UPDATE: San Jose unveils $5 billion budget with surplus

San Jose’s final draft of its multi-billion dollar budget is out and Mayor Matt Mahan is sticking to his “back-to-basics” approach—prioritizing homelessness, crime and blight.

Mahan released his June budget message today, outlining how he plans to allocate the city’s $5.2 billion purse. The monthslong budget process started smoothly, with unanimous approval of his first draft released in March. But it has since been marred by political divide, upheaval from staff demanding raises and a contentious debate on how to spend affordable housing dollars. Councilmembers put forward 81 budget requests totaling $11.1 million to cover a wide range of community needs, about 60 of which the mayor incorporated.

“I was elected to challenge the status quo,” Mahan said at a news conference today. “Everybody should be sheltered and live indoors. Our city should not be nearly as dirty as it is today. And people want to feel safer in their neighborhoods and in our downtown. So that’s really what this budget focuses on.”

The San Jose City Council will vote on the budget June 13 to approve spending for the next fiscal year beginning in July.

San Jose will have an estimated $35.5 million surplus, but a shortfall is expected in 2024-25. Main sources of revenue for the city such as sales tax and airport services still look strong heading into next year, but persistent inflation threats, as well as the end of federal stimulus funds like the American Rescue Plan, threaten the city’s upward pattern of budget surpluses.

In preparation for these revenue losses, Mahan said there will inevitably be cuts to preserve San Jose’s core functions and tackle the city’s pervasive issues. Programs funded by a one-time infusion of federal dollars dispersed during the pandemic will slowly wind down over the next two years. This includes some contracts to nonprofits to provide meals for those food insecure, rental assistance programs and early education programs.

“It’s not that we don’t care, it’s that we’re figuring out how to manage a decline in revenue. And that requires tough trade-offs,” Mahan said.

The mayor also wants to set aside $18.8 million this year to combat a potential deficit the following year, in a continued attempt to protect the city from any financial pitfalls.

Homelessness

Mahan’s plans to tackle homelessness continue to be the most controversial part of his budget proposal. The mayor wants to divert dollars previously allocated for affordable housing development through Measure E and instead spend it on homeless shelters, also known as interim housing. He believes this is a humane and quick approach to getting homeless people off the streets and into temporary housing. However, the majority of homeless and housing advocates say affordable housing is the strongest long-term solution, so diverting dollars away delays the city’s ability to solve the homeless crisis at its core.

There are $137 million in Measure E dollars to be used over the next two years. In a new iteration of Measure E spending, Mahan plans to allocate $36 million to four approved affordable housing projects that will bring 595 homes. Mahan will also allocate $33.3 million to fund new affordable housing developments. The remaining dollars will be spent on homelessness solutions and services like interim housing development and more staffing to help house people.

“This is the least impactful trade-off I can find in our budget,” Mahan said. “When all is said and done, what’s the impact on affordable housing here, it’s about $23 million (lost).”

Mahan is also proposing an option to waive the supermajority vote, which is eight votes, required to change Measure E spending and instead wants to pass it with a regular majority vote, or six votes. This decision may stem from the pushback he received from at least three council members on his homelessness plan.

The mayor wants to continue funding San Jose Bridge with $5 million, which creates entry-level jobs for homeless individuals to help clean the city while providing job training and placement services. Another $5 million is going to homeless prevention services like the eviction help center. Diversion programs will also remain funded.

Mahan’s housing plan consists of allocating $50 million to fund immediate solutions to homelessness like interim housing, $50 million for new affordable housing projects and $36 million to fund previously approved affordable housing developments.

Crime 

The city’s police department, which has a budget of more than half a billion dollars and is the most expensive department, is set to receive more funding. As part of that funding boost, the mayor wants to create 31 new sworn and unsworn roles to “reduce response times, expand community policing and enhance investigative capacity” – a cost of $5 million. The department in recent years has faced a staffing shortage that city leaders have tried tackling through hiring initiatives, including $1.5 million in bonuses and higher wages.

The San Jose Police Department is also getting a renovated 911 dispatch station, as well as continued funding to operate its controversial automatic license plate readers. Critics doubt the readers are improving public safety and worry about data collected.

To deter crime in certain areas, Councilmember Peter Ortiz asked for $50,000 to put security cameras at the Alum Rock Village and another $60,000 to study the feasibility of adding lighting along the Mayfair pedestrian bridge, which Mahan said has become “a center of criminal and gang activity, including stabbings and intimidation of seniors.”

San Jose is also allocating $1.6 million to hire and train firefighter paramedics, which have also seen a decline in staffing.

The mayor wants to address unsafe roads. Last year, 65 people died from traffic collisions—a record-breaking high. More than $200,000 is allocated to improve street safety infrastructure and thousands more to add speed bumps to reduce speeding—the leading cause of traffic deaths.

Several youth programs will also be funded, many of which came at the requests of Ortiz and Councilmembers Bien Doan, Omar Torres and David Cohen.