SJ faces $61 million budget gap

March 17, 2009 6:30:38 PM PDT
San Jose is dealing with a budget deficit that rivals the financial turmoil it faced following the dot-com bust. Tuesday, the city council started a long budget process by looking at where it has been and where it needs to go.

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In 2007, San Jose faced a $16 million dollar budget shortfall. Today, those numbers are reversed and the budget gap is $61 million.

The recession hit the Valley hard, eating away at valuable property and sales tax revenue. Unemployment in the San Jose metropolitan area shot up 84 percent in the last year. Santa Clara's median home value plunged 35 percent and the glut of vacant office space soared 62 percent.

The mayor says layoffs among the city's nearly 7,000 employees are almost certain.

"We're discussing anything and everything that our unions think might be useful; everything from furloughs to wage freezes to reductions," Mayor Chuck Reed said.

San Jose will be getting about $40 million in federal stimulus money but it is generally earmarked for new projects and will not help solve the budget shortfall.

The city has vowed public safety is a priority and even intends to hire more police officers. To do that at least one council member is suggesting the city try to finagle funds from the redevelopment agency, which has an annual budget of close to $500 million.

"We can be creative, we can use that in areas that are crucical for the constituents like libraries, parks and public safety," City Council member Nora Campos said.

The city attorney warned redevelopment money has legal strings attached and is hard to redirect. Still, the council agreed on one thing Tuesday: it must remain open to all possibilities.

"I think we need to do is hold back from taking hard positions on sacred cows right now. Let's put everything on the table," City Council member Sam Liccardo said.

Like the state budget process, the end result will be a painful mix of service cuts and fee increases. The council's budget discussion continues next Tuesday. A draft budget is due out in May.

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