{"id":1957,"date":"2026-06-12T23:07:03","date_gmt":"2026-06-12T23:07:03","guid":{"rendered":"https:\/\/nextcitydigest.com\/?p=1957"},"modified":"2026-06-12T23:07:03","modified_gmt":"2026-06-12T23:07:03","slug":"five-things-to-know-about-the-2026-san-jose-budget","status":"publish","type":"post","link":"https:\/\/nextcitydigest.com\/?p=1957","title":{"rendered":"Five things to know about the 2026 San Jose budget"},"content":{"rendered":"
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After months of contending with a $50.3 million shortfall, San Jose has approved its budget for the upcoming fiscal year starting July 1 \u2013 delivering a $5.5 billion spending plan that, while balanced, contains cuts that officials described as tough but necessary.<\/p>\n

Read more Officials warn a California ballot proposal changing voting thresholds on local tax initiatives could cost San Jose millions<\/a><\/p>\n

A city\u2019s annual spending plan is a roadmap for how it intends to deliver critical services against its available funds \u2013 some budget advocates call it a \u201cstatement of values.\u201d San Jose City Council unanimously approved the budget on June 9.<\/p>\n

Early in the process, residents across cultures and generations \u2013 including the most vulnerable among San Jose\u2019s 1 million residents \u2013 engaged with city leaders through study sessions and public hearings, asking them to protect immigrant services, homelessness initiatives and assistance for the rising cost of living.<\/p>\n

San Jose officials maintain that, despite the cuts, they were able to produce a budget that reflects those community priorities.<\/p>\n

Spending has dropped, but priority areas remain funded<\/strong><\/p>\n

The general fund approved this year was roughly $1.7 billion, about 13% less compared to last year. While the overall budget is $5.5 billion, the general fund represents the primary pool of money the City Council has direct discretion over when deciding which programs and services take priority.<\/p>\n

San Jose tracks its performance using five official \u201cfocus areas\u201d adopted by the City Council 2023, including improving community safety, reducing unsheltered homelessness, cleaning up neighborhood blight, building more housing, and growing the local economy.<\/p>\n

Among those five areas, spending has largely decreased. The only exception was public safety. The broader \u201cPublic Safety City Service Area\u201d \u2013 as it is officially called in the budget \u2013 actually saw an increase in planned spending, growing by about $24 million, or about 2.5%, this year.<\/p>\n

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A significant portion of that increased spending includes $5 million from one-time cash reserves to pay officers to cover empty shifts, and $1.9 million to buy back banked time off, among other expenses.<\/p>\n

The budget also introduced $764,000 for a fire department community paramedicine pilot program, highlighted by Mayor Matt Mahan in his June budget message, mainly to provide medical treatment primarily to unhoused residents wherever they are located. About $750,000 is allocated for an AI report-writing tool he said would improve police efficiency and eventually reduce costs.<\/p>\n

Cuts were targeted, no mass layoffs<\/strong><\/p>\n

While increasing spending simultaneously with making cuts might seem counterintuitive, it comes down to the source of the money. Many of the newly funded programs are largely one-time expenses paid for by tapping into temporary cash reserves. But to close the city\u2019s $50.3 million structural shortfall, the city was forced to cut programs that generally rely on long-term, ongoing funding.<\/p>\n

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To save money, among the many reductions, the budget deferred for two years the opening of a new police training center to save $778,000 and eliminated 85 city positions, the majority of which are currently vacant. Mahan noted that displaced workers will have opportunities to be reassigned to different roles within their departments.<\/p>\n

The budget also includes $5.4 million in cuts to homelessness-related programs, including suspending operations at the Taylor Street Safe Sleeping site starting in January.<\/p>\n

Additionally, the plan reduces general fund contributions to interim housing to save $1.25 million this year and scales back community events, reducing the popular Viva Calle open-streets event from three dates to two.<\/p>\n

However, a council-adopted amendment set aside $60,000 to explore creating a smaller version of the event, dubbed \u201cViva Callecita.\u201d<\/p>\n

Residents fought for the immigration defense fund and California Room \u2013 and they were saved<\/strong><\/p>\n

Read more Man\u2019s body found on UC Berkeley campus<\/a><\/p>\n

From April to June, the city of San Jose held town halls, study sessions and hearings to get feedback from residents on their priorities on the budget.<\/p>\n

