City Council Passes Budget

Jennifer Maguire, San Jose’s budget director, has worked for the city for for 18 years, and says she has never seen anything this bad. And she is not hopeful that things will improve fast. “Most economists are predicting a slow recovery,” she said ruefully.

Maguire addressed the City Council as it prepared to vote on the 2009-2010 budget. Within the hour, the Council would unanimously approve Mayor Chuck Reed’s Budget Message, as well as the Operating and Capital Budgets. But leading up to the unanimous decision, which closed an $84.2 million shortfall, Maguire was one of many local leaders who adopted a solemn tone while making dire predictions.

Reed began the discussion by reeling off a list of losses that the state would be handing down to the city, from cutbacks in public safety grants to reductions in state sales tax revenues, totaling $58 million. He then reminded the council that just yesterday, it was reported that the city’s own sales tax revenues are down by 30 percent, adding $9 million to the deficit.

Introducing the vote on his Budget Message—the narrative describing the numbers in the actual budget—he re-stated, for probably the hundredth time, his hope that the city will “get through this together by sharing the pain.” He thanked the bargaining units that have handled the negotiations with the city’s unions, and then expressed hope that “next year things won’t be as bad as we fear.”

Councilmember Sam Liccardo continued the theme. “There’s no such thing as a good budget in times like these,” he said, calling the one on the table “only the best among a list of alternatives.”

Councilmember Pete Constant called on his colleagues to change the city’s budgeting process.

“By next year, we will gave cut a half-billion dollars from our budget, total, over the past eight years,” he said. “We have trimmed all of the fat, and are getting near the vital organs. We came dangerously close to them this year.

“It’s been an illusion that we have control of our budget. I don’t really think we do.”

There were two pieces of good news to offset the gloom. The first came in the form of federal stimulus dollars that will help the city pursue some overdue infrastructure improvements despite the hard times. The second came from a special election in which the city’s hoteliers approved an expansion of the city’s convention center—which is projected to add $80 million to the city’s coffers in the form of direct business and bed-tax revenues.

Scott Knies of the Downtown Association made a valiant effort to elevate the mood in the Council Chambers. “This is a great time,” he said smiling. “Let’s celebrate a little bit!” Nobody in the room responded.

24 Comments

  1. #2,

    Why doesn’t our city manager have on her web page a few simple colorful charts (not buried in scanned b/w PDF files)  showing the state of the San Jose budget?  A good example would be the charts in the Mercury News recently explaining the California budget situation. 

    Mr. Herhold wrote in a recent column that Ms. Figone has trouble communicating effectively with the community.  Looking at her poorly designed budget website I would have to agree.

  2. Isn’t this a big loss for BIG LABOR?  They only got 3 votes!  Madison skips the vote?  Maybe the voters were right and Cindy Chavez could not have governed the city council.

  3. She sid she worked for the city for 18 years.  she has not been the budget director for 18.  It’s not a billion but a million.  The blogosphere could use an editor.

  4. Apparently Pete C. doesn’t understand that cutting the budget is a whole hell of a lot different from cutting spending.

    I just read that a few years back The IMprov. got $5.1 MILLION over ten years to come to SJ.  Tom McE gets $6million to EXPAND San Pedro Square, at a time when the three largest venues in it stand empty, one of them for well over a year.  $$$Millions to the wealthy Swigs to build the Fairmont.  Susidies for chain restaurants, while the locals get ZIP.

    The RDA has had since the McEnery years to make something of DT SJ; yet they still have to give away $$ to lure folks here, and the DT is still moribund. The 24-hour DT is no closer to fruition than when it was first proposed.  The RDA has failed utterly.  It needs to be disbanded/dismantled so that the increment tax $$ can go to things like streets, libraries, parks, THROUGHOUT SJ.

    And this budget nonsense has to stop. Pat #2 has it right.  They talk about all the money slashed from the “budget”; but spending continues to rise.  And what do we have for all the increased spending??  The second WORST roads in California, for one thing.

  5. Beware of government accounting. My friend Pete Constant implies that we have cut 1/2 a billion dollars over the past eight years, yet our city budget increased from $720 million in 2002/2003 to over $900 million this fiscal year.

    Government accounting works like this: I spent $100,000 last year, I would like to spend $150,000 next year, but my pay will only support $105,000. Therefore, I have to cut $45,000 to balance my budget. Therefore, I have “cut” $45,000 even though I have increased my spending $5,000!

    We need better transparency in the reporting of government spending. Mere mortals have a hard time decoding things that should be pretty straightforward, such as growth in headcount and spending.

