OAKLAND — City officials will be swimming in red ink once again when they return to business after the New Year.

Mayor Ron Dellums released a budget report this week projecting a general fund deficit of $50 million for the fiscal year beginning July 1, 2009, and $58 million the year after that. The bleak projections are due to an economy in recession and expected increases in spending on children's programs and employee benefits and pension obligations, among other things, Dellums' report said.

The mayor will meet with the City Council on Jan. 12 to begin hammering out a spending plan for the two-year period beginning July 1 and to take stock of the city's fiscal picture over the next five years.

"Most public agencies nationwide, as well as private businesses large and small, local and global, face a daunting financial future," Dellums said in a statement. "The city of Oakland is no exception. The economic downturn that we face is unprecedented."

The projected $50 million deficit for the 2009-10 fiscal year represents more than 10 percent of Oakland's general fund, and Dellums recommended a number of possibilities for closing the gap, including asking voters for an increase in the local sales tax to pay for specific programs; negotiating with employees for concessions on retirement and medical benefits; and the possibility of more City Hall closures in years to come.

The city will be forced to spend millions more than it currently does on children's programs after voters passed the Kids First! ballot measure, Measure OO, in November. And finding any fat in the budget could prove a difficult proposition after the council took drastic measures — including layoffs and 13 City Hall shutdowns — in October to balance this year's budget.

Council President Ignacio De La Fuente (Glenview-Fruitvale) said he doubted if the budget could be balanced without raising some fees, though he still believed there was ample room for stricter management of existing resources.

"I'm absolutely convinced that we are working at a 50 percent level of efficiency in the city," he said. "And it's totally unfair for us to ask people for more money when we don't have our (stuff) together, when we don't have systems that allow us to manage our resources."

The Jan. 12 meeting begins at 10 a.m. at City Hall, 1 Frank Ogawa Plaza.

Administrator? Not yet.

Dellums will not appoint a permanent city administrator this month, as his office said he intended to do.

The mayor fired City Administrator Deborah Edgerly on July 1, and Dellums aide Dan Lindheim has filled the role in an acting capacity since. In a question-and-answer session with reporters this week, Dellums offered little information about whom he might select or why it is taking him so long to make a decision.

"I will let you know at the appropriate time, and that will be very, very soon who (that person) will be," he said, adding, "I wanted to try to find the best, and it takes time to try to find the best."

Former City Manager Robert Bobb is viewed as a leading contender for the job, and he has been ever since Dellums selected him in July to conduct a top-to-bottom review of the mayor's and city administrator's offices.

A separate firm is conducting the search for a city administrator.

Bobb said by telephone from Washington, D.C., that he is "absolutely" interested in the job if the "circumstances are right." He declined to elaborate.

Lindheim has also been mentioned as a possibility for the job. But Dellums said a more important issue for him than the person who gets the job is what Oakland's strong-mayor form of government will look like once Bobb's report is finalized and changes are implemented.

Keep the power on

Officials this week unveiled a measure to keep utilities on for renters living in foreclosed buildings.

California law requires utility companies and public utility districts to keep utilities running when a city declares that shutting them off will result in a threat to public health and safety, City Attorney John Russo's office said.

A declaration signed by Russo, Lindheim and Oakland Building official Ray Derania declared that the termination of utilities at a tenant-occupied foreclosed property will "automatically be deemed a significant threat to the health or safety of the residential occupants and/or the public."

What that means, Russo's office said, is the utilities will stay on for renters for 120 days after getting their first shut-off notice.

"In Oakland, banks that foreclose on rental properties have often refused to accept their legal obligations to their new tenants," Russo said in a statement, adding, "Families in foreclosed buildings have lost heat or water, sometimes for weeks at a time, forcing them to live in inhumane and unsafe conditions. Especially at this time of year, this represents an immediate and significant threat to health and safety in Oakland."

Reach Kelly Rayburn at 510-208-6435 or krayburn@bayareanewsgroup.com.