The Santa Clara County Board of Supervisors approved the $13.7 billion budget for the upcoming fiscal year this week, while acknowledging that challenging financial times still lie ahead as they brace for further cuts from the feds.
The budget for the 2025-26 fiscal year, which begins on July 1, is an increase from the current $12.5 billion budget, driven largely by the county’s purchase of its fourth hospital in East San Jose. The county took over operations of Regional Medical Center in April and restored the Level II trauma center.
But the county’s reliance on federal funds, which has equated to roughly 30% of the budget in the past, has created fiscal uncertainty as President Donald Trump and Congressional Republicans look to make cuts to Medicaid — a publicly funded health insurance program for low income individuals — and other social services.
The county, though, has tried to take a proactive approach in an effort to prevent the federal government from dictating what services get cut. Last month, County Executive James William advised the board to pull nearly $70 million in federal funds they would typically anticipate out of the budget. The county ultimately replaced nearly $60 million of federal funds with local dollars that will go to housing, public health and behavioral health services.
“The Board’s decision to act now to realign local general fund dollars to backfill certain anticipated federal funding losses will help prevent greater impacts to critical services that so many in our community rely on,” Williams said in a statement. “During these challenging times, it is important that we continue to make budget decisions on our own terms as a community, while holding firm to the values that define us.”
At the Thursday afternoon budget meeting, Supervisor Susan Ellenberg said that in past years, she has felt “more elated and energized when we approved the budget.”
“This is a tough year,” she said. “Part of the reason that today is so hard is that I feel that we are not providing the safety, stability and healing at the full level that I — and I’m certain all of my colleagues in the administration — want to. This process has been difficult and at times deeply depressing.”
In an effort to balance the budget, county officials had to make cuts across departments and eliminate several hundred positions, most of which were vacant. It’s the third year in a row where the county has grappled with a significant deficit, as costs are rising faster than revenues. The budget deficit is projected to grow to $476 million by the 2029-2030 fiscal year.
While the country tried to anticipate some federal fiscal impacts, cuts to Medicaid and other programs like Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program remain to be seen. The federal fiscal year doesn’t start until October 1, which means any cuts to these programs could require the county to open its budget back up later this year.
As the operator of four hospitals and more than a dozen clinics, federal health revenues make up a large chunk of the federal dollars the county receives — roughly 80%. Almost all of that is related to Medicaid and Medicare.
“Let’s make no mistake, the county has limited capacity to fill that type of a funding gap,” Board President Otto Lee said of the anticipated funding cuts. “While DOGE was created to supposedly cut waste and fraud, they are now cutting essential services like food, like medicine that people rely on every single day. These cuts are self inflicted. This is hurting Americans.”
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