we are digging into a really puzzling situation unfolding in Oakland, California. It’s a story about a city surplus that, well, might not be what it appears to be, and it involves a new tax that could hit every single homeowner.All right, let’s just jump right into the heart of the matter, because this is the paradox we need to unpack.How on earth can the city of Oakland be telling its residents two completely opposite stories about its finances at the exact same time? It just doesn’t add up.So on one side, you have this big announcement back in February of a $73.6 million surplus. Sounds great right?But on the other side, the city is still operating under an official declaration of “extreme fiscal necessity.”A surplus and a state of emergency at the same time? You have to ask yourself what is actually going on with the city’s money?To really get this, we’ve got to go back a bit to the union contracts that were signed in September of 2025. This right here is where the whole thing kicks off.So right out of the gate, those contracts handed out over $10 million in cash bonuses to union employees. And that money, it came directly from taxpayers. But believe me, that was just the start.Now, here is the real kicker. An even more substantial amount of money. We’re talking almost $15 million in raises was also put on the table, but this one had a catch.This payout was contingent. It would only get triggered if and only if the city officially declared a budget surplus at the end of the fiscal year on June 30th.And that brings us right back to our big question: The city’s been forecasting deficits. So how did they suddenly conjure up a surplus just in time to maybe trigger these raises?Well, the evidence in the public records suggests it’s not because the economy is booming. It’s because of some very clever financial engineering.So take a look at this breakdown because it’s pretty revealing. This surplus wasn’t built on things like growing tax revenue. No, a full 60% of it came from one time cash infusions and another 31%? That came from raiding restricted funds, something the city is only allowed to do because it’s declared that state of “extreme fiscal necessity.”You see, the emergency itself is what lets them move money around to create this surplus on paper.This timeline really lays it all out, doesn’t it? You can see the dominoes falling one by one:The contracts in September create the need for a surplus. The ongoing emergency gives them the tool to create it. Then boom! A new parcel tax campaign launches. And if that passes in June, it basically locks in the surplus and pulls the trigger on that $14.9 million in raises.So that leads to a pretty obvious question, right?If the city needs more tax money, why are public employee unions spending their own money to get this tax measure on the ballot? Why wouldn’t the city just run the campaign itself? Well, the answer seems to be a very handy loophole in California law.See, if the City Council puts a special tax on the ballot. It needs a two-thirds supermajority to pass. That’s a really high hurdle.But if it’s run as a “citizen-sponsored” initiative, it only needs a simple majority: 50% plus one vote.That is a much, much easier target to hit.Okay, let’s do what you’re supposed to do in these situations: Let’s follow the money. We’ll start with who’s paying for all this, and then we’ll see who stands to profit.First up, who is funding this “citizen-sponsored” tax campaign? The campaign finance records are crystal clear. Public employee unions have already poured over $400,000 into this thing. And who’s the biggest donor? SEIU Local 1021, which wrote a check for $200,000.Now have a look at this.This chart shows who gets the money if that surplus trigger is pulled. And would you look at that? SEIU Local 1021, the top donor to the tax campaign is also set to get the biggest pay raises, by far: $12.5 million in raises for its members.You see the same pattern with the other major donors.The campaign is also being pretty slick with its wording to sell this to voters. The ballot measure literally claims it will result in lower taxes for most homeowners. But text of the measure suggests a disingenuous rhetorical sleight of hand because even though it fiddles with an existing tax, the bottom line is still a major new property tax for homeowners.So let’s cut to the chase. What’s the real cost here? If this whole thing passes in June, what’s the final price tag for the taxpayers in Oakland?And here it is.This is the bottom line: of the $34 million this new tax would bring in every year, almost half of it — we’re talking 44 cents of every single new tax dollar — would go straight to paying for those triggered union raises. For the unions funding this campaign, I mean, it’s an absolutely incredible deal. They put up a bit over $400,000 to help get the tax passed and in return, their members get nearly 15 million in raises in just the first year.That’s a 3,600% return on their investment.So all of this leaves us with one last question to think about when a city’s surplus actually depends on a state of emergency to exist, and it can only be maintained by a new tax hike, which is bankrolled by the very people who stand to gain millions from it.Is that really a sign of a city in good financial health? Or is it a masterful piece of financial engineering?WE RELY ON YOUR FINANCIAL SUPPORTOakland Report is a charitable nonprofit organization based in beautiful Oakland, California. Our mission is to make truth more accessible to all Oakland residents. We rely on our readers’ financial support to continue our work.Sign up to be a supporting member today, and help us continue our work to shine a light on the decisions that affect our lives. Thank you.Learn more This is a public episode. 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