Santa Clara County warns of steep federal cuts as board adopts midyear budget adjustments

Santa Clara County supervisors approved a midyear budget package on Feb. 25 while county leaders warned that proposed congressional actions could produce large reductions in federal funding for Medicaid, SNAP and other programs that fund local safety-net services.

County Executive James Williams and newly arrived Budget Director Ezekiel Vega framed the midyear review as a two-track exercise: close a $37.7 million projected general-fund gap for fiscal 2025–26 and prepare contingency options if Congress moves forward with the cuts the House Republican budget resolution targets. “The current budgetary authority for the federal government expires on March 14,” County Executive James Williams said, describing a fast-moving process in Washington that could force deep federal spending reductions.

The midyear package that passed the board included adjustments to current-year spending, replenishment of a portion of the general-fund contingency, and the technical steps needed to bring Regional Medical Center onto the county books on April 1. Supervisors voted unanimously to adopt the midyear recommendations (5–0). The board also approved related salary ordinance changes and other implementing items.

Why it matters: roughly one-third of the county’s revenue is derived directly or indirectly from federal sources, officials said. County staff estimated roughly $2.9 billion in federal health‑related funding flows through the county annually — about $1.9 billion attributable to Medicaid programs alone — and noted that the House resolution charging appropriations committees to find nearly $880 billion in Medicaid savings would pose an existential threat to many county services.

What the county will do next: Vega told the board the administration will continue the regular recommended‑budget timetable while simultaneously preparing contingency options for the larger federal threat. Those materials will be brought forward in coming weeks and folded into the May budget workshops and the June adoption process. “We are taking a measured approach to balancing the budget,” Vega said, adding that departments were asked to identify 1.5% efficiencies where feasible and to prioritize preservation of core safety‑net services.

Discussion highlights: Supervisors emphasized transparency and outreach to the public and congressional offices. Supervisor Ellenberg urged residents and stakeholders to contact members of Congress; Supervisor Allenberg said the county must coordinate with business and community partners. Several members of the board asked administration to return in April with a menu of options — revenue, program reductions, and structural changes — in the event federal cuts materialize.

Votes at a glance: the board carried the consent calendar earlier in the morning (unanimous ayes) and later approved the midyear budget adjustments, salary ordinance changes and associated items (motion carried, 5–0). The board recorded the administration’s direction to continue work on options for the fiscal 2025–26 general fund gap and to report back.

What officials said: “Most of what’s been identified as possible targets … are things that counties run,” Williams said, pointing to Medicaid and SNAP as examples. Vega added the midyear adjustments were primarily corrective but acknowledged this fiscal year is unusual because the administration had to recommend cuts midyear to rebalance the general fund.

Looking ahead: supervisors asked administration to provide an April update tying the midyear adjustments, the pending federal picture and the larger strategic priorities that will guide budget decisions in May and June. The county also said it will continue targeted outreach to congressional offices on the local impacts of proposed federal cuts.