Dmitriy Grigoryev CC-BY-SA 3.0
As COVID-19 continues to wreak economic havoc, budget challenges are becoming clearer for cities in Santa Clara County.
At least four cities within the county—Milpitas, Santa Clara, San Jose, and Gilroy—have acknowledged budget shortfalls and are weighing different options to make up the deficits. Here’s how it’s looking for each city.
San Jose: Rachel Leven noted in a May 3 piece for San Jose Spotlight on economic anxieties for businesses and local leaders that the city “has gone from expecting a $25 million budget surplus to a $45 million budget deficit in the past month.” Days before this, the San Jose Mercury News reported that the city would furlough more than 1,000 employees and make budget cuts to cover the deficit.
San Jose has already been facing a tight situation financially, with a Santa Clara County Grand Jury report last year noting that San Jose had more than $3.4 billion in unfunded pension liabilities and that pensions would command $340 million annually from the city’s General Fund.
It is unclear if the city will attempt to renegotiate its pension obligations with claimants or the California Public Employees Retirement System.
Gilroy: A report from interim city finance director Bryce Atkins found that Gilroy could face an $11.3 million shortfall over the next two years, including losing nearly 30 percent of its sales tax revenue this year, according to the Gilroy Dispatch.
The paper noted that the report “presented a list of projects that could be delayed to save the city $7.1 million,” including postponing construction of a fire station and downtown parking lot and holding off on Sports Park expansion.
Milpitas: The Silicon Valley Business Journal reported in late March that Milpitas city officials forecasted a potential $20 million budget shortfall over the next 16 months.
At the time, the city put out a statement saying it would “review all expenditures and defer equipment and capital expenditures to the extent possible” and that "the remaining shortfall will be addressed with expected savings from the current year and use of the Budget Stabilization Reserve.”
At its April 21 meeting, though, the Milpitas City Council began to explore another potential solution: easing a city-wide ban on cannabis business and placing a cannabis tax on the November 2020 ballot.
The exploration didn’t come without controversy, with Councilwoman Karina Dominguez asking if Councilman Anthony Phan were a marijuana lobbyist and Phan replying that he wasn’t and threatening to take legal action if Dominguez brought it up again.
The council didn’t take action at the meeting to move forward with a ballot initiative, though it left the matter open for discussion at future meetings.
Santa Clara: Milpitas isn’t the only local city that has considered easing cannabis restrictions amidst the uncertain economic climate, with the Santa Clara Planning Commission last month reviewing a moratorium passed in 2019 on dispensaries within the city.
The consideration during an April 8 virtual meeting spurred much discussion, with a motion to prohibit all cannabis business in the city ultimately failing 4-3. The commission is slated to take another look in February 2021, according to the Silicon Valley Voice.
The commission met a week after Santa Clara City Manager Deanna Santana told the council that COVID-19 had increased the city’s deficit to between $8 million and $10 million this year and as much as $22 million next year.
