San Jose Mayor Matt Mahan has long said he wants elected officials and city leaders to be accountable for eliminating homelessness and improving public safety. That’s the centerpiece of his latest 2025-26 budget message.
Mahan released his annual March budget message alongside Vice Mayor Pam Foley Wednesday, which is focused on his usual core issues of reducing homelessness, crime and blight and improving the local economy — but he said this year’s budget will have stronger teeth. He talked about his “acts of accountability” initiative that would tie performance to pay raises for San Jose’s top officials. As part of his acts of accountability, Mahan said he wants to double the city’s shelter capacity, and use his performance pay policy as an incentive to open temporary homes as quickly as possible.
The San Jose City Council will discuss the budget message March 18, which will help the city manager’s office prepare proposals for final budget deliberations in May. The new fiscal year starts in July.
“Over the past two years we’ve achieved focus. We’ve gone from over 40 listed priorities, a big complex matrix, to four,” Mahan said Wednesday. “We’ve established dashboards to track our progress across these four priorities so that we know what’s working and what’s not. (If) the council approves the March budget message — the year ahead will be about execution, it’ll be about accountability.”
San Jose initially anticipated a budget shortfall of $39 million for the 2025-26 fiscal year, but that ballooned to $60 million in December. The increase was due in part to an 11% drop in sales tax revenue from the previous year. City officials reshuffled this fiscal year’s budget last month and agreed to a hiring freeze after deficits forced them to identify millions in savings.
Balancing the shortfall
In Mahan’s March 12 budget message, he said the 2025-26 fiscal year shortfall was reduced to $46 million, with a $53 million budget shortfall anticipated for the 2026-27 fiscal year. He’s asked the city manager and her budget office to take a two-year look to anticipate what changes need to be made.
Addressing homelessness has been the top issue for San Jose residents for the past four years, according to a city report released last month. The city and Santa Clara County run almost 3,000 shelter beds, but city officials say this is still not enough to house the 5,477 unsheltered homeless residents living in San Jose. The city has the fourth highest homeless population in the U.S.
“We’ll be taking a deep dive into our upfront construction and ongoing shelter operating costs, with the goal of reducing both by 20% so we can help more people get off our streets,” Mahan said. “We’ll be asking (Santa Clara County) to look at the fairgrounds once again with the goal of using the old RV park as a safe parking site.”
Mahan’s budget message comes after he unveiled his “Responsibility to Shelter” initiative to arrest homeless residents who choose not to accept shelter after three attempts within an 18-month period. He said Wednesday the initiative is among his “acts of accountability.”
His budget message also reflects using tens of millions in Measure E funding, meant for permanent affordable housing, to build up the city’s temporary shelter capacity.
“If the council embraces the common sense Measure E reform that we proposed in this March budget message, we will avoid any major service cuts or mass layoffs,” Mahan said.
Voters approved Measure E, a real estate property transfer tax, in 2020. The city council later apportioned 75% of funds for building affordable housing and 25% for temporary housing and homeless services.
“In the Measure E funds, there’s dedicated funds for prevention of homelessness of at least 10%,” Foley told San José Spotlight. “That’s an important component, helping people prevent actually getting into homelessness.”
Mahan’s proposal would change that dynamic, using $39 million toward homeless prevention, temporary housing and supportive services.
Despite the shortfall, Foley and Mahan said they want to explore opportunities to maximize available funding for the Vision Zero traffic safety infrastructure program.
Building temporary housing
The city already spends millions of dollars overseeing six tiny homes sites, two safe parking sites and hotels that have been converted into temporary housing. Operating costs are expected to climb as other temporary housing sites open this year, including the Cherry Avenue and Via del Oro tiny home sites and a safe sleeping site. A multi-story modular temporary housing complex for homeless families opened on Branham Lane last month.
Mahan told San José Spotlight the city is developing more than 1,000 beds for homeless residents this year, and is improving the quality of services at those sites so homeless residents stop choosing tents over shelters. He’s also pushing a program to bus homeless residents back to their families outside the region, known as Homeward Bound.
“We’re expanding job training to all of our interim housing sites, we asked the city manager to broaden out the San Jose bridge program to be available to anyone in an interim housing site,” he said. “We’re implementing Homeward Bound … the idea being not waiting to find a bed for you. If you have a loved one who might be able to take you in, we will work with you to help facilitate that.”
Mahan and Foley said they wanted to make sure San Jose is ready for the world stage in 2026, with the Super Bowl and FIFA World Cup coming to the area, which means continuing to invest in building up the city’s infrastructure through the 2025-26 budget.
“We are making improvements to the Guadalupe River Park, which is at the heart the park in the heart of our city, to the Plaza de Cesar Chavez, which can be used repeatedly for community gatherings and performances, but currently that stage has a pretty high barrier to use,” Mahan told San José Spotlight. “What we’re trying to do is position ourselves for lasting impact.”
Contact Vicente Vera at [email protected] or follow @VicenteJVera on X.
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