What could you do with $2 billion dollars? Two billion! No, that’s not a line from an Austin Powers movie. It’s the amount of money the city has stockpiled in its investment portfolio. This is money that could be used to protect essential services and lessen the pain small businesses are suffering during this crisis.
Since day one of the pandemic, elected and appointed leaders across our country have asked the public to dramatically change their lives, to sacrifice. From sheltering-in-place, to closing businesses to canceling weddings and graduations, life as we knew it changed. You have been asked to think differently. To act differently. We have asked you to do this to benefit the greater community. You should expect the same of your city leaders.
The San Jose City Council is working on its budget for the next fiscal year, and it is no easy task. As the council grapples with how to cope with the human and financial crisis created by the COVID-19 pandemic, we must look at every option available to find solutions to help people and minimize the pain of budget and service cuts. Cutting services and raising taxes should not be the only options on the table.
The city of San Jose is in an advantageous position to meet this challenge. We have $2 billion dollars that we can put a portion of to work to serve our residents.
The city’s investment portfolio of $2 billion is invested in many different ways. The city buys bonds of other local governments, invests in the U.S. federal government mortgage programs, and it even loans money to private corporations. In fact, right now, more than half a billion dollars has been lent to private companies with high credit ratings. The city’s investments are considered conservative, and so far, this fiscal year have yielded a 2.32% return generating more than $35 million in interest earnings.
If the city can invest in corporate America and the U.S. government, why can’t it invest in itself? The city has the ability to loan a small portion of this investment portfolio to its General Fund for a short period of time to help make ends meet while we adapt to the post COVID world. The General Fund is what pays for core city services, like police officers, fire fighters, librarians and is best suited to assist small businesses get back on their feet again.
How could this work? Simple. A loan agreement is created that details how much the loan will be for, the length of the loan, the schedule of repayments and the amount of interest charged to the General Fund so that the fund that lends the money receives interest just as if it was invested like the rest of the money in the investment pool. This process is legal and supported by California law and the City Council’s own policies. Gov. Gavin Newsom has proposed similar actions to balance California’s budget this year.
A relatively modest loan to the General Fund can mean we protect ourselves from longer police and fire response times to 9-1-1 calls, shuttered libraries and canceled programs to assist senior citizens. We can also plan on how to assist our struggling service industry small businesses, such as restaurants and retailers.
Unfortunately, some at City Hall only believe in cutting their way to a balanced budget. They do not want the public to know about the enormous stockpiles of cash we have that could be put to use to save services. That way of thinking led to the draconian budget cuts last decade, that decimated our police department and severely harmed our residents. We’re still recovering.
We believe it’s our duty to bring these options to the table. To anyone who refuses to even consider looking at this option, we have to ask, “We have asked everyone to think differently and to act differently because of the pandemic, why doesn’t that apply to our city government?”
So we ask, if you had $2 billion dollars that could help our residents and small businesses, what would you do with it?
Sergio Jimenez is a San Jose city councilmember elected in 2016 to represent District 2, spanning Edenvale, Santa Teresa and Coyote Valley. Paul Kelly is the president of the San Jose Police Officers Association.