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Eliminating the Structural Budget Deficit
For the past decade, San José has confronted ongoing budget deficits that threaten the City's ability to deliver basic services throughout the community. In FY 2010-11 and FY 2011-12, these General Fund deficits surpassed $100 million each, forcing City leaders to make the deepest and most painful cuts yet.
This is why Mayor Reed said in his first State of the City Address:
“We cannot become a great city unless we eliminate our structural budget deficit. That is our greatest challenge. The budget deficit is public enemy number one, an enemy that will steal our hopes and kill our dreams of becoming a great city if we ignore it.”
While the City is expecting a small surplus for FY 2012-13, it has projected yet another significant budget deficit in the year after that.
In order to preserve core city services and eliminate these ongoing budget gaps, Mayor Reed has made it a top priority to:
- Bring the growth in employee costs under control. By June 2011, the City had achieved a 10% reduction in total compensation (from FY 2009-10 levels) for every employee, helping save hundreds of jobs and core services. Learn about the City's rising employee costs
- Pursue new service delivery models that reduce costs and improve efficiency. This has allowed the City to focus its limited resources on preserving core services that the community values and depends on most.
- Grow city revenues by recruiting new businesses and pursuing economic development projects that will expand the city’s tax base (read about the Mayor's economic initiatives). Mayor Reed also headed campaigns to update the City's telecommunication/911 fees and cardroom tax, helping preserve funding for vital services.
- Enact ongoing solutions that will help minimize future shortfalls – a stark contrast to our state legislature, which balances its budget with one-time fixes and smoke and mirrors. Mayor Reed's first three budget deficits were closed with more than 90% ongoing solutions. Even the FY 2010-2011 budget, which had the largest deficit in San José's history, included 83% ongoing solutions.
- Implement long-term fiscal reforms that address and eliminate the structural causes of the budget deficit, such as reforming retirement benefits for city employees. Learn more about the Mayor’s fiscal reforms
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City of San José
General Fund Deficits |
| FY 2002-03 |
- $46.3 million |
| FY 2003-04 |
- $92.1 million |
| FY 2004-05 |
- $81.7 million |
| FY 2005-06 |
- $58.0 million |
| FY 2006-07 |
- $34.9 million |
| FY 2007-08 |
- $19.9 million |
| FY 2008-09 |
- $29.6 million |
| FY 2009-10 |
- $84.2 million |
| FY 2010-11 |
- $118.5 million |
| FY 2011-12 |
- $115.1 million |
| FY 2012-13 |
+$10 million* |
| FY 2013-14 |
- $22.5 million |
*Note: the $10 million surplus that is projected for FY 2012-13 does not include more than $100 million in deferred road and infrastructure maintenance needs.
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Visit Mayor Reed's About the Budget Deficit webpage to learn about the causes and impacts of San José’s structural budget deficit.
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- November 2008