San Jose City Council Budget Study Session on 2026-2027 Priorities - February 5, 2026

The San Jose City Council held a study session on February 5, 2026, to discuss the Preliminary General Fund Forecast and Budget Priorities for fiscal year 2026-2027. The session focused on setting priorities to address a projected ongoing general fund shortfall of $55 to $65 million. Mayor Matt Mahan opened the meeting, emphasizing that the session was about providing direction for the March budget message, not final decisions. City Manager Jennifer McGuire, Budget Director Jim Shannon, and Assistant City Manager Lee Wilcox presented an overview of economic conditions, revenue estimates, expenditure drivers, community priorities, and potential budget balancing strategies. Council members then shared their perspectives on service priorities, potential reductions, and structural changes. The meeting concluded with public comments.

Public Comments & Testimony

• Jeremy Baruse (Amigos de Guadalupe Center for Justice and Empowerment) urged the council to preserve $1 million in funding for immigration services, citing that individuals with legal representation are 10 times more likely to have positive outcomes. He noted recent victories and asked the city to fundraise for these services as Councilmember Ortiz is doing for the East San Jose revitalization plan.
• Ms. Rayan Mendoza (Amigos de Guadalupe) read a statement from a community member who feared speaking publicly due to immigration enforcement concerns. The statement requested that the city prioritize and fully fund the remaining $500,000 for immigration legal services, describing it as hope and protection for families.
• Shannon Zhang (Silicon Valley Council of Nonprofits/Real Coalition) praised the revised budget principles, especially transparency and public engagement, and urged the council to center racial equity commitments. She called for preserving services amidst the affordability crisis deepened by federal actions.
• Chris Rodriguez questioned the year-over-year increases in the police budget (now $600 million vs. $500 million five years ago) and suggested looking for efficiencies there to fund other priorities like immigration support.
• Heine Gonzales (Tetral Committee/SOMOS Mayfair) asked for investments in worker cooperatives to support excluded workers and create community wealth, especially in light of attacks on immigrant families.
• Demaris Estrada (SOMOS Mayfair) highlighted the need for dignified, sustainable, and healthy living conditions in East San Jose, noting that the benefits of Silicon Valley prosperity have not flowed to that community.
• Guadalupe Perez (Tetral Committee/SOMOS Mayfair) emphasized that excluded workers have contributed to economic growth but lack prosperity. She supported the East San Jose revitalization plan and called for economic justice and stability for workers.

Discussion Items

• Vice Mayor Foley emphasized focusing on core services (public safety, libraries, crossing guards, Vision Zero) and avoiding layoffs. She supported maintaining current focus areas and suggested exploring efficiencies, reducing duplicative services, and using one-time funds carefully. She also advocated for alternative funding for the automated speed camera program and offsetting any new programs with cuts.
• Councilmember Ortiz outlined priorities for East San Jose: public safety (maintaining Project HOPE and crime intervention), youth intervention (New Hope for Youth, City Peace Project), accountability for blighted properties, and affordability. She noted a soft commitment from philanthropic partners to fund half of the East San Jose Economic Revitalization Framework and asked the city to contribute the other half.
• Councilmember Candelas stressed protecting youth programming, placemaking (Viva Parks), library hours, and senior nutrition programs. He suggested finding efficiencies in the Beautify program and in encampment management/coordination with the county. He proposed adding a focus area on families, youth, and seniors.
• Councilmember Kamei emphasized community and public safety as top priorities. He urged awareness of state raids on local revenue (e.g., sales tax changes, ERAF litigation) and suggested exploring new revenue streams. He called for streamlining processes in code enforcement, parking enforcement, and other areas to reduce bureaucracy and improve efficiency.
• Councilmember Mulcahy advocated for focusing on top resident concerns: homelessness, traffic safety, cleanliness, public safety, and affordability. He supported evaluating programs by measurable outcomes and suggested scaling back or delaying initiatives that still need evaluation. He called for better interjurisdictional agreements to reduce wasted coordination costs, and urged using technology and partnerships to redesign programs. He questioned the relevance of historical headcount comparisons.
• Councilmember Campos emphasized youth intervention as part of community safety. She suggested narrowing the neighborhood cleanup focus area and refining the homelessness focus area to include prevention, as current EIH spending is unsustainable. She recommended preserving youth programs, libraries, and safe routes to schools. She called for rethinking the budget to address the affordability crisis and invest in children, families, and seniors.
• Councilmember Tordios highlighted the need for improving city bureaucracy efficiency, citing a previous "Bureaucracy Busters" program. He supported expanding ministerial permitting and streamlining code enforcement processes. He also encouraged technology investments in parking enforcement, traffic safety, and code enforcement to allow staff to do more with less.
• Councilmember Duan prioritized children and youth services (New Hope, City Peace Project), library services, affordable housing, and support for immigrant communities. He advocated for optimizing EIH services by speeding up transfers to permanent housing and holding other levels of government accountable for reimbursement.
• Councilmember Campos (additional remarks) again stressed the importance of effectuating the Children and Youth Master Plan and noted public comments supporting immigrant protections and climate goals. She challenged the council to reimagine a budget that reflects the affordability crisis.
• Councilmember Kamei (additional remarks) cautioned against cutting quality-of-life services like arts, music, and sports, and suggested a two-year transition for reductions to smooth impacts. He expressed optimism about upcoming events (city's 250th anniversary, Olympic soccer in 2027) and noted that the council has pushed for new revenue streams.
• Mayor Mahan closed the discussion by highlighting positive trends: a 37% increase in trust in City Hall, crime down over 20%, unsheltered homelessness down about a third, and strong resident satisfaction. He noted competitive advantages in power-ready sites for data centers and a growing experience economy. He thanked council members for their input and staff for their work.

Key Outcomes

• No formal votes or decisions were made; the session was designed to gather direction for the Mayor's March budget message.
• The Mayor and administration will use council feedback to inform the March budget message, which will be deliberated on March 17, 2026.
• The city will release a formal five-year forecast on March 2, 2026.
• The budget process will continue with study sessions, public hearings, and community budget meetings, leading to final adoption in late June 2026.
• Council members emphasized the need for a balanced approach that protects core services, finds efficiencies, minimizes layoffs, and uses two-year implementation where possible.