If a hotel tax measure fails on the June ballot, San Jose residents could lose Sunday library hours and downtown police patrols the city manager warned Wednesday during the unveiling of a budget proposal with significant cuts to programs and services to balance a $50.3 million shortfall.
In San Jose’s first budget session for the coming year, city leaders weighed the $5.5 billion budget proposal that closes the deficit, in part, by eliminating 85 mostly vacant or unfilled positions, delaying a new fire station and police training center by two years and reducing encampment cleanups. Officials also considered the potential fallout if a proposed hotel tax fails, a scenario city staff cautioned would trigger further hits to services and possible layoffs.
“This fiscal year, we face the most challenging conditions in my time on the City Council,” Mayor Matt Mahan said. While he believes the budget proposal keeps the council’s priorities intact, he said the shortfall “requires us to make difficult decisions.”
The $5.5 billion proposal prioritizes public safety, neighborhood cleanliness and housing production, according to city staff. However, much of the fiscal plan is contingent on Measure A, a hotel tax on the June ballot. If approved, the measure would raise San Jose’s hotel tax from 10% to 12% starting Oct. 1.
Last March, as the City Council voted to approve Mahan’s budget message, community members turned out in droves to ask the city to prioritize affordability, immigrant services and homelessness.
The proposed $5.5 billion budget is roughly 13% lower than the $6.26 billion approved in 2025.
If the hotel tax fails, a fallback plan would eliminate Sunday hours at all branch libraries and end downtown police foot patrols. The plan also calls for cutting assistance for low-income residents to pay for required tree and sidewalk repairs and slashing an additional 40 to 49 positions — a move officials warned would noticeably reduce city services and impact current employees.
While councilmembers and the community showed broad support for the transient occupancy tax earlier this year, critics say the increase will squeeze hotel owners and make San Jose less competitive for the tech conferences and business travelers that drive the local economy.
Despite the shortfall, Mahan’s office highlighted a community paramedicine pilot that would add three positions to create a field-response team for overdoses and behavioral health crises. He also said the budget continues efforts to reduce unsheltered homelessness by “optimizing the interim housing system after a period of rapid expansion.”
To drive long-term growth, the city highlighted its plan that continues to support programs for small businesses, including funding the “Stitching Districts” project to improve walking paths and public art between the SAP Center and San Pedro Square, alongside an East Side Revitalization Plan to attract investment to historically underfunded neighborhoods.
The proposal includes $500,000 for a plan to boost children and youth services. Mahan described the one-time funding as an investment to support intervention and afterschool programs in disadvantaged neighborhoods.
While the city trimmed the initial gap by about $6 million through internal savings and tapping reserves, City Manager Jennifer Maguire warned that because the city already shifted and cut funding last year, further reductions will hit core services much harder.
Maguire noted in her budget message that the cuts can potentially “impact already disadvantaged communities” and that the administration must “intentionally consider equity” regarding budget actions.
During Wednesday’s session, Councilmember Pamela Campos echoed the sentiment, urging the city to be honest about which expenses “could be considered luxuries.”
“Because when we are using our public dollars, we really need to be stewarding those investments into building social infrastructure and wealth throughout the city,” Campos said. “Because no one is coming to save us — not the county, not the state, and not the federal government. So it’s important that we’re being thoughtful about what needs to change so people can have better lives in San Jose.”
The city will hold public hearings throughout the month for community feedback leading up to Mahan’s expected second budget message on June 1, before the City Council votes on the final plan June 9. The next fiscal year begins July 1.