San Jose council approves midyear budget adjustments after warning of $25M–$30M sales‑tax shortfall

San Jose City Council on Feb. 11 approved a midyear budget review for fiscal year 2024–25 that recognizes new grants and reimbursements, increases several cost lines and draws on the budget stabilization reserve after staff projected a $25 million to $30 million sales‑tax shortfall.

The midyear package, presented by Jim Shannon of the city budget office, includes recognizing $9 million in state revenue tied to the Cherry EIH agreement, a forthcoming insurance payment tied to the History Park fire, and a set of technical adjustments for operating and capital funds. The council voted 10–1 to adopt the staff recommendations; Councilmember Kamay voted no.

City staff said the shortfall stems largely from weak sales‑tax receipts through the first quarter of collections, with staff noting only one quarter of payments (July–September) was available at the time of the report and that most retail sectors and business‑to‑business receipts were down. Jim Shannon, budget office staff, told the council that the administration is projecting a tentative $25 million to $30 million shortfall in sales tax for 2024–25 but is relying on expenditure savings and reserves to end the year balanced.

Shannon said ongoing expenditures are currently tracking to…