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News Release: City of San Jose Releases 2020-2021 Proposed Operating Budget

Post Date:05/12/2020 6:30 PM

Office of the City Manager

For Immediate Release

Contact
Rosario Neaves, Director of Communications, City of San José
408-535-7777; EOC_PIO@sanjoseca.gov

City of San Jose Releases 2020-2021 Proposed Operating Budget
Impacts of COVID-19 global pandemic results in significant revenue declines; estimated General Fund budget shortfall of $71.6 million projected

SAN JOSE, Calif. (May 12, 2020) – The City of San Jose has released its Proposed Operating Budget for the upcoming 2020-2021 fiscal year. The Proposed Budget forecasts a General Fund budget shortfall of roughly $72 million and shortfalls in several other funds based on anticipated severe revenue declines – especially sales tax revenues – from the impacts of the COVID-19 public health emergency. In fact, General Fund revenues are forecast to drop 9 percent compared to 2018-2019 actuals, marking more substantial decreases than experienced during the Great Recession and Dotcom Bust.

“I am proud of the way the city responded to the health crisis that we have all faced. Now we find ourselves having to address a budget crisis with unprecedented revenue losses,” said Dave Sykes, San Jose City Manager. “Undoubtably more difficult decisions lie ahead as we work through a long road to recovery. At this point we have done our best to put forward a budget proposal that responsibly addresses the impacts we can currently project, but delays decisions about more severe impacts to our community and our workforce until a time when we understand the full impacts of the revenue losses.”

The City’s $4.1 billion 2020-2021 Proposed Operating Budget successfully closes a $71.6 million General Fund shortfall through a combination of a limited number of new revenue sources, expenditure reductions, and the strategic use of reserves and other one-time dollars. The recommendations include decreases to position levels throughout the organization. Overall, the level of staffing will decrease by a net 103 positions, from 6,647 full-time positions in the 2019-2020 Adopted Budget to 6,544 positions in the 2020-2021 Proposed Budget. No employee layoffs are anticipated at this stage because of the City’s high position vacancy rate, although some limit dated positions will expire on June 30, 2020, as previously planned.

A contingency plan has also been developed in the event that City revenues decline further than anticipated. If needed, another $12 million in expenditure reductions, including 75 more position eliminations, have been identified. These contingency proposals would only be brought forward in early fall for City Council consideration once more data has been received that indicates worsened economic conditions.

The City Manager’s Proposed Budget balancing strategy resolves the shortfall through a mix of ongoing and one-time solutions, mindful of: 1) the need to make ongoing service reductions driven by a significantly weakened economic environment; 2) City Council and community priorities with the understanding that service reductions can have disproportionate impacts within our community; 3) minimizing employee layoffs; and 4) the uncertainty of the medium to long-term impacts of COVID-19 and the corresponding need to preserve capacity for core service delivery. For more details on major budget recommendations, please refer to the City Manager’s 2020-2021 Budget Message.

“San Jose residents are struggling mightily in today’s COVID economy, and we must do all we can to lift our neighbors to higher ground,” said Mayor Sam Liccardo. “The public’s participation in in the budget process is vital. We encourage you to participate by attending one of the four community budget meetings this week along with upcoming public hearings and City Council Study Sessions.”

There are many opportunities for public input on this budget. The City Council will hold Study Sessions May 14 and May 15 to discuss the Proposed Budget. Public Hearings are scheduled for May 21 and June 15. Community Budget Meetings also are scheduled for this week:

 Community Budget Meetings
 May 13 6:00 p.m. – 8:00 p.m.
 May 16 10:00 a.m. – 12:00 p.m.
 May 18 6:00 p.m. – 8:00 p.m.
 May 20 6:00 p.m. – 8:00 p.m.

The City Council is scheduled to finalize and approve the budget on June 16, 2020 with formal adoption on June 23, 2020.

About the City of San José
With more than one million residents, San José is one of the most diverse large cities in the United States and is Northern California’s largest city and the 10th largest city in the nation. San José’s transformation into a global innovation center has resulted in one of the largest concentrations of technology companies and expertise in the world. In 2011, the City adopted Envision San José 2040, a long-term growth plan that sets forth a vision and a comprehensive road map to guide the City’s anticipated growth through the year 2040.

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