Outside the rotunda at San Jose City Hall
San Jose City Hall is pictured in this file photo.

A looming budget shortfall in San Jose means looming threats of layoffs at City Hall.

San Jose is facing a nearly $52.1 million shortfall this year and will have to find ways to cut costs while preserving city services. City officials have been clear that cutting vacant positions will be part of the approach. What hasn’t been clear is whether some filled position will be cut.

Carolina Camarena, spokesperson for the city manager’s office, said the city has a number of strategies to bring San Jose’s budget into structural alignment.

“Some of these strategies include the expiration of (temporary positions), the elimination of some vacant positions and the elimination of a small number of filled positions,” Camarena told San José Spotlight. “The human resources department will be working to find positions for all those that are impacted, likely avoiding any layoffs.”

It’s not clear how many filled positions will be cut, in which departments and where an employee will be moved to.

“The proposed numbers will be available when the proposed operating budget comes out later next week and would still be subject to final approval by the City Council in June,” Camarena said.

The city manager’s office is expected to provide its May budget message around May 1 and employees are expected to hear about potential job changes or layoffs next week, Director of Employee Relations Jennifer Schembri told San José Spotlight.

Budget Director Jim Shannon said there will be a “handful” of filled positions that will be cut, along with several vacant positions that have been empty for years, so it shouldn’t significantly affect city services.

“There’s always a little bit of stuff we could do to trim costs and efficiencies that don’t result in big service impacts, and so we’re going to identify some of those,” Shannon told San José Spotlight. “But our gap is big enough that we’re going to have to look at eliminating or reducing some current service levels throughout the (city).”

Shannon said San Jose is facing a structural shortfall is for a number of reasons — but essentially revenue growth is not keeping up with expenses.

The local economy is slowing, in line with national trends, Mayor Matt Mahan wrote in his budget message earlier this year. Key sources of city funding such as sales and property taxes are projected to grow — but at a slower rate — over the next five years.

This will be offset in part by the city’s higher operating costs because of pay raises given to union workers last year. The agreement increases compensation by $25.3 million and retirement contributions by $14.3 million. San Jose’s investments in temporary homeless housing are also projected to increase by $25 million.

In addition to lower revenues, San Jose will have to dish out $25 million to clear out an estimated 1,000 homeless people from encampments along creeks and rivers by June in response to a mandate by the San Francisco Bay Regional Water Quality Control Board. If the city fails to do so, it could face litigation and $60,000 in daily fines per pollutant.

On top of all that, there are a number of one-time project costs from the current fiscal year Mahan hopes to carry over into next fiscal year — including trail patrols along Coyote Creek and the Guadalupe River and homeless and blight services through BeautifySJ — that cost an additional $23 million.

Mahan’s priorities for this next fiscal year are addressing street homelessness and blight, increasing public safety and to bring more businesses into San Jose.

Contact Jana Kadah at [email protected] or follow @Jana_Kadah on X, formerly known as Twitter.

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