San Jose mayor unveils plan to address city's $60M budget deficit

SAN JOSE, Calif. - San Jose's mayor and council members, on Tuesday, grappled with a problem impacting all three of the Bay Area's largest cities: Necessary belt tightening due to a projected budget shortfall.

"Rather than having Groundhog's day every year, we need to simply embrace reality," said Mayor Matt Mahan, (D) San Jose, as he stood in his office on the 18th floor of City Hall.

He said that the reality is the city doesn't have enough money to meet its projected obligations for the fiscal year 2025-26. Sluggish sales tax receipts, which are down about 11%, coupled with inflation, are cited as causes.

"A lot of people moving, a lot of changes, a lot of expenses, inflation. They are spending more than they've budgeted," said Prof. James Mohs, an accounting lecturer at the Univ. of New Haven.

San Jose Mayor Matt Mahan accepts the Super Bowl 60 torch from New Orleans. Feb. 10, 2025. 

The mayor believed a projected $60 million shortfall can be cut by 2/3 by changing the use of Measure E funds.

Enacted in 2020, Measure E is a tax on the transfer of properties above $2 million, and funds permanent affordable housing construction and supports services and interim housing for the city's 6,340 unhoused residents. Mahan hopes for a council vote to earmark the funds for interim housing.

"It's a policy decision. If we make permanent the measure E decision we made last year, we do not have two-thirds of the projected deficit. That's a simple vote of the council," he said.

Advocates for the unhoused are split on the plan. Some said more spending on immediate needs will save more lives. Others fear not staying focused on long-term permanent housing will leave groups of people without a place to go in an area where the average home costs approximately $2 million.

"I don't agree with Mayor Mahan on a lot of things, but this one I do," said Todd Langston of Agape Silicon Valley. "Letting them stay out there in the fields and on the streets is inhumane. We have a humanitarian crisis, and we have to act accordingly."

Ray Bramson, COO for Destination Home countered, "For those working families, for the veterans, for the aging seniors, affordable housing really is the only solution....and we can't cut off one just to provide the other, because we know at the end of the day people do need a place to call home."

If the change is made, the city will still have a shortfall of $20M. Mayor Mahan said he hopes to close that game without having to lay off city employees and instead rely on greater operational efficiencies. But experts warn cuts will have to be made somewhere in the budget.

Jesse Gary is a reporter based in the station's South Bay bureau. Follow him on the Instagram platform, @jessegontv and on Facebook, @JesseKTVU

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