Councilmember Ramachandran’s Deep Dive Reveals that Oakland Leaves Over $50 Million on the Table of Unpaid Business Taxes. Make Your Voice Heard This Tuesday! |
One of the key responsibilities of the city is to generate revenue to fund critical functions of government. Business license taxes are one of those sources of revenue. In a tough fiscal environment where the City is facing a $177 million budget deficit, I find it deeply problematic that Oakland’s Finance Department has not been pro-actively collecting revenue owed to us. The money owed - over $50 million - could go so far to provide basic city services that Oakland residents so desperately need right now – be it public safety, paving, parks, affordable housing, or protecting our commercial corridors.
This past March, staff presented a report at the Finance Committee with information about the $177 million budget deficit in the Mid-Cycle General Purpose Fund. I began a line of questioning to better understand what shortages in revenue were caused by businesses who failed to pay business license taxes. Unsatisfied with staff responses to my question, I conducted a deep dive into the issue that revealed that Council had not been getting an accurate picture of the City’s shortfall in revenue collection.
During this past Tuesday’s Council meeting, I presented my deep dive into Oakland’s revenue-generating programs which revealed that Oakland has left over $50 million on the table in uncollected business licenses taxes. I also presented a number of questions to staff, who will be providing responses at next week’s Council meeting.
If you believe that the City must make immediate changes to ensure that we collect on the taxes owed to us, make your voice heard next Tuesday at the City Council meeting, May 7th at 5 pm. Share why you believe it is more important than ever for the City to generate revenue so that we can fund our essential city services. See below for instructions on making public comment.
Here are a few highlights from my presentation at this Tuesday’s City Council meeting (view the entire presentation here), as well as the questions I posed to Finance Department staff:
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Approximately 12,500 unduplicated businesses did not pay business license taxes between 2020-2022. Approximately 40% of these businesses are rental businesses, and 60% are other businesses. Understanding that calculating unpaid business license tax requires estimates (as we don’t know how much income businesses made without their submission of gross receipts), my calculations factor in interest, penalties, previous receipts of the businesses, and industry averages. After my presentation on Tuesday, Finance Department staff did not confirm nor deny the amount of missing revenues.
- I presented a detailed explanation of the typical timeline for business license tax collection, noting the major gaps that occurred last year. Notices were significantly delayed (by 6-7 months) in being sent out to businesses that were considered delinquent. Notices were also delayed in being sent in 2020, 2021, and 2022; many delinquent businesses had not been sent notices for several years altogether.
- The Finance Department attributes most of the 2023 delays in sending notices to the citywide ransomware attack in February 2023. However, the online web portal for submission of business license taxes was back online by March 31st, 2023, and the software used by staff to track business taxes was restored by April 13th, 2023.
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Rental property owners who are delinquent in their business tax payments are subject to a Lien Hearing, which is traditionally held by City Council in June of each year. After these hearings, city staff records the liens of these delinquent businesses with the County Assessor, and the delinquent amounts roll over to that property’s subsequent property tax bill. Delays in notices being sent out led to staff not presenting a Lien Hearing list to City Council at all in 2023. As a result, delinquent amounts were not rolled over to property tax bills last year because the County deadline to do so is on August 10th of each year.
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There is a three-year statute of limitation on collecting delinquent businesses taxes. Therefore, the City has lost out on the ability to collect on several million dollars that it had not yet pro-actively pursued. As a result of various delays, the City now must collect on multiple years of delinquent business taxes at the same time before the statute of limitation runs out.
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A recording of my presentation and staff’s responses is available here.
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How to Make Public Comment |
There are two ways to make comment live during the meetings (you can also check out our one-page guide here)
1) Submit a speaker card in person at City Hall – approach the clerk for a speaker card and fill out before the item is heard.
2) Submit an electronic speaker card to comment on Zoom:
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Go to Legistar and find the meeting you would like to attend
- Click the “e-comment” button to the far right
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Complete the online registration to sign in to speak on a particular item
- Your name will be acknowledged when it is time for comments to be heard on that item
- Raise your hand on Zoom and unmute yourself to give your comments
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If you need help signing up to make public comment, contact D4 Legislative Aide Rebecca Dean rdean@oaklandca.gov for assistance
Live comments are the most impactful way to make your voice heard with city leadership. However, if you can’t attend tomorrow’s meetings, you can also send written comments to all Councilmembers at council@oaklandca.gov.
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In recent weeks, we have been sharing videos explaining the basics of Oakland’s budget. Check out these videos on our YouTube page. Once the Mayor’s proposed budget is released on May 17th, Council will hold a series of public meetings to discuss the budget, solicit public feedback, and offer amendments. Stay tuned for more information on these meetings and Councilmember Ramachandran’s proposed amendments.
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Click here to see our budget 101 video |
In service and community,
Councilmember Janani Ramachandran and the District 4 Team
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Paid for by Councilmember Janani Ramachandran, Oakland District 4 Officeholder, Committee Council District 4, 2023, FPPC #1442792 |
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