Click Here to Read the March Budget Message

Mayor Gonzales Releases
Budget Guideline

Focus on cost reductions to balance budget, minimize layoffs, and protect vital neighborhood services

San José  ---- In the face of looming budget deficits caused by the prolonged recession and the California budget crisis, San José Mayor Ron Gonzales has recommended to the City Council an aggressive approach to reduce costs, minimize layoffs, and protect vital public services as the city’s budget is prepared for the coming fiscal year.

Gonzales emphasized in his March budget message released today that the deep state and local economic recession will require an even greater commitment to the conservative fiscal strategy the city has used to ensure balanced budgets and high quality services.

“Especially in this time of extremely limited resources, governing means choosing – and we will have to make some extremely tough choices this year,” said the mayor.

“Even as we must cut costs, we also must continue to make smart investments that will keep our neighborhoods strong, our city safe, and help us return to prosperity.  .”

The mayor outlined his six budget priorities, which include building stronger neighborhoods; remaining the safest big city in America; helping children achieve success; building better transportation; sustaining a strong economy; and making city government work better.

Complicating the city’s budget decisions this year is the uncertainty caused by the severe state budget crisis and its potential negative impacts on communities throughout California. Until the Legislature and Governor approve the state budget later this year, the city council will not be able to determine how much of an impact there will be for San Jose.

Gonzales noted, however, that the city should anticipate a large share of the state’s budget burden will be shifted to cities and counties. 

As a result of the recession, the shortfall for San Jose’s General Fund is currently estimated to be nearly $72 million. Current state budget proposals could result in San Jose’s deficit increasing to approximately $130 million.  Last year San Jose General Fund revenues totaled $634 million, which means the projected deficit could be as much as 20 percent.  The General Fund covers the costs of basic services such as police and fire, parks, libraries, and street maintenance.

The Governor has also proposed shifting redevelopment tax revenues away from local investments to replace statewide education funding.  The impact of this proposal would eliminate the ability of the San Jose Redevelopment Agency to invest in affordable housing, neighborhood improvements, and economic stimulus and job creation.

In his budget message to the City Council and city administration, Gonzales set the framework for the preparation of the annual city budget that will be submitted in May for public and council review.  He called upon the city staff to present strategies and proposals that will achieve priority goals and services and make recommendations for specific reductions that will result in a balanced budget.

Because of the uncertainty of the state budget, he has asked the city staff to develop a plan of specific budget reductions that could be made when state budget impacts are known.  This would enable the city to take immediate steps to further reduce the budget without further review.

            Gonzales also said he has begun a positive discussion with representatives of city employee bargaining units to enlist their help in solving the deficit. He noted that the city’s senior management employees have already frozen salaries and performance bonuses and recommended that the city council approve a similar freeze for mayor and councilmember staffs in order to lead by example.

Each March the mayor makes recommendations to the City Council to provide direction for the preparation of the annual city budget.  The city manager will release the proposed budget in May for consideration and adoption by the Council in June after public hearings.

The City Council will consider the mayor’s proposed budget guidelines next Tuesday, March 25, at its regular meeting that starts at 1:30 p.m.