Oakland (Special to OaklandNewsOnline.com) – On the morning of the City of Oakland’s special City Council Finance Committee Meeting featuring an “informal report” on Oakland Police Overtime, and in the wake of rumors that the City of Oakland may file for bankruptcy, Zennie62Media, Inc. has uncovered a damning May 8th, 2024 letter to Oakland Mayor Sheng Thao directed at Oakland Finance Director Erin Roseman.
What could be called the “Report on the behavior of the Finance Department with respect to Business Tax Collection” was written by a coalition of Oakland workers representing SEIU, Local 1021, FPTE, Local 21, IAFF, Local 55, and IBEW, Local 1245, and posted at the website of IFPTE, Local 21. It accuses Ms. Roseman of lack of leadership and “illegal behavior”, to highlight some of the criticisms.
Zennie62Media reformatted the letter for readability.
The Oakland Union Coalition Letter To Mayor Thao From May 8th 2024
Mayor Thao and Members of the Finance Committee,
As the coalition representing over 3,000 city workers, we are writing to express concern with recent actions of the Finance Department leadership. We have attempted to engage in thorough discussions with the Finance Director Erin Roseman and Revenue and Tax Administrator Sherry Jackson about the state of the City’s budget and revenue collections, however in those attempts we have been met with illegal behavior, resistance and a troubling lack of transparency.
Numerous reports to City Council have made it clear that last year, thousands of businesses did not pay business taxes by the April 17th deadline. Those reports also show that as much as $34 million in business tax collections from prior years may still be outstanding. To date, thousands of businesses still have not been noticed that they are delinquent.
According to policy documents provided to us by the Finance Department, delinquency notices are typically sent in May of each year and the entire process for collections takes approximately 45 days. Last year, the first notices of delinquency were mailed in October, November and December of 2023—a full six months after the normal timeline for business tax collections, four months after the close of the fiscal year and months after finance department operations had recovered from the ransomware attack.1 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. Not only did Director Erin 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. Failing to collect all outstanding revenues as quickly as possible to protect these vital public services is unconscionable and a failure of leadership.
Oakland Finance Director Erin Roseman Accused Of Not Showing Up For Meetings With Union SEIU 1021
IFPTE Local 21 made a first attempt to meet with Finance Director Erin Roseman to discuss this issue in December of 2023, however Director Roseman did not show up to the meeting. As a result, the union submitted questions in writing on February 16th.
According to the Finance Department’s Measure T Implementation Report from November 2023, the department had resumed normal operations and had issued business tax certificate renewals by May of 2023, meaning that notices were also sent six months after the department had resumed operations.After Director Roseman and Revenue and Tax Administrator Jackson failed to respond to a number of items, Local 21 filed an unfair labor practice charge on March 25th, 2024.
To date, the union has still not received a full response to its requests from Erin Roseman. On April 15th 2024, SEIU 1021 also attempted to meet with Director Roseman to discuss the issue and Director Roseman again did not show up. In both cases, our union representative appeared at the meeting and waited, only to be told that the Director would not be attending.
When Director Roseman and Revenue and Tax Administrator Jackson have appeared in meetings, their answers to our questions are often evasive or at times contradictory or untrue. In one recent meeting, representatives of Local 21 were told by Director Roseman that, in 2023, Oakland’s business tax deadline could not be enforced because the state and federal government had extended their tax filing deadlines to the fall, due to winter storms. This is simply not true, as the city’s tax filing deadline is not automatically tied to state or federal deadlines.
No Follow-Up With Oakland Businesses After Delinquency Notice Is Sent
In our conversations with union members tasked with tax compliance work, we have learned that the vast majority of Oakland businesses pay upon receiving an initial delinquency notice and require no further follow-up, making an unexplained delay in sending these notices even more troubling.
