As a microcosm of the huge financial crisis enveloping state and municipal governments across the country consider the case of Oakland, California.

The city’s mayor, Jean Quan, is voluntarily cutting her own salary by 25 percent, as the cash-strapped city faces a budget deficit in excess of $40-million.

Oakland is likely to make steep cuts in city workers and reduction in city services to try to bridge that gulf by the end of June.

We are going into some very, very tough times, and I wanted to lead the way, Quan told the San Francisco Chronicle. I don't ask people to do what I'm not willing to do.”

Former Mayor Jerry Brown (now again the governor of the state) took similar steps himself.

Quan will now take home $137,000 in yearly wages. She said, however, that if the local economy were to improve she might consider restoring her full pay.

(According to the San Francisco Chronicle, Quan earns about $46,000 less than her predecessor, Ron Dellums).

However, Oakland’s financial woes are led to some odd developments.

For example, according to the Oakland Tribune, the Oakland school district – which is being asked to reduce their budgets by 7 percent this year – is actually considers handing out pay raises of 2 percent for district employees, including teachers. The pay hikes are estimated to cost about $2-million (while the schools are simultaneously proposing to cut its budget by $12-million).

Similarly, the city of Oakland said it will rehire ten of the 80 police officers it laid off last summer. Not only that, but Mayor Quan has vowed to spend $500,000 to upgrade substandard equipment (radios, computers, etc.) that policemen have long complained about.

But all is not well among Oakland’s men in blue.

Overall, the city has laid off ten percent of its police force, reducing manpower to about 700 (to patrol a city with a population of 400,000).

The police chief Anthony Batts is openly campaigning for another job in another city (even after he was turned down as police chief of nearby San Jose, Cal,., he publicly stated he would keep looking for other opportunities of Oakland did not supports its police department better.

But it will be very much of a challenge for Quan to make the police happy – for one thing, she can’t balance the city budget unless the police union agrees to have its member pay at least 9 percent of their pension plan (as other city employees have been doing).

Meanwhile, the budget clock keeps ticking on Oakland, a decaying former manufacturing city with high rates of crime, gang activity and poverty.