A group of city workers and union leaders gathered on the steps of Oakland City Hall this week to demand answers to their allegations regarding tens of millions of dollars in uncollected city taxes.
At a time when Oakland is facing a potential budget shortfall of roughly $177 million, union leaders allege that the city’s Finance Department failed to collect taxes from thousands of businesses by the April 17, 2023, deadline and that as much as $34 million in unpaid business taxes from previous years could still be outstanding.
During the Tuesday morning rally and in a letter addressed to Mayor Sheng Thao and the City Council’s Finance and Management Committee, the unions say department staff, including Finance Director Erin Roseman, have been evasive or provided information that is “contradictory or untrue” about their tax collection efforts.
“The Finance Department is currently projecting a $177 million deficit. This deficit projection is in part based on the assumption that business tax collections for this year will remain at last year’s levels,” according to the letter. “Not only did Director Roseman fail to collect revenues from approximately half of Oakland businesses last year, but Director Roseman is essentially assuming that we will do the same this year, which is driving dramatic service cuts to our community and potential layoffs of union members.”
Tracking down the scofflaws
The rally was held prior to the city’s Finance and Management Committee meeting Tuesday, during which City Councilmember Rebecca Kaplan said she understood that the issue involves both businesses that have filed tax documents with the city and for whom there may be some outstanding taxes, and those businesses that haven’t filed tax documents at all.
Kaplan said she believes that the larger potential for generating tax revenue lies primarily with tracking down businesses that simply don’t file their tax documents with the city.
“The city needs to identify and collect the revenue owed to us; each $1 million we successfully collect in owed revenue can maintain several city workers who provide the services we must deliver to Oaklanders. …”
City Councilmember Nikki Fortunato Bas
“It’s my understanding that years ago that was a greater focus and that there hasn’t been as much personnel assigned to that task recently, and so that question, identifying non-filers to get them to file and pay their share of the revenue, I think is really important,” she said.
Council president Nikki Fortunato Bas said revenue collection is central to the city’s long-term fiscal health.
“The city needs to identify and collect the revenue owed to us; each $1 million we successfully collect in owed revenue can maintain several city workers who provide the services we must deliver to Oaklanders — from clean streets to active parks to community safety,” Bas said in an email Tuesday. “I look forward to the upcoming Revenue Report to the City Council to take action on improving our systems and immediately collecting owed revenue.”
Modernization needed
Union leaders who signed their names to the letter include those from the International Association of Firefighters Local 55, Service Employees International Union 1021, the International Brotherhood of Electrical Workers Local 1245 and the International Federation of Professional and Technical Engineers Local 21, as well as a representative from the East Bay Alliance for a Sustainable Economy.
“It is a failure of government to talk about cuts for first responders when millions of dollars in tax revenues are going uncollected,” said IAFF 55 president Zac Unger. “We demand clear action and accountability from the City Administration to ensure corporations are paying their fair share.”
City officials acknowledged that the department has some work to do to modernize and improve its tax collection processes but noted that the estimated amount of uncollected taxes is based on three years of data and represents less than 1 percent of the city’s overall budget.
Also, the city’s initial calculation of the total business taxes it’s owed every year is reliant on annual “gross receipts” estimates provided by individual businesses — estimates that can vary widely based on the health of the overall economy, among other factors.
Additionally, the city’s ability to collect taxes in 2023 was delayed by a ransomware attack that impacted several city departments.
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