Following community input, councilmembers introduced amendments to save two of the most heavily defended programs that faced reductions or restrictions. These included funding for immigration defense \u2013 originally proposed to be cut in half to $500,000 \u2013 and regular public access to the California Room, an important historic state archive at the Dr. Martin Luther King Jr. Main Library that was slated for reductions to save $388,000.<\/p>\n

Responding to community concerns regarding federal immigration activity, the council ultimately decided to fund the immigration defense at the full $1 million. Meanwhile, to keep the California Room open, the council approved bridge funding amounting to $245,000 to protect public access for the upcoming year.<\/p>\n

San Jose is not broke \u2013 but the budget remains fragile<\/strong><\/p>\n

While the city has money in its emergency reserves, the balance sits at just 4.9% of its day-to-day operating costs \u2013 falling well short of the City Council\u2019s 10% safety target. For a city with a $1.7 billion general fund, that means the ability to tap the checkbook for sudden, unexpected expenses is very limited right now.<\/p>\n

Several looming threats, however, could quickly strain the city\u2019s finances.<\/p>\n

Just this past week, city officials noted proposed changes to voting thresholds on local tax measures on the November statewide ballot could cost the city upwards of $100 million. Additionally, changes to card room regulations and a pending state audit on how Santa Clara County collects and disburses property taxes could cost the city a combined $65 million over the next several years.<\/p>\n

The city, meanwhile, still projects a deficit of $26.8 million, and $11.8 million the year after. While it expects surpluses after that, any sudden expenses, including those outside of the city\u2019s control, could threaten the city\u2019s fiscal stability.<\/p>\n

The city\u2019s next challenge: Raising funds while the cost of living is high<\/strong><\/p>\n

This precarious financial situation is mainly due to a combination of slowing revenues and rising costs, City Budget Director Jim Shannon previously told this news organization. Key funding sources, such as sales tax collections and property tax transfers, have slumped.<\/p>\n

Several residents who spoke at the budget hearing said they understood the need to raise money, but asked the council not to impose new taxes on residents.<\/p>\n

Some councilmembers agreed with that sentiment, while others acknowledged the financial burden on residents but noted that given the city\u2019s challenging financial status, all options should be considered.<\/p>\n

Mahan said his priority is focusing on economic growth to expand the city\u2019s tax base, rather than imposing new taxes that would further burden financially stressed residents.<\/p>\n

\u201cIn a moment where cost of living, and doing business is high, we have to compete to attract employers,\u201d he said. \u201cWe need to focus on growing the local economy.\u201d<\/p>\n

The mayor said this would entail supporting growing commercial corridors for small-business districts, while cutting down red tape and providing incentives for employers to locate in San Jose.<\/p>\n

\u201cThe best solution for preventing financial doom is to grow the economy to be able to grow our rainy day fund,\u201d he said.<\/p>\n

Read more Woman killed, suspect hospitalized after stabbing at San Jose apartment<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

San Jose City Council unanimously approved the $5.5 billion spending plan this month<\/p>\n","protected":false},"author":1,"featured_media":1956,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1957","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nFive things to know about the 2026 San Jose budget - Next City Digest<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nextcitydigest.com\/?p=1957\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Five things to know about the 2026 San Jose budget - Next City Digest\" \/>\n<meta property=\"og:description\" content=\"San Jose City Council unanimously approved the $5.5 billion spending plan this month\" \/>\n<meta property=\"og:url\" content=\"https:\/\/nextcitydigest.com\/?p=1957\" \/>\n<meta property=\"og:site_name\" content=\"Next City Digest\" \/>\n<meta property=\"article:published_time\" content=\"2026-06-12T23:07:03+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/#\\\/schema\\\/person\\\/13065d40d633843429ac57d4e5c06f9b\"},\"headline\":\"Five things to know about the 2026 San Jose budget\",\"datePublished\":\"2026-06-12T23:07:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957\"},\"wordCount\":1139,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/nextcitydigest.com\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/419767a1c485143402c47f6018fe438c.webp\",\"articleSection\":[\"Business\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957\",\"url\":\"https:\\\/\\\/nextcitydigest.com\\\/?p=1957\",\"name\":\"Five things to know about the 2026 San Jose budget - 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