San José