After months of speculation about where the budget axe might land to balance a $50 million deficit, San Jose’s City Manager has released a proposal for the upcoming fiscal year that includes significant cuts to city services but avoids layoffs.
The $5.5 billion budget proposal submitted by City Manager Jennifer Maguire on Friday has come as a relief to some who feared after years of struggling with steep budget shortfalls, San Jose may have reached a breaking point — forcing it to find savings by laying off city workers. However, the proposal does include $18.9 million in cost and service level reductions, which will land hard on public safety initiatives, library programs, youth services, and other city priorities. The budget has to be finalized by June 3o.
“Though the Administration’s approach limits negative outcomes, impacts will be felt across the organization,” Maguire wrote in a budget message that accompanied the proposal.
The proposal, which covers the fiscal year that begins in July, will now go before the city council for further review over the coming month in a process that includes study sessions and public hearings, ultimately culminating in a June 9 vote. The potential cuts have already stirred pushback, raising the possibility that upcoming budget negotiations will be hard fought.
Under the newly submitted budget proposal, administration officials say the city can fill a significant portion of the projected $50 million shortfall — a figure that’s been revised from earlier estimates — through use of reserve funds, as well as from savings that will come as the city eases back on a years-long effort to rapidly expand homeless shelter capacity.
For example, with the city anticipating fewer large-scale encampment sweeps in the coming year, the city plans to soon decommission the Taylor Street sanctioned encampment site for a projected cost reduction of $1.2 million.
But those savings still won’t be enough to fully close the budget gap without significant trimming of city services.
The largest of the proposed cuts will affect two major public safety expansion projects — the opening of a new fire station near Interstate 680 and Highway 101 and a new Police Training Center. In both cases, the proposal would mean delaying planned openings slated for this spring by two years. By pausing these projects, the city frees up $5.4 million from this year’s budget, according to the proposal.
The city manager’s proposal also peppers smaller cuts across a wide variety of departments. Those include more than $1.2 million in cuts that will land on the library system, leading to the closure of a popular room at Dr. Martin Luther King, Jr. Library that provides access to documents related to California’s history. Another proposal would reduce the budget for youth jobs initiative San Jose Works by $200,000.
The budget does preserve $500,000 in one-time funding to support expanded services for children and youth, including youth programming intended to reduce gang activity.
Mayor Matt Mahan applauded Maguire’s proposal, which he said identified millions in savings, while preserving core city services.
“Tough budgets require discipline, adaptability and a focus on solving problems,” Mahan wrote in a statement. “I look forward to working with the City Council to refine these proposals and ensure we deliver a responsible budget that is results driven.”
But the response from others, including labor union leaders, has been mixed.
“It’s good news that layoffs were avoided, but in the view of public servants, this budget still reflects the wrong priorities,” John Tucker — a senior union representative for AFSCME Local 101, which represents public employees in San Jose — told San José Spotlight. “We’re cutting services that residents depend on while continuing to give handouts to developers and corporate interests. That’s a choice, and it’s one that leaves working families and neighborhoods behind.”
In February, the city council passed a package of developer-friendly policies intended to spur housing growth by reducing construction taxes and easing requirements to provide below-market rate homes.
A release from Mahan’s office highlighted areas where the new budget proposal has expanded funding. In particular, it noted the budget would fund a new Community Paramedicine pilot within the Fire Department. The pilot is intended to improve emergency response services for high-needs residents, such as those who suffer from drug addiction or mental health challenges.
Meanwhile, those plans could be upended should voters reject Measure A, a proposed increase to the city’s hotel tax appearing on the June primary ballot. The budget assumes the city will be able to rely on roughly $10 million in annual revenue the 2% tax hike is projected to generate. If that money is taken off the table, the city will need to consider even more drastic cuts, officials said.
“The city manager’s proposed budget thoughtfully responds to the council-passed March Budget Message,” District 1 Councilmember Rosemary Kamei told San José Spotlight. “It is, however, deeply reliant on the passage of the (hotel tax) measure.”
Contact Keith Menconi at [email protected] or @KeithMenconi on X.