San Jose proposes FY25–26 operating budget to close $35.6M shortfall; fewer than 15 positions affected

San Jose city officials presented a proposed FY2025–26 operating budget at a May 7 study session that they said fully resolves a $35.6 million general‑fund shortfall while reducing a projected FY26–27 deficit by roughly half.

The proposed budget, presented by the city manager and budget director, follows direction in the March budget message and seeks a mix of revenue measures, targeted service and cost reductions, and one‑time reserve use to produce a structurally balanced 25–26 operating plan. City leaders said the plan resolves the current year shortfall and positions the city to cut an anticipated second‑year gap from about $52.9 million to roughly $26 million.

The proposal matters because the general fund supports day‑to‑day city services such as public safety, neighborhood services and parks. Officials said sales and property tax performance and federal funding uncertainty are the largest external risks to the plan.

Budget director Jim Shannon said the five‑year forecast began with a $35.6 million general‑fund shortfall, revised down from the $45.7 million estimate published in February, but with an additional $52.9 million shortfall anticipated the following year. The presentation noted a cumulative two‑year shortfall near $89 million and a…