San Jose Mayor Matt Mahan’s March budget memo to the city leaders outlined significant financial headwinds in the 2026-27 budget cycle and beyond, while also outlining areas the administration plans to invest in technology.
Despite the somber fiscal outlook, the mayor noted several areas where technology will continue to be a priority.
In the March 9 letter, the mayor acknowledged the city’s $56 million general fund shortfall, noting that deficits are likely to continue through the 2030-31 budget cycle. The projected shortfall in that period is more than $69 million.
The already lean government, the mayor’s letter reads, means that any further reductions would likely come at the expense of service delivery, as a good portion of the city’s spending is non-discretionary.
“While these shortfalls look small as a percentage of the total General Fund budget, we know from the Feb. 5 City Council Study Session that only about two-thirds of spending is truly available for reduction in the following fiscal year,” the letter reads. “This means that we need to be clear-eyed about the trade-offs before us. The city manager will likely need to bring forward reduction proposals that touch a range of city services."
Among the many strategies the mayor outlined for the city manager was the use of one-time funding for “deferred infrastructure projects, technology investments and a limited suite of one-time service enhancements.”
Streamlining the “development services processes” was also identified as one of the mayor’s priorities, which would remove some of the barriers between departments and speed building projects. In this area, Mahan directed the city manager to “collaborate with the data fellow to develop permit transparency tools, such as permitting Gantt charts and target completion dates.”
Other directions from the mayor included the evaluation of AI-enabled monitoring enhancements through the city’s surveillance network to spot blight and strengthen enforcement efforts, as well as continued funding for the city’s Real Time Intelligence Center.
The council has until May 6 to submit cost estimate requests, and budget documents are due to the mayor’s office by May 21.
The full letter can be reviewed here.
San Jose Likely to Face Prolonged Multiyear Budget Shortfalls
The city is facing an estimated $69.2 million general fund shortfall during the next five years. Officials are considering ways to trim costs and streamline government services.