  6. JMO #6, unfortunately, ending RDA handouts won’t help the general fund problems that San Jose has. The “natural” increase in property taxes would have flowed to the county (which is one reason for tension between the county & the city).

    It was encouraging to see the majority of the council step up to the plate for the vote. It’s unfortunate that the current gap is being closed, in part, by shuffling reserves around.

    I suspect that our elected officials are hoping that an economic rebound will lessen the projected gap for next year, and are banking on that to help solve the 2010/2011 problem. Because they’ve really done nothing to resolve the systemic nature of our ongoing budget problems. They’ve just shoved some fingers in the dike…but it is cracking (just like our roads).

  7. OK, Pat #7—The county could do better with the $$ than the RDA (unless they wanted to put it into doing something county-run with the Fairgrounds).  Put it all into healthcare—better than wasting it on trying to breathe some 24 hour life into DT SJ.

  8. Cindy Chavez should know better as a former councilmember.  She has the know how to figure out the city has little choice but to do what Mayor Reed has proposed.  People are now finding out that Cindy’s smiling personality is just masking a bitter, vindictive personality that is re-running the mayor’s race.  She should accept the loss and move on.  Enough already.

  9. RDA fan-

    Are you honestly arguing that, without the RDA, downtown San Jose property values would have been flat over the last 30 years?

    Nearly every RDA in the state seems to use RDA money as a peculiar slush fund for projects that would never make the cut for genreal fund money. 

    We’d be better off if the state legislature disbanded all of them, and returned the money to the schools, cities, and counties.

  10. Did anyone confirm that Nguyen & Chirco were really sick?  THE BIGGEST vote of the year, and they call in sick????  Unless they wewre on their deathbeds, they should have been there and voted.

    Pat #7 wrote:“Because they’ve really done nothing to resolve the systemic nature of our ongoing budget problems. They’ve just shoved some fingers in the dike…but it is cracking (just like our roads).”  That oughta give them the credentials to move up to Sacramento.

    I gotts agree with #11.

  11. 12 – Chirco has been undergoing chemo the past few months and attends meetings when she is up to it. Don’t know about Nguyen.

  12. Dear Paul from City Hall,

    I think you are 100 percent right.  Cindy has become really bitter after her loss.  She probably won’t run against Chuck again because she’s afraid she’ll lose, but she’ll do everthing in her power to destroy him.  It’s sad that she’s ending her career in such a negative way.

  13. I see school is out for the summer. So far we have Anonymous posts calling the Mayor a “dork” and number #15 calling Cindy Chavez a drag queen.

  14. “San Jose’s largest employee union as well as another group of workers tentatively agreed today to give up promised raises of 1.5 percent to 6.5 percent in the coming year, a move that will save some $6 million and 46 jobs as the cash strapped city finalizes an operating budget that will close an $84 million deficit.”

    http://www.mercurynews.com/news/ci_12619603

  15. Looks like there is no shortage of money down at city hall to fund a huge construction crew building the “Green Mobility Showcase Project” across the street from city hall.

    Reading the RFI, the city is going to install four LED street lights, a solar powered cooling station, and plug-in stations for electric vehicles.

    A while back with much fanfare the city installed a charging station in this same location.  Having passed by the area many times I have never once seen a vehicle being recharged.

  16. I find it akin to something I might read in “Ripley’s Believe or Not” – we’ve somehow managed to close an 80+ million dollar budget deficit with less than a one-half of one percent reduction in force.  Oh yeah, Pete Constant, we’ve sure as hell eliminated all of the fat… NOT!

  17. 19 – She has attended meetings from time-to-time as her health allows. I don’t know for sure, but I do not think proxies are allowed.

  18. JMO,

    The point with the RDA is that is funded with tax increment. In theory, this money is only generated because of the investment of RDA funds, which increases the value of the property and those surrounding it, thereby increasing the tax increment and providing for other RDA investments. Without the RDA, its quite possible that the money wouldn’t flow to straight to the County because it wouldn’t exist. I am not a fan of the way the RDA is managed, and the intense focus solely on our downtown. But that shouldn’t make the case to disband it – just to change its Board.

  19. Hello #11
    Sunnyvale is redoing most of its downtown core.
    Their RDA website has a good explanation of how RDA agencies operate.
    The increased property tax money won’t return to the city until the loans get repaid, many years down the road.
    There seems to be no incentive to include non-profits and churches in RDA plans since they pay little or no property taxes.
    pgp3