After two months of figuring out just how deep COVID-19 would hit San Jose’s coffers, city officials announced Tuesday that they expect a $71.6 million deficit in the year ahead.
The city’s general fund revenues, which includes sales tax, are poised to take the biggest hit, as officials forecast a 9 percent drop from 2018-19 totals. That’s a steeper downtrend than the ones hastened by the Great Recession and the Dotcom Bust.
In an effort to balance the $4.1 billion proposed budget, City Manager Dave Sykes said he will use “new revenue sources, expenditure reductions and the strategic use of reserves and other one-time dollars.”
Like every other Silicon Valley city bracing for similarly devastating budget cuts, San Jose will have to decrease its staffing. Based on the most current projections, that will require eliminating 103 positions—going from 6,647 full-time jobs in the current fiscal year’s budget to 6,544 positions in 2020-21.
Sykes, however, said that he doesn’t anticipate layoffs due to the city’s high job vacancy rate and the previously planned expiration of a number of positions on June 30.
“I am proud of the way the city responded to the health crisis that we have all faced,” Sykes said in a news release. “Now we find ourselves having to address a budget crisis with unprecedented revenue losses. Undoubtably more difficult decisions lie ahead as we work through a long road to recovery. At this point we have done our best to put forward a budget proposal that responsibly addresses the impacts we can currently project, but delays decisions about more severe impacts to our community and our workforce until a time when we understand the full impacts of the revenue losses.”
Should the economy continue its downward ascent, San Jose has a contingency plan that would call for another $12 million in spending cuts, which would include the the elimination of 75 more jobs. The proposals would be heard by the City Council in the fall once officials have a better sense of how the economy’s doing by that time.
“San Jose residents are struggling mightily in today’s COVID economy, and we must do all we can to lift our neighbors to higher ground,” Mayor Sam Liccardo said. “The public’s participation in in the budget process is vital.”
The council will hold study sessions on Thursday and Friday to discuss the proposed budget. The city has also scheduled four community budget meetings to gather feedback from residents on Wednesday, Saturday, May 18 and 20. The final budget hearings for the city council are scheduled May 21 and June 15.