{"id":249238,"date":"2026-04-03T00:00:09","date_gmt":"2026-04-03T00:00:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/249238\/"},"modified":"2026-04-03T00:00:09","modified_gmt":"2026-04-03T00:00:09","slug":"communication-breakdown-may-have-cost-oakland-millions-report-finds","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/249238\/","title":{"rendered":"Communication breakdown may have cost Oakland millions, report finds"},"content":{"rendered":"

As Oakland lurched through financial crises over the last few years, it failed to do something that could have cushioned the city\u2019s budget: collect a significant amount of the business taxes it was owed, according to a new audit<\/a> by the city auditor.\u00a0<\/p>\n

City Auditor Michael Houston published a report Thursday describing how Oakland\u2019s Revenue Bureau, the city department responsible for collecting taxes, \u201creduced or ceased multiple activities that led to reductions in the revenues that could have been collected\u201d between 2021 and 2024.\u00a0<\/p>\n

During this period, the city failed to refer delinquent business tax accounts to other divisions for collecting in a timely or consistent manner, the audit found. The firm Sjoberg Evashenk Consulting was contracted by the auditor to conduct the review.\u00a0<\/p>\n

It\u2019s unclear how much money was left on the table. Data limitations prevented auditors from determining the total amount of revenue lost by the city. The auditors also couldn\u2019t determine the amount of money deemed uncollectable due to the statute of limitations \u2014 the legally allowed time the city has to follow up. But in a given year, the city could expect to refer between $9 and $12 million to collections and liens, according to the report.\u00a0<\/p>\n

The reduction in collections corresponded with an organizational shift in late 2022, when the city\u2019s tax compliance division began reporting directly to the revenue and tax administrator.\u00a0<\/p>\n

\u201cIn order to deliver essential services our community needs and deserves, the City of Oakland must bring in revenue to keep up with its expenses,\u201d City Auditor Michael Houston said in a statement. \u201cGiven our ongoing budget constraints, the city needs to secure every dollar it can. I am glad this audit identified ways the city can bring in revenue that it is owed and desperately needs.\u201d\u00a0<\/p>\n

Oakland leaders called for the audit after learning in 2024 that thousands of businesses had failed<\/a> to pay taxes for several years. According to one report<\/a>, as much as $34 million had not been collected, although staff emphasized that the exact amount of money was difficult to estimate. Staff also blamed the ransomware attack<\/a> in 2023 for delaying the process for notifying businesses about delinquent taxes.\u00a0<\/p>\n

The revelation that Oakland wasn\u2019t collecting millions of dollars in tax revenue during a massive budget crisis sparked outrage from Oakland councilmembers as well as the city\u2019s unions. Some staff in the revenue unit sent a petition to then-Mayor Sheng Thao that accused revenue and tax administrator, Sherry Denham-Jackson, of mismanaging their office. <\/p>\n

Not long after these disclosures, the city sacked<\/a> Denham-Jackson. The former revenue chief later filed a legal claim<\/a> against the city for wrongful termination. She followed that claim with a lawsuit that is currently pending in Alameda County Superior Court.\u00a0<\/p>\n

How the revenue collection process broke down<\/p>\n

Oakland voters approved a progressive business tax<\/a> in 2022, which was expected to bring in more revenue for the city. But the audit found that in the following years Oakland did a haphazard job collecting money.\u00a0<\/p>\n

This problem partly stemmed from the city\u2019s revenue bureau not having an effective process for collecting money from businesses that were late in paying their taxes. The bureau had an enforcement unit for getting that money, but \u201cit failed to execute the program as designed or in an effective manner,\u201d the auditor found.\u00a0<\/p>\n

For example, the bureau is supposed to maintain an updated record of which accounts have not paid their taxes. If a business doesn\u2019t pay its taxes or close its account by March 1, the business is supposed to be marked \u201cdelinquent.\u201d Between 2021 and 2024, the revenue bureau took longer and longer to mark accounts as delinquent, which slowed down the collection process.\u00a0<\/p>\n

In late 2022, the tax compliance division began reporting directly to the revenue and tax administrator. After this shift, there was a sharp decline in the volume and frequency of delinquent business accounts being referred to collections and liens. According to the audit, as of June 2024, some delinquencies from 2020 still hadn\u2019t been processed.\u00a0<\/p>\n

The new report also documented how the bureau\u2019s disorganized efforts to refer accounts for collection created more confusion. The vast majority of accounts forwarded to collections from the compliance unit in 2024 \u201chad not been researched, contact attempts were not made, no notes were attached, and did not include supporting documentation.\u201d This forced the city\u2019s collections division to handle some of the steps normally taken by the tax compliance division for approximately 1,000 delinquent accounts from the batch they received in 2024.\u00a0<\/p>\n

Auditors also noted that the longer accounts were marked delinquent without being notified<\/a>, the longer penalties and interest accrued, which made it more difficult for them to come into compliance. This was especially true if a business wasn\u2019t paying taxes because it was struggling financially.\u00a0<\/p>\n

It\u2019s normal practice for cities to search for and contact unregistered businesses to get them in the tax system. But auditors found that the bureau stopped these efforts in 2023. These practices were only restarted starting in the fall of 2025. In reviewing the bureau\u2019s system, auditors discovered that some businesses had been flagged as unregistered and owed multiple years of business license taxes. A handful of cases included businesses that had been in operation for over 30 years.\u00a0<\/p>\n

The auditor found that communication between the bureau\u2019s divisions broke down during this period.\u00a0<\/p>\n

\u201cMembers of Bureau leadership stated that they did not know what was happening in the Tax Compliance Division,\u201d the report stated. \u201cRegular meetings with the Tax Administrator all but ceased.\u201d\u00a0<\/p>\n

This had serious implications for processing delinquent accounts, which must be processed by multiple units to reach collections.\u00a0<\/p>\n

The audit appears to have already spurred changes <\/p>\n

According to the new audit, Oakland\u2019s tax compliance division was dissolved while the audit was ongoing. The division\u2019s resources were reallocated to other parts of the revenue bureau. The report also notes that the bureau has plans to upgrade its business tax tracking software to more accurately show amounts owed to Oakland at any given time.\u00a0<\/p>\n

Oakland\u2019s auditor has issued several recommendations to improve the bureau\u2019s performance.\u00a0<\/p>\n

These include:<\/p>\n

Developing better processes for identifying and referring delinquent business accounts for enforcement action<\/p>\n

Reinstituting the process for discovering unregistered businesses.\u00a0<\/p>\n

The City Administration \u201cgenerally agreed\u201d with the report\u2019s findings and recommendations, according to the auditor. A written response is forthcoming.\u00a0<\/p>\n

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