San Jose Mayor Sam Liccardo, in the face of what he warned is “a looming national economic downturn,” announced today that the city’s general purpose reserve will reflect 8% of the general fund operating expenses, the largest reserve in at least two decades.
Repeating a message from his June budget message, Liccardo said that for the first time in decades the city’s projections for its general fund show a very modest surplus over the next five years, which he attributes to reductions in retirement costs and rising revenues.
At the same, Liccardo’s announcement urged caution by future mayors and city councils, as pushes to bolster the city’s fiscal condition. The mayor terms out this year.
“As we see the clouds gathering, it’s time to tighten our belts and bolster our city’s reserves to weather the economic storms ahead,” said Liccardo. “Recessions have deep and difficult impacts, but good preparation and fiscal discipline can soften the blow.”
By comparison, the city’s reserves represented 5% of the general fund prior to the Great Recession of 2007-2008.
“The City of San Jose will experience a long-term decline in the cost for retirement benefits for the next decade, as a result of our longstanding efforts to implement pension reform,” the mayor said in his statement. “The dividend of these many years of sacrifice and belt-tightening today provides the resources that are helping us to get homeless residents housed, expand our police department, expand library hours, and restore other essential services.”
In the annual report for 2021-22 by City Manager Jennifer Maguire released today, while actual revenues across all city funds totaled $4.6 billion, 7.5% ($376.8 million) below the budgeted estimate of $5 billion, spending was 19% ($1.1 billion) below the modified budget of $5.8 billion.
For most funds, according to Maguire, the actual 2021-2022 ending balance was above original estimates.