San José
Releases Recommendations for Reduced Budgets
Balanced budget proposals for City and Redevelopment
Agency
still subject to uncertainty from state budget crisis
San José, CA ---- The City of San José
and the San Jose Redevelopment Agency today released their proposed budgets
that recommend reductions to close a projected City General Fund deficit
of $77 million and five-year Redevelopment Capital Improvement Program
that reflects no new projects.
The proposed budget reductions are necessary to address the lower revenues
caused by the prolonged and severe regional and statewide economic downturn
that began in 2001. The proposals also contain contingency plans to address
additional shortfalls that could occur as a result of State budget actions
expected later this year.
The City's $2.5 billion 2003-2004 Proposed Operating Budget
successfully closes a $77 million budget shortfall through a combination
of reduced service levels, use of reserves, and fee increases. City Manager
Del Borgsdorf also recommended the elimination of 231 positions to balance
the budget.
Through aggressive cost cutting measures and a hiring freeze over the past
two years, however, the City successfully reduced the current projected
deficit by 9% and held more than 800 positions vacant - a number equivalent
to ten percent of the workforce.
The vacancies will help minimize the loss of jobs by providing flexibility
for reassignment, but they also mean that San José has in effect reduced
services in manu areas. Employees in eliminated positions who want to
remain with the City will have the opportunity to fill vacant positions
they are qualified for.
"The good news about this budget is we have been able to preserve
essential City services and the City Council's program priorities,"
said City Manager Del Borgsdorf in releasing his budget message. "Unfortunately,
there will be service reductions that our residents will notice, and these
would be just the tip of the iceberg if the State decides to take more
dollars from local government."
Despite recessionary challenges and no growth in projected tax revenues,
the Redevelopment Agency's proposed FY 2003-04 Operating and Capital Budget
and Five-Year Capital Improvement Program reflect the Agency's continuing
strong commitment to neighborhood improvements, affordable housing, economic
stimulus and job creation.
Redevelopment capital investments over the next five years total $740
million. This includes $250 million for housing development, $214 million
for neighborhood improvements, $195 million for public facilities, and
$81 million to support private investment in revitalization projects.
The Agency's budget also addresses a potential $19 million Educational
Revenue Augmentation Fund that may be required to be paid to the State
of California in response to the state budget crisis. The ERAF payment
would reduce the Agency's ability to produce affordable housing, make
neighborhood improvements, and assist economic recovery.
"Our budget is based on the best information we have to date,"
said SJRA Executive Director Susan Shick. "Affordable housing, neighborhood
improvements, and job creation continue to be our top priorities for San
José, and we have recommended a solid workplan that reflects that
commitment."
The City Council and Redevelopment Agency Board will hold two public
hearings on their budgets - the first on Tuesday, May 20, and a final
public hearing on Monday, June 9. The Council and Board will adopt a final
budget on June 17.
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