As San Jose officials prepare a budget proposal that’s sure to involve significant cuts, Mayor Matt Mahan has marked out his own spending priorities for the city.
The mayor’s annual March budget message, released Tuesday, directs city administrators to strive for maintaining key service areas — around homelessness, neighborhood blight, public safety, housing affordability and economic growth — as they attempt to balance a projected $56 million deficit.
In his message, Mahan acknowledged the city will likely need to consider significant service cuts. However, the 41-page policy document also directs officials to first search for opportunities to cut costs through efficiencies.
“Tightening our belts does not mean abandoning our progress,” Mahan said in a statement. “Even as revenue slows, we can continue making progress on the issues residents care about most by staying relentlessly focused on the basics and protecting the services people rely on every day.”
The $56 million shortfall is the latest projection from the City Manager’s Office. San Jose’s chronic budget challenges have grown more severe in recent years as a soft economy has led to weak sales and property tax revenue.
The mayor’s budget message — which still must be approved by the full City Council Tuesday — provides guidance for the City Manager’s Office as it draws up concrete spending proposals for the coming 2026-27 fiscal year, which starts July 1. The budget process is expected to culminate with a final council vote on June 16.
Gary Hector, vice president of the Almaden Valley Community Association, seems satisfied with the mayor’s priorities, but still expressed misgivings heading into budget season.
“I find the mayor’s focus to be very encouraging,” Hector told San José Spotlight. “I find the shortage of revenue to be worrisome.”
Despite the shortfall, Mahan’s budget message includes a number of programs the mayor would like to see preserved or even expanded. For example, it directs staff to maintain the city’s RV buyback program, which offers homeless people who have agreed to a shelter placement $2,000 in exchange for their RV. The city first launched the program when it cleared roughly 370 homeless people and 120 occupied vehicles from a sprawling encampment in Columbus Park last year.
In addition, the budget message also seeks to secure $500,000 in one-time funding to reduce youth violence by expanding enrichment programs for young people. In the past, such programs have included the city’s Safe School Campus Initiative, a gang tattoo removal program, and the city’s career development efforts, according to the message.
On the other side of the ledger, the document also identifies several possible ways to save on spending. For example, the mayor is asking staff to continue efforts to cut costs across the city’s network of homeless shelter sites to include resubmitting some of the city’s service contracts for public bidding.
The budget message also broaches the possibility of new revenue generation, and directs staff to begin exploring a ballot measure to expand the city’s parcel tax supporting the San Jose Public Library system.
San Jose may need to get creative to advance all of its goals. Last June, amid widespread alarm over President Donald Trump’s immigration crackdown, councilmembers approved $1 million to fund local immigrant defense organizations. Now, Mahan is directing staff to search for “philanthropic dollars” to build on the city’s efforts.
With more than one million residents to please, the mayor’s budget message could signal the start of tense budget talks. Already, some observers are expressing skepticism about the direction Mahan has taken.
“I think the mayor needs to tell us more precisely where he thinks the excess may be and how he can reduce the cost,” Elizabeth Chien-Hale, a board member for the San Jose Downtown Residents Association, told San José Spotlight. “I just don’t think empty words about growing an economy, growing revenues is going to really help.”
Contact Keith Menconi at [email protected] or @KeithMenconi on X.