Every year, San Jose approves its operational budget. But what does it mean in terms of the city’s day-to-day operations — and how can the average resident understand the city’s budget documents?
“Most folks may not realize how much information is in these budget documents,” said San Jose Budget Director Jim Shannon. “The city tries to be as transparent as possible in its governance, so there is a lot of information to digest.”
San Jose Mayor Sam Liccardo issued his budget message in March, which focused on job creation and housing. But the budget process for 2021 began months earlier — and in the year following the rise of the global coronavirus pandemic, the question of where to allocate funds remains contentious.
“It is chaos,” said Jean Dresden, a volunteer with San Jose Parks Advocates. “It’s going to be hard for the City Council and staff to figure out where to put resources in such a fluid situation.”
The operating budget focuses on the costs of the city’s day-to-day services. San Jose’s $4.8 billion operating budget for the 2020-2021 fiscal year — which began on July 1, 2020 and ends on June 30, 2021 — was approved by the City Council in May based on revenue projections of $1 billion for the general fund, which can be used for any purpose.
“This is the city’s primary source of funds to pay for the services that people often associate with city government, such as libraries, parks, community centers and public safety,” Shannon said. “Because the need for services is so great, a significant amount of attention is paid to the general fund during the budget development process.”
City officials also estimated $2.6 billion in revenue from special funds, which are drawn from narrowly applied fees and taxes and dedicated to specific purposes.
“Revenues collected from the sanitary sewer bill can only be used to operate and maintain the sanitary sewer system and wastewater treatment plant, and revenues generated from the airport can only be used to operate and maintain airport facilities,” Shannon said.
The city’s Budget Office is now developing its proposal for the 2021-2022 fiscal year, which it plans to release on May 3, according to budget specialist Kris Rath. The budget process typically begins in October, when the Budget Office surveys residents and the City Council reviews the city’s financial condition, according to the city’s budget timeline. In November and December, the office forecasts general fund revenues for the following year, and solicits budget proposals from each department.
Jill Bourne, director of the San Jose Public Library, said her department may need to make further cuts to services on top of what was enacted last year. Under the current budget, the city’s libraries will need to reduce operating hours by an average of four hours a week at each branch when they reopen.
“Last year, during the budget process, there was the first of two tiers of (service) reductions caused by the pandemic,” Bourne said, referring to the reduction in service hours. “When a library is no longer open — it’s a loss to the community.”
For the next year’s budget, Shannon said the city is facing a $48.1 revenue shortfall for the general fund. The city will receive $220 million from the American Rescue Plan signed by President Joe Biden on March 11. But even with this one-time funding, the city still needs to address the problems that created the shortfall, which will impact the budget in future years.
The anticipated $48.1 million shortfall comes as cities across the state faced an “unprecedented” decline in tax revenues during the pandemic while businesses were shuttered.
The city’s budget for the next fiscal year includes the $25.7 million shortfall carried over from the current fiscal year, according to San Jose’s budget forecast. San Jose’s revenues in the 2019-2020 fiscal year fell sharply due to declines in sales taxes, transient occupancy (hotel) taxes, business taxes, fines, forfeitures and penalties, while costs remained high.
Dresden said it’s important for people to keep in mind that while some city services have been paused during the pandemic, departments still use funding in other ways. For example, while the Parks Department is not operating community centers, its employees are fulfilling other needs.
“What’s taken front-and center in terms of visibility are vaccinations and food distribution… but who do you think are the people out there helping to make sure those testing sites had nice lines set up?” Dresden said. “Some are volunteers, but the person who brought the signs and the tape and the plan… those are (parks) employees.”
San Jose police and fire departments use the greatest amount of general fund dollars, and were allocated $455 million and $243 million respectively in the adopted budget for 2020-2021. The police department budget was $446 million in the previous fiscal year; the fire department’s was $242 million.
Parks, Recreation and Neighborhood Services was allocated $82 million, down from $92 million in 2019, while the Transportation Department was allocated $37 million. Its budget the previous fiscal year was $38 million.
The city’s Planning, Building and Code Enforcement Department saw a reduction in its budget from $62 million to about $16 million between the 2019 and 2020 fiscal years, though city officials said that’s because certain development fees were moved out of the general fund.
Libraries and Public Works were each allocated $36 million, with the latter department taking a cut of $13.4 million from the previous fiscal year. Libraries didn’t face any major cuts in the adopted budget from the prior fiscal year.
Bourne said she was encouraged by the public engagement in last year’s budget process, which was made more accessible in some ways due to COVID-19 restrictions moving all meetings online. She said it’s important for residents to make their priorities known to the City Council and city officials.
“A lot of city staffers like myself are there to answer questions,” Bourne said. “Getting involved, and making sure that your priorities are heard is really important.”
Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.