Pefley: State and City budget realities mean tax increase requests are just around the corner
State Assembly 28 candidate Carol Pefley takes a look at SJ and State budget maneuvers, and notes that systemic shortfalls aren't being solved, She predicts new tax proposals are likely on the horizon.
While initially anticipating a $60 million dollar shortfall, the SJ City budget deficit has been cut in half to $35.6 by reallocating $39.2 million of Measure E funds meant for affordable housing, to homeless services and temporary shelters.
Measure E is a real property transfer tax increase approved by voters in 2020 for long-term affordable housing solutions and only 15% of the funds were originally intended to be used for temporary housing.
Protestors rallied outside of City Hall Tuesday with concerns about the redirecting of Measure E funds and the Mayor’s new plan to deal with the homeless issue.
While many are not happy with the strategy of reallocating these funds, it does help the city avoid any major cuts in public safety for the San Jose Police and Fire Departments which was a big concern for many San Jose residents.
Other cities are facing similar budget challenges. Sacramento, dealing with a $62 million deficit, has proposed eliminating 12 filled city staff positions and about 70 vacant ones, including 23 from the police department. The city has also increased fire prevention fees, some 100%, to maintain fire department services. Meanwhile, Los Angeles is confronting a nearly $1 billion shortfall, prompting Mayor Karen Bass to propose layoffs for more than 1,600 city workers.
At the state level, California is grappling with a $47 billion budget deficit, driven by soaring wildfire recovery costs, higher labor expenses, and declining tax revenues. Governor Gavin Newsom’s 2025-26 budget proposal does not include major tax increases or new fees to address the shortfall. Instead, the state is relying on reserve funds, spending reductions, and an 8% reduction in the California State University system’s budget to balance the budget. Newsom has been strategically positioning himself as a national leader by emphasizing California’s economic resilience, climate policies, and social programs which is a little ironic since these are some of the very issues contributing to the budget shortfall.
Experts say the proposed cuts and juggling of funds and resources will not be enough to bridge the gap so what does this mean for the average citizen who is just trying to make ends meet? Eventually more tax increases, more fees, less services as costs for wildfire recovery, healthcare, and education continue to rise. Welcome to California.
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