As it navigates a modest shortfall without reducing its overall workforce, San Jose is heading into the coming year with a $5.57 billion budget that diverts voter approved funds for affordable housing projects to interim homelessness solutions and increases financial support for immigration services.
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With the federal government creating chaos at the local level through the cancellation of grants and immigration enforcement, city officials made last-minute adjustments to the budget by increasing the amount of immigration support services to at least $1 million, with the possibility of funding escalating to up to $1.5 million.
“This is a fiscally responsible, service-sustaining and forward-looking budget,” Mayor Matt Mahan said. “It closes a $35.6 million projected shortfall this year, proactively reduces next year’s projected deficit from $52.9 million to $25.9 million and does so while avoiding virtually all layoffs. In fact, we have added a net five positions to our workforce.”
The city’s financial picture has improved drastically over the past several months as the projected shortfall it faces this year dwindled despite concerns that lagging sales tax revenue could significantly impact services. However, the city may be forced to make more difficult tradeoffs next year should the current economic headwinds continue.
Reacting to the most prevalent concerns voiced by residents, the city will once again prioritize investments in reducing unsheltered homelessness, improving safety and cleanliness, growing the economy and building more housing.
Public safety services will receive 27% of the operating budget, while environmental and utility services receive 30%. The city is also allocating 10% of its budget towards both neighborhood services and transportation and aviation services.
“This budget focuses on the areas that our community depends on us to look at and that is public safety, clean, safe and vibrant neighborhoods, ending homelessness and leaning into economic development and opportunities,” Vice Mayor Pam Foley said. “We know we are in a difficult economic situation and frankly, we’re in a difficult federal government crisis. That has resulted in a look at how we need to analyze our budget a little bit differently and maybe consider things we weren’t considering a month or two ago.”
City officials have touted the improvements residents have seen in public safety, with the crime rate and number of traffic fatalities decreasing. They added that the investments made in homelessness — which will see the city’s shelter network expand to nearly 2,000 placements — have resulted in a reduction and a higher utilization rate of services.
This year’s budget also will include investments ahead of 2026 when the metro area will become the first in history to host Super Bowl and FIFA World Cup matches in the same year. The SAP Center also will host NCAA Men’s March Madness tournament games, potentially driving even more economic activity to the region.
“All of these accomplishments and this small but meaningful progress within our focus area are not accidents,” Mahan said. “They are the result of intentional focus, data-driven governance and a united council vision around the things that matter most to our residents.”
While the City Council approved the reallocation of Measure E dollars, it did not come without opposition from nonprofit providers, community members, and individual councilmembers who requested that the city increase funding for homelessness prevention.
Councilmembers Pamela Campos, Carl Salas, and Bien Doan had requested that the city increase the percentage of funding for homelessness prevention, gender-based violence programs, legal services, and rental assistance from 10% to 15%, noting how it was more cost-effective to keep residents out of homelessness than it was to provide shelter. Salas added that it would send a message to the county and constituents that the city was focused on more than triaging the homelessness crisis.
“It’s going to get ugly with the feds and we’ve got to get people from getting evicted,” Salas said. “We know that homeless prevention works.”
While city officials rebuffed the request, citing how it would throw the budget out of alignment, there is the possibility of allocating more funds in the future.
The budget has also undergone some significant modifications since its initial introduction last month.
As part of the original proposal, the city had envisioned cutting more than $500,000 in grant funding for senior programs. City officials have tapped into the essential services reserve to add $300,000 in one-time funding, aiming to limit the impacts.
Addressing the increase for immigrant support services, District 5 Councilmember Peter Ortiz — who has led the charge to support the immigrant community — noted how immigration enforcement had already negatively impacted residents by scaring them from going to work or school or even doing essential daily tasks.
That impact has only been heightened recently as a result of the immigration sweeps in Los Angeles and Ortiz said the community could not wait to receive support.
“This is more than a budget line,” Ortiz said. “It’s a recognition of the vital role our undocumented neighbors play in the vibrancy and resilience of the city of San Jose.”
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