San Jose adopts 2025–26 operating and capital budgets; Measure E prevention allocation remains 10%

San Jose — The City Council approved the city’s 2025–26 operating and capital budgets and the schedule of fees and charges on June 10, and in a separate vote decided to retain the Measure E allocation that directs 10% of Measure E receipts toward homelessness prevention rather than increasing that share to 15%.

Measure E deliberations had dominated public comment and council discussion for two days. A coalition of councilmembers and community groups had urged boosting prevention investments, arguing it saves money over time by stopping people from falling into homelessness. A competing council memo and the mayor’s proposed budget urged maintaining the 10/90 allocation (10% prevention, 90% shelter/production/operations) on the grounds that scaling up interim housing operations and shelter capacity requires stable, ongoing resources; the staff recommendation maintained 10% and the council adopted that recommendation 8–3.

Budget director Jim Shannon briefed the council on the five‑year forecast and said shifting Measure E allocations would create ongoing gaps in future years. If the council moved 5 percentage points from operations to prevention permanently, staff warned it could increase the forecasted deficit in 2027–28 by roughly $40‑$47 million depending on revenue assumptions.

The budget package includes a multi‑pronged approach to homelessness: continued expansion of interim housing and safe‑parking capacity, additional permanent affordable housing funding (a $60 million NOFA for affordable housing in the current budget), and the standing 10% prevention allocation. Councilmembers who favored increasing prevention emphasized the escalating risk of federal cuts to housing vouchers and other programs.

The council adopted a set of related budget memos by consensus or separate votes to fund a mix of district priorities and city‑wide initiatives, including an initial $500,000 allocation for immigrant legal and emergency services with a direction to consider an additional $500,000 later if fiscal conditions allow; short‑term funding to keep two youth drop‑in programs open while the city seeks longer‑term operators; and funding to resume a transport resource (Med 30) on a limited—7‑month—basis, with direction to align longer‑term funding in the next budget cycle subject to revenue analysis.

After the Measure E vote the council approved the full 2025–26 operating and capital budget and fee schedules. That motion included the mayor’s June budget message direction and a number of council member memos folded in by agreement; the operating budget vote passed and the fees and capital allocations were also approved at the same meeting.

Ending: The council’s decision to preserve the 10% prevention allocation for Measure E and to approve the rest of the budget reflects the trade‑offs officials said they face between immediate shelter and operations needs and growing prevention demands. Several councilmembers pledged to continue seeking philanthropic and grant funds and to revisit prevention allocations at mid‑year or as revenues permit.