The free Broadway Shuttle bus service lost about one-quarter of its funding, but city officials say they expect to preserve the service.
AC Transit has operated the $630,000-a-year shuttle service since 2010 with the help of a $355,000 grant from the Bay Area Air Quality Management District.
But on Wednesday, the district's board voted to cut that grant in half to $177,000.
City officials had feared that the cut would have a ripple effect for the shuttle service because other grants are dependent on the shuttle maintaining its current hours and schedule. However, the city thinks it has found "viable funding options" to offset the reduced grant, said Zach Seal, who manages the shuttle service for the city.
The shuttle serves an estimated 2,650 riders per day, connecting Jack London Square and the 12th Street BART Station with many office buildings around Grand Avenue. It runs from 7 a.m. to 7 p.m. and comes every 10 minutes during commute hours.
In other Oakland news, the City Council approved an ordinance to mandate electronic filing of campaign finance statements and mandate fines for those who miss filing deadlines.
Also, the federal judge overseeing police reforms directed Oakland's court-appointed monitor and compliance director to consider objections from the city over the most recent status report that found Oakland had backslid on the reform effort.
Hayward gets a voice in Hetch Hetchy's future
Hayward took steps this week to have a say in the future of Hetch Hetchy Reservoir, which supplies almost all of the city's water.
Last November, there was a ballot measure that if approved would have required San Francisco to evaluate how to drain the reservoir. Only San Francisco residents were allowed to vote on the measure, which was defeated.
The City Council on Tuesday signed an amendment to its wholesale water agreement with San Francisco.
The amendment blocks draining of the reservoir unless all the cities and water districts that receive Hetch Hetchy water give their approval.
"This gives wholesale customers a voice in future efforts to remove the dam or drain Hetch Hetchy," Alex Ameri, head of the city's utilities department, told the council.
"This is extremely good for us," said Councilman Al Mendall.
San Francisco Public Utilities Commission passed the agreement in January. It needs the approval of 75 percent of the remaining Hetch Hetchy users, which is expected to occur.
Hayward is the largest public entity to purchase Hetch Hetchy water, buying 10 percent of what is sold.