OAKLAND -- With a surging real estate market filling city coffers, Oakland council members passed a budget that doesn't shy away from spending, especially on public safety and blight abatement.

The two-year, $2 billion spending plan approved Thursday night ends five years of austerity that had cost Oakland about one-quarter of its police force and left several other city departments with skeleton staffs. The new budget has funding to hire about 160 police officers, but it does little to address long-term risks that threaten to push the city back into cost-cutting mode within a few years.

The council approved the budget 5-3 with the backing of Councilmembers Rebecca Kaplan, Lynette Gibson McElhaney Dan Kalb, Pat Kernighan and Libby Schaaf.

"This budget contains funding for the top priorities for the people of Oakland, which are public safety, cleaning up blight and making our city a better place to live," Kaplan said after the vote.

Kaplan, Kalb and Gibson McElhaney drew up the final agreement by incorporating spending priorities from proposals pitched by their colleagues and then further increasing spending to boost services.

Councilmembers Desley Brooks, Larry Reid and Noel Gallo voted against the budget, saying that the spending was excessive and risked shortfalls down the road.

"It is a setup for layoffs; it is a setup for catastrophe; it is a setup for irresponsibility," Brooks said.

The budget funds 10 new civilian police staffers to help with investigations and crime lab research, an extended contract for the California Highway Patrol to help police city streets, additional crews to reduce blight and patch potholes as well as a $6 million set-aside to boost pay for civilian employees whose contracts expire at the end of the month.

It also will boost administrative staffing to foster development, reduce the need for hiring outside attorneys and clear a hiring backlog that has left many jobs vacant for months, including 47 civilian posts in the police department.

In several instances, the budget uses nonrecurring revenue to pay for expenses slated to continue well into the future, such as a recently approved fee reduction for city taxi companies. Similar spending habits made Oakland especially vulnerable when the financial collapse struck in 2008.

The council only tinkered with Mayor Jean Quan's original budget proposal, which locked in most spending for salaries, debt payments and infrastructure projects. The city will have roughly a $40 million rainy day reserve -- about $5 million more than required.

But Oakland still faces more than $1.4 billion in unfunded liabilities for employee pensions and medical benefits.

Underscoring the fragility of Oakland's economic recovery is the fact that much of the city's new spending initiatives are effectively being purchased with borrowed money.

Last year, the council approved issuing $210 million in bonds to shore up an underfunded pension program for retired police and firefighters. Had the city not issued bonds, it would have had to pay about $30 million this year to fund the pensions, effectively wiping out all the new spending authorized by the council.

Oakland will have to start paying off the bonds in 2017, around the same time it intends to begin putting money away to properly fund medical benefits promised to retired workers.

Contact Matthew Artz at 510-208-6435 or martz@bayareanewsgroup.com