After reaching a tentative agreement earlier this month and averting a strike, the San Jose City Council finalized city worker contracts Tuesday that will cover more than 4,500 full- and part-time public employees.
Under the three-year agreement running through June 2029, employees will receive guaranteed 3% annual pensionable pay increases and an immediate 1% lump-sum cash payment. The deal also includes the potential for up to an additional 1% raise in the 2028-2029 fiscal year if the city projects a general fund budget surplus, alongside new workplace protections regulating artificial intelligence.
The agreement became official weeks after members of the International Federation of Professional and Technical Engineers (IFPTE Local 21) and the Municipal Employees’ Federation authorized a strike in August. Together, the unions represent a wide range of the municipal workforce, including management, engineers, and architects. A walkout would have disrupted key public services, including libraries and animal care facilities.
Mayor Matt Mahan called the deal a positive step forward, even as the city navigated tight financial constraints after closing a $50 million budget gap this fiscal year through select project delays, targeted program cuts and other cost-saving measures.
“Our goal was to give people the largest raise we can without reducing services or putting the city in an unsustainable fiscal position,” Mahan said. “Our goal over time is to hire more workers and provide higher service levels.”
Although the immediate deficit was addressed, San Jose still projects shortfalls of nearly $27 million and $11 million over the next two fiscal years. Throughout negotiations, unions pointed to severe employee retention challenges and the region’s high cost of living as key factors driving the strike vote.
“The agreement represents significant progress toward addressing workers’ priorities, such as AI guardrails and employee retention, and securing a contract that recognizes and respects the workers who keep the city running,” IFPTE Local 21 said in a statement.
San Jose has not had a city worker strike since 1981, when employees walked out over gender pay disparities. A strike would have heavily impacted a city already running lean. With just one municipal worker for every 112 residents, San Jose maintains one of the lowest staffing ratios among major California cities, behind only Bakersfield, according to a news organization analysis.
Councilmember Peter Ortiz, a former union organizer, recognized the workers’ role in delivering critical services to residents.
“We ask so much of our staff every single day,” Ortiz said. “Our employees deserve much more than often what we’re able to provide, especially in a city where the cost of living continues to put enormous pressure on working families. I’ve always believed our city can’t serve its residents well while leaving behind the people who make those services happen”.