San Jose Projects $71.6 Million Deficit in Next Year’s Budget

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.

Grace Hase is a staff writer for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @grace_hase.

17 Comments

  1. Sounds to me they should open the city back up for business and start tax revenue flowing again. People now know about the virus and what needs to be done to protect themselves. At this point I see this only as a power play, to make people suffer to show residents who is in charge.

  2. Come on Sam, anyone can be mayor when times are booming as they have been here for the past five years . 75 jobs, really????. Add up the jobs lost by all the shuttered SJ businesses and start getting down to spending your days cutting cutting and cutting some more. Any government services that have been closed for two months and paid those workers full pay and benefits to stay home just blew your padding. If those services were shut for two or three months, you are looking at 20-30 % across the board reductions, Since police and fire can’t be cut, you will have to go deeper to the fluff. Think like we have to think as families. One job down, we cut expenses 50% , or more. Stop living like you have a Google expense account, you don’t anymore! Shared sacrifice. That doesn’t mean public payroll is immune from shared pain. Take a leadership role Sammy and start by cutting your pay 20% then get rid of all your slush fund favorites. We are going to get the public records and we will see how you did compared to how those who elected you did during the same time period.

    • > Stop living like you have a Google expense account, you don’t anymore!

      OUCH! That’s going to leave a mark!

      You really didn’t have to mention the Google contributions tucked into the waistband of his boxer shorts.

    • Bravo Susan. Let’s not forget Sam’s claim that “we’ve checked the sofa for loose change and no more to be had” – only to be contradicted by the Auditor’s report. As I recall there was about $143 million in potential savings that could be recovered in 12 months based on the IBM report and a followup by Citizens For Fiscal Responsibility.

      Do reconsider potential SJ Fire efficiencies. SJ Fire has no obligation to respond to medical emergencies – that’s the County’s duty. Instead, we fund duplicate and overlapping services. Then there’s featherbedding – staffing far beyond what’s necessary. The Auditor’s reports are chocked full of unaddressed savings opportunities.

      Then there is the capital budget shell game. Why should we spend millions on the 10th St ice rink expansion when we can’t fix potholes or improve roads?

      • > Then there is the capital budget shell game. Why should we spend millions on the 10th St ice rink expansion when we can’t fix potholes or improve roads?

        I don’t know for a fact, but I assume that the 10th St ice rink (Solar4AmericaIce) is leased on a long term arrangement to the San Jose Sharks organization and that it is or ought to be paying its own way, including the expansion.

        If it’s not paying its own way, I would strongly suspect bad deal making on the part of the city.

    • Budget of the police auditor is $1.3 million….you can start there. That office has no power to do anything.

  3. Too bad city officials, city workers, city and government employees in general are immune to the destructive economic effects of the policies they have so enthusiastically endorsed and bought into.
    The science is in. This shutdown must end.

  4. How many more millions will CSJ pour into worthless programs to help the 70% or so of the homeless who are schizophrenic and or drug addicted? The rage now is a one stop shop, with medical care, rehab, and job advice. The medical care and rehab should be in a lock down facility. As for job advice, none of those folks are capable of working and who would hire them anyway?The whole program is a scam to keep funneling money to non profits run by cronies of the mayor and council, who profit off the worthless programs they describe in their grant proposals. The people who operate them are parasites who squander tax money on worthless programs that benefit only themselves, and have NEVER been effective at reducing the homeless population.

    • > The whole program is a scam to keep funneling money to non profits run by cronies of the mayor and council, who profit off the worthless programs they describe in their grant proposals. The people who operate them are parasites who squander tax money on worthless programs that benefit only themselves, and have NEVER been effective at reducing the homeless population.

      I’m shocked! Is this true?

      Does the mayor and city council know about this?

    • JMO, Agree for the for the most part. The *only* exceptions I know of are the Salvation Army and Catholic Charities. Salvation Army accepts no government funding. Both have a good track record of outcomes, transparency, and governance.

      The SJ Auditor’s report on homeless programs also focused on the utter lack of accountability and tangible results.

      If we want to see improvement, then demand that shelters and homeless housing be licensed under the state Community Care program. It’s required for those that are unable to care for themselves – which many homeless are by definition.

      • > If we want to see improvement, then demand that shelters and homeless housing be licensed under the state Community Care program.

        “Homeless housing” needs to be licensed?

        How about as a requirement to be licensed it must be located at least fifteen miles away from any taxpaying San Jose resident who objects, is traumatized, or is uncomfortable?

  5. How much of the city budget is for pension benefits alone? It has to be huge (25%) and growing. this is a crony system set up for a one-party system to keep “Party Members” living well – long after they are retired or on to their next civil service job. If Grace/Jenn or anyone at Metro wants to do a real budget busting expose – investigate this problem. It’s not just San Jose- -California has the same problem and like the old USSR, incompetence and largess piled onto the few Special party members will be the demise of us.

    Find out how many public employees are 20 years/out and on to the next job/pension- – -jeez — just add up all of Jerry Browns pension draws from all of this public jobs — – seriously.

    this is why politicians cling to the public teat – – they reward their classified public union buddies with lucrative careers who in turn support them – thus we see a city council person move up to county supervisor and then up to state legislature and eventually a federal political office – – – sound familiar?

    • Nice use of ” public teat”. Grace and Jenn can do a bang up job on this, they just need a publisher willing to support them in doing so! Gonna need local reporting more than ever!

  6. did AG Becrrra sneak in a prop for this Nov called “Education and Local Govt Funding” – it is a means to overturn Prop 13, drive out the remaining middle class and create a socialist paradise in CA. and we are getting there sooner than expected.
    so no worries- Sam and the rest will have plenty of $ to lavish on the masses – (peanuts) and keep their plush salaries and pensions.

  7. This mayor and most of the city council have no clue as to how to budget their own budgets let alone the city’s. When the mayor and city council starts abiding by the city charter, then I’ll take them seriously.

Leave a Reply