City Manager Debra Figone said, "We have some very, very difficult discussions and decisions ahead. Those include what services we can afford to provide."
The cuts will be across the board and deeper than ever before, from senior centers and libraries to police and fire departments.
San Jose's population of more than a million people is currently served by a staff of 5,910 city workers. In one scenario, if the unions don't make pay concessions, the city would have to eliminate 1,193 positions or 20 percent of the workforce.
The cuts would not spare any department, including police, which have never before in the history of the city had to deal with layoffs. They may lose 350 positions. Police Chief Chris Moore said, "We're trying to maintain as much core service in the patrol, the 911 answering function as we can, but again, all other areas of the department, we are going to see significant cuts."
The mayor is asking every employee to take a 10 percent pay cut which the city manager calculates would save $38 million and protect up to 335 jobs. Before the study session began, about three dozen union members protested the call for employee concessions.
Disiree Gezzi said she has worked for the city for 13 years and makes $57,000 a year. She is a single mom raising two children and said a 10 percent pay cut would be devastating to her family. She suggests that there should be a sliding scale for concessions, with people who make more, giving up more to help solve the budget crisis.
"Going to the Goodwill, going here, going there is OK, but just not being able to provide for my children is going to be really hard," said Gezzi.
Mayor Chuck Reed said by far the biggest challenge is the runaway retirement benefits that threaten to erode virtually every city service. Mayor Reed said, "They are clearly out of control. We have to restrain them because we are just cutting services in order to pay for pensions and that's not a future city we want to live in."
The increased retirement costs in the coming budget alone amount to nearly $61 million of the $110 million. Negotiations with the 11 unions are underway, they began last month.
A balanced budget must be in place by July 1.