With deep cuts expected to Medicaid, Medicare and other social services programs this year, Santa Clara County Executive James Williams is recommending pulling nearly $70 million in federal funds they would typically anticipate from the upcoming budget — but additional dollars could still be on the chopping block.
Though that figure represents less than 2% of the dollars the county receives on an annual basis from the federal government, Williams said it puts the decision-making power into the county’s hands and prevents a “drip, drip, drip of cuts.”
The county estimates roughly $3.6 billion, or nearly 30%, of its current budget is made up of federal funds, with 80% of that dedicated to health care.
“We don’t want the federal government to dictate to us what services get cut,” Williams told The Mercury News. “Instead, we’re going to be the ones to decide how we manage our own resources and the services that we deliver in our community.”
The county executive said he decided not to include the nearly $70 million in his newly released recommended 2025-26 fiscal year budget in the event funds are cut or the feds institute “conditions that are completely antithetical to our county’s core values.”
The Trump administration has already tried to end federal grants that promote diversity, equity and inclusion, “gender ideology,” and “sanctuary” immigration policies. Last week, Santa Clara County signed onto a lawsuit against the feds over the U.S. Department of Housing and Urban Development placing “unlawful” conditions on funds to address homelessness.
The county executive’s recommended budget for the 2025-26 fiscal year is $13.6 billion — an increase from the current $12.5 billion budget. It’s the third year in a row the county has grappled with “significant local deficits,” according to Williams, which means they have fewer vacant positions to eliminate and less flexibility to close the gap than in years past. The deficit is projected to grow to $476 million by the 2029-2030 fiscal year.
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While the county planned for some level of federal cuts, Williams said there is still “a lot of layers of uncertainty.” The proposed budget assumes no changes to Medicare, Medicaid or federally-funded social service programs like SNAP and Temporary Aid to Needy Families largely because it’s not something the county can anticipate.
“There’s many many different ways they could potentially target California’s Medi-Cal program, so those cuts could disproportionately hit us,” Williams said of the uncertainty.
The county might have to reopen the budget and make changes in the fall once Congress finalizes the budget for the federal fiscal year, which begins Oct. 1.
Board of Supervisors President Otto Lee said in a statement that the “primary concern is the potential impact of Medicaid cuts.”
In Santa Clara County, one out of every four residents relies on Medicaid — a public health insurance program for low income individuals that’s referred to as Medi-Cal in the state. Republicans in Congress have been looking at making sweeping cuts to the program to pay for President Donald Trump’s immigration policies and tax cuts, but Democrats warn that slashing Medicaid would be devastating for the more than 70 million Americans who rely on the program.
Public hospitals are highly dependent on revenues from Medicaid, as well.
“With four hospitals in our healthcare system, these federal funding reductions could have devastating consequences for our life-saving services and trauma care,” Lee said. “The seriousness of this issue truly cannot be overstated.”
Supervisor Susan Ellenberg said that regardless of whether the county receives reimbursement for Medicaid-covered services, they’ll still continue providing healthcare.
“If they’re not reimbursable by Medicaid, they’ll be coming from our general funds,” Ellenberg said in an interview. “Which then indirectly means that other services that I would argue are largely vital are going to go by the wayside.”
As Santa Clara County walks through its annual budget process over the next month, Williams said the county will also have to keep a watchful eye on Gov. Gavin Newsom’s May state budget revision. In January, Newsom said he expected a balanced budget for the 2025-26 fiscal year. But last month, the governor said he’ll now likely have to cut spending due to the impact of Trump’s tariffs on the state’s economic prospects.
“We’re hearing very concerning indications that the May revise might propose devastating cuts to some of the same types of funding and programs on a state level that are being threatened on a federal level,” Williams said.
Supervisor Margaret Abe-Koga said in a statement that given the current fiscal picture, the county needs “to get creative in finding new revenue streams.” She’s asked county officials for a list of properties they own that could potentially be leased.
“We will likely get more curveballs,” she said, “And we need to continually look for revenue streams.”
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