Spying a years-long stretch of budget shortfalls on the horizon, Mayor Sam Liccardo has urged his colleagues to “tap the brakes” on city spending.
In his second March budget proposal as mayor, Liccardo tells the city to set aside next year’s $5.7 million surplus for future deficits.
“Given the economic and fiscal landscape, now is not the time for new programs requiring ongoing spending commitments,” Liccardo said. “Until our future fiscal condition is clearer, we need to tap the brakes on spending and continue tightening our belts.”
After a small surplus in the fiscal year starting this summer, the city expects a cumulative $36 million shortfall over the following four years. That doesn’t account for a $1.1 billion backlog of street maintenance.
“Moreover, while the budget office forecast anticipates an economic slowdown, a more significant—and seemingly inevitable—recession would reduce revenues far more sharply,” Liccardo cautioned.
Unfortunately, the long-term forecast looks pretty grim. San Jose, he said, should take advantage of this modest recovery to bolster against another recession.
“The city’s revenues appear highly sensitive to larger economic forces,” Liccardo wrote. “[T]he horizon reveals economic threats that have rattled equity markets, cooled venture capital investment in local tech companies, exposed weakness in China, and mired key global markets—from Europe to Brazil to Japan—in protracted slumps.”
Still, the message proposes one-time funding to ramp up recruiting for San Jose’s depleted police force. It also calls for new software for the fire department to slash 9-1-1 response times.
“Improving public safety remains our highest spending priority, and this budget message will allow us to continue to make progress on that critical goal,” Liccardo said. “However, restoring core city services to the levels our residents expect and deserve will require us to grow revenues.”
Despite shortfalls ahead, the mayor wants the city to spend what it can this next year to curb homelessness, blight and gang violence. He’s also eyeing a set-aside for a Vietnamese community center and some $4 million in state funding for local water fluoridation.
If residents want to add services, they can vote on a way to fund them this summer. A quarter-cent sales tax up on the June ballot would rake in about $40 million a year.
“Otherwise,” Liccardo said, “we should continue to tighten our belts, and to fasten our belts, for an uncertain future.”
The mayor’s message marks the first step in the city’s 2016-17 budget planning. The City Council will hold a public hearing on the proposal next week. Meanwhile, City Manager Norberto Dueñas will drum up a plan of his own for the council’s consideration.