As the city copes with the ongoing economic impacts of the coronavirus outbreak, San Jose Mayor Sam Liccardo announced in his recent budget message that he wants to shift public dollars to prioritize housing and homelessness, while cutting back on city spending in the event of an economic downturn.
The mayor’s budget message, which was unanimously approved Tuesday, commenced a series of budget discussions that will lay the groundwork before lawmakers adopt a final budget in June.
Amid the rapid spread of the virus, city leaders on Tuesday discussed the uncertainty the city faces as it continues to mitigate the effects the virus will have on the economy, but disagreed on how to approach budget cuts — especially when it comes to policies focused on equity.
“We find ourselves in a different place than we did just a week ago,” City Manager Dave Sykes said. “The economic conditions that we had factored into the February forecast are just radically different than now — it is important that we acknowledge all of that as we go through this budget process.”
Expecting a recession, Liccardo in his message proposed separating the city’s spending priorities into three tiers to soften the blow, guided under four principles: Long-term saving, avoiding ongoing general fund obligations, focusing on highest priorities and leveraging other resources.
Tier one projects will focus on boosting “fiscal resilience,” which means building the city’s reserves, limiting public spending to one-time expenditures, bolstering the city’s credit rating, freeing city-owned land from restrictions imposed by creditors, while saving and paying down debt to reduce reliance on the general fund. Tier two projects will focus on housing and homelessness solutions, funded by revenue generated through Measure E.
“I always appreciate the fact that you take the fiscally conservative approach,” Councilmember Dev Davis told the mayor. “You always take a look at what our downside risk is and how we can mitigate the downside risk for our residents.”
While many councilmembers applauded the mayor’s efforts, several raised concerns about shelving proposals to peg public dollars for an equity fund, which has been shelved in the mayor’s plan until tier one and two projects have been completed.
“I appreciate saving money and using Measure E funds,” Councilmember Maya Esparza said. “But I also wanted to raise the issue about equity. In the last recession we didn’t really take equity into consideration when we made cuts in our city.”
The mayor’s budget passed last June on a split 6-5 vote because some elected leaders felt it didn’t go far enough to address racial and economic inequities and to equitably distribute public resources to struggling neighborhoods in San Jose. Some councilmembers may not be happy if this year’s budget does not go far enough to address the same equity concerns again, fearing budget cuts will negatively affect low income residents and people of color the most.
Councilmember Sylvia Arenas said Tuesday that ensuring that services such as child care are available to vulnerable residents and protecting children from sexual assault remain at the forefront of the city’s agenda.
“I would really hate for this crisis to give opportunity — because it is a crime of opportunity — to some of these folks to continue to increase this trend upward for our children of color,” Arenas said of rising sexual assault cases among children.
“Equity is even more important now especially if were going to talk about budget cuts than it would be if we talked about a budget surplus,” Councilmember Raul Peralez added.
But the mayor said approving tier three projects would occur on a “contingent” basis and only if the coronavirus pandemic improves in the coming weeks or if there is a non-general fund source for the proposal. Still, the reality of those proposals moving forward is bleak, he added, as the city uses funds to mitigate the effects of the outbreak.
“As far as I know, certainly we have the need, but I don’t expect we’ll have the resources to make those kinds of decisions,” Liccardo said.
Those tier three proposals will ultimately be approved in June, when lawmakers OK the final budget for the next fiscal year.
The second tier of his plan, focused on building new affordable housing and funding homelessness solutions, include programs such as building interim housing including and tiny home communities, helping homeless students, unemployed homeless secure work and increasing ‘granny units.’
The mayor has also proposed tripling the city’s current commitment of $3 million toward its homeless prevention program, bringing the total to $9 million.
Ray Bramson, chief impact officer at Destination: Home, told San José Spotlight he’s excited to see more funds prioritized for homeless prevention services.
“We’ve seen already since the program’s launch a few years ago that it is effective in preventing homelessness — it’s providing an immediate response to a growing demand in our communities,” he said.
Additional proposals that have been shelved include accelerating more affordable housing production, cleaning up blight, encouraging community art and culture as well as digital innovation. Once the coronavirus pandemic subsides, the mayor supports moving forward with restoring key city services, such as increasing police and firefighter staffing and addressing gun violence.
The City Manager’s Office will formulate its budget in May before councilors approve the final budget in June.
Editor’s Note: Jennifer Loving, executive director of Destination: Home, serves on San José Spotlight’s Board of Directors.