Silicon Valley agency freezes hiring amid deficit

Silicon Valley’s main water supplier is tightening its wallet in the face of a structural deficit and in an effort to keep water rates from rising.

Santa Clara Valley Water District officials have frozen hiring for 72 job vacancies amid a $222 million budget deficit for the current fiscal year ending in June. The skyrocketing price tags for projects like the Andersen Dam and Pacheco Reservoir expansion, in addition to the rising cost of cleaning waterways polluted by unhoused residents, are the cause for the ballooning shortfall expected to increase to $300 million in 2024-25 and $350 million the following fiscal year, according to a March Valley Water presentation.

The hiring freeze, along with the delay of major capital projects and consolidation of office space at the water district’s San Jose headquarters, are an effort to keep water rates down.

“(The hiring freeze) comes as we face an era of essential investment to ensure our water infrastructure can supply water now and into the future for our kids and grandkids,”  Valley Water CEO Rick Callender told San José Spotlight.

Water officials have put a focus on infrastructure projects like dams as hotter and drier weather conditions threaten the region’s future water supply. But as budget discussions ramp up, Board Director Barbara Keegan says it’s time to take a serious look at which projects can wait before the district throws around money.

“I think the Pacheco Dam project for example is going to be very difficult to get implemented and get permits for. We’re spending almost $1.5 million a month on it,” Keegan told San José Spotlight. “That’s a lot of money that could employ a lot of people. I think we need to take a critical look at our capital improvement projects and identify where we can make cuts.”

Valley Water has already put other major projects on hold to accommodate the budget, including plans for a water purification facility in Palo Alto that will be revisited in two years. Spokesperson Matt Keller said plans for a restoration project at Lower Llagas Creek to reduce flood risk are also being delayed due to cost.

The water district wants to expand Pacheco Reservoir’s capacity from 5,500-acre feet of water to 140,000-acre feet of water. Situated atop the remote Pacheco Pass in the county, the expansion project would require extensive geological and engineering work, which opponents claim would exacerbate environmental issues, flood private property and intrude on culturally significant land for local Indigenous tribes, including burial sites. The project’s estimated cost is $2.78 billion, but factoring financing and other contingencies could escalate the price tag to $5.5 billion.

Likewise, the projected cost of rebuilding Andersen Dam near Morgan Hill to prevent the uncontrolled release of hundreds of millions of gallons of water if the dam were to fail in an earthquake has gone from $648 million to $2.3 billion, according to the Mercury News.

Keegan said it doesn’t completely stop the water district from hiring new workers.

“It doesn’t mean you can’t fill the positions, they just have to be reviewed before you make decisions,” Keegan told San José Spotlight. “For example, an engineer working on a critical project — you might still want to fill that slot but before that you might look at if there is someone already working at the district who you can transfer over. The hiring freeze just puts a barrier in place.”

Homeless camps along the waterways are also driving up costs for Valley Water, which has spent millions in recent years cleaning up trash, debris and hazardous pollutants.

In the next fiscal year, Keller said Valley Water looks to spend $25 million to address the encampments.

“While this isn’t the whole reason behind the hiring freeze, it certainly is a major factor as we prioritize our budget while keeping costs as low as possible,” Keller told San José Spotlight.

Contact Brandon Pho at [email protected] or @brandonphooo on X, formerly known as Twitter.