After filing an unfair labor practice charge, Local 21 was able to secure redacted copies of approximately 3,000 notices that were sent in October, November and December of last year. Many of these delinquent businesses are long established Oakland taxpayers and highly profitable corporations, many of whom are no doubt well aware of the city’s tax filing deadline and had the ability to promptly pay upon receiving notice. Enterprise Rent-A-Car at the Oakland Airport did not pay and was noticed at the end of 2023, as did Hertz rental car company. Both companies experienced record financial results in 2023, with $35 billion and $9.4 billion in revenues respectively.
Large engineering contractor Arup ($2.7 billion in 2023 revenues) was noticed of delinquency in 2023 as well. The company is currently seeking renewal of a $1.5 million on-call contract for engineering services with the Department of Transportation, despite the fact that their business license should have been inactive for much of last year.
ESO Ventures, the troubled for-profit organization that was awarded $8 million in grant funding in 2021, which has been the subject of calls for an audit due to lack of spending and progress reports, also failed to pay business tax in a timely fashion.2 It is also not clear to date if ESO Ventures has paid and is in compliance.
Efforts to conduct tax compliance work are further hampered by understaffing, a lack of resources, and detrimental changes to the workflow. For example, Tax Compliance currently only has six (6) Tax Enforcement Officers on staff, with two (2) of the six (6) having only been hired in the Spring of 2024. In the past this Unit has had up to eleven (11) FTEs.
The union members are also being denied other resources essential to conducting City business, including out of date technology that slows down processes (delinquent notices must be done manually rather than through an automated process), insufficient equipment to perform field work (lack of cell phones and only one City vehicle), and a lack of support from upper management when seeking to address these issues.
In our repeated requests for information, we have insisted that Finance Department leadership tell us when all remaining tax notices will be sent to businesses. In their correspondence to us, we were told that notices to thousands of landlords would be sent on April 15th. After April 15th, we were told the date had moved to May 1st, 2024—a full one year after these notices should have been sent. It is still not clear to us if all businesses have been notified of their delinquent payments.
Even fulfilling the Union’s information requests has been poorly managed. Rather than Finance leadership providing the information directly or at least collaborating with union members or other clear explanations as to the purpose of requests, the expectation to comply with the requests have fallen on the backs of already overburdened union members. Many union members have reported being given unclear direction and tedious assignments that are inefficient and take union members away from their primary job duties to collect this year’s taxes, further exacerbating the problem.
More recently, we’ve met with the department to discuss revenue enhancement work that has been performed by our union members in the past but is no longer occurring. We’ve discussed researching major taxpayers to identify changes to business operations that may not be reflected in tax filings and could lead to an audit and reviving a successful landlord audit project that occurred in 2019.
We’ve also requested to know how often the department is analyzing data to inform and update their revenue forecasts. In response, we’ve been given vague, undetailed answers or have been assured work is occurring – only to confirm with our union members that it is not.
In some cases we have been directed to irrelevant documents. For instance, when we asked how often department leadership analyzes property transfer data reports from the county to inform their real estate transfer tax projections, Director Roseman directed us to read an analysis of the July 2023 property tax assessment roll, which does not include any data about real estate transfers over the course of the fiscal year.
Oakland Finance Director And Department Accused Of Being Evasive And Vague
It is also clear that many of the department’s responses to City Council are equally evasive and vague. It is our belief that all stakeholders and Oakland residents deserve clear and decisive leaders who are able to answer these difficult questions an show a single-minded focus on enforcing the city’s tax codes and protecting services for Oakland residents.
Layoffs of city staff and dramatic service cuts should not occur when millions in tax revenues are going uncollected. As the elected representatives charged with oversight of the city’s finances, we ask that you join us in demanding clear action and accountability from Finance Department leadership to ensure that all outstanding tax revenues are collected and to protect the services our union members provide.
Sincerely,
Antoinette Blue, SEIU, Local 1021
Julian Ware, IFPTE, Local 21
Seth Olyer, IAFF, Local 55
Charley Souders, IBEW, Local 1245