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Oakland city employees represented by unions SEIU Local 1021 and IFPTE Local 21 line up for a BBQ outside the Oakland City Hall before holding a rally in Oakland, Calif., on Thursday, June 13, 2013. The Oakland city council is holding its final budget meeting Thursday evening before it approves a two-year budget later this month. (Anda Chu/Bay Area News Group)

OAKLAND -- With a budget deadline just two weeks away, council members are struggling to reach a compromise that would strengthen the police department, add blight abatement crews and boost pay for many city workers.

There remained disagreement on spending priorities and uncertainty about the amount of available revenue even after a six-hour budget hearing Thursday that drew a huge turnout from city workers seeking their first raise in six years.

The council will try to bridge their differences at a special meeting June 27.

In her strongest statement yet in support of some form of pay boost for the unions, Mayor Jean Quan told council members at Thursday's meeting that "there should be enough money that we don't have to pit public safety against employee raises."

With city revenue approaching levels not seen since the 2008 financial collapse, council members are under pressure from residents and unions to increase spending, even though the city still projects long-term funding shortfalls and more than $1.4 billion in unfunded pension and employee medical liabilities.

On Thursday, the council overturned a policy mandating that when taxes on property sales top $40 million in a year, the additional revenue must go to the city's rainy-day reserve. The new policy allows council members to spend the money, estimated to be about $3 million this year, for one-time expenses.

The council can only tinker with Mayor Jean Quan's proposed two-year, $2 billion budget, most of which is earmarked for salaries, debt payments and infrastructure projects. The budget plan eliminates dozens of civilian jobs to help pay for the hiring of about 160 police officers.

With available funds limited, council members this month split into two camps. Council President Pat Kernighan, backed by Councilwoman Libby Schaaf, proposed limited additional spending with an emphasis on hiring 10 civilian investigators and crime lab workers in the police department.

A retooled counterproposal from Councilmembers Desley Brooks, Larry Reid and Noel Gallo, all of whom represent East Oakland, called for more spending on graffiti and illegal dumping abatement and less on the police department. It also proposed setting aside money to help fund a 3 percent raise for civilian workers, while rejecting Quan's call for new hires to help with economic development projects.

City Administrator Deanna Santana cautioned that the plan would still produce a deficit and potentially result in additional layoffs because it didn't fully fund the raises. She also said that her staff was so cut to the bone that some of her deputies have been "pulling all-nighters" just to get their work done. "We can fully acknowledge that in some cases we are on the verge of administrative collapse," she said.

Every facet of the city has taken a funding hit over the past five years. The city has significantly fewer crews picking up trash and painting over graffiti, and the police department has lost nearly a quarter of its officers and about one-third of its civilian employees. Even the budget office has gone from six analysts to two.

Reid said this week that he won't compromise on boosting funds for crews to pick up illegally dumped trash and furniture. "In my district, people really hate inviting folks to their neighborhoods because there are huge mounds of illegal dumping and graffiti galore."

The split on the council has been about both spending priorities and whether the city's budget projections are trustworthy. Reid said his group's plan was fiscally sound and that he believed union assertions that the administration was underestimating revenue projections while negotiating new labor pacts.

"We're in a bargaining mode," he said.

Kernighan said she trusted the administration's projections, but she acknowledged that several council members were more optimistic about the city's finances. "The first big argument is how much revenue do we have to work with," she said. "And the second big argument is what do we spend it on."

Contact Matthew Artz at 510-208-6435.