SJ budget deficit soars to $60 million

November 21, 2008 7:40:40 AM PST
San Jose is now on the verge of cutting jobs and services after learning its budget deficit has soared to almost $60 million.

It's still too early in the budget projections to know what city departments and services will be affected and how many jobs could be cut, but what's clear is San Jose's financial hole is getting deeper.

When Mayor Chuck Reed took office last year, he declared chronic deficits "public enemy number-one." He's really going to be challenged now with more cuts needed and layoffs almost certain.

City leaders are facing a budget deficit that has ballooned from an estimated $42.5 million to $59.1 million for the 2009-2010 budget year.

The problem is revenue has dropped because of a decline in sales and property taxes, plus the city has substantial spending increases next year with health care and hiring more police officers, plus maintenance costs for new parks, libraries and fire stations.

In a search for solutions, San Jose's city manager says some employee groups have agreed to take lower raises. But some of the biggest cuts suggested would come through reduction or elimination of unspecified city services, layoffs and eliminating vacant positions.

Revenue ideas include raising business taxes and selling or leasing underused city land. The Bay Area's three largest cities are struggling with growing budget deficits; current figures in San Jose are $59.1 million, Oakland has a gap of $42 million, and San Francisco is grappling with a deficit that could exceed $90 million.

San Jose's city council is holding a budget 'Study Session' on December 5th to review expenditures, plus solutions for cuts and revenue.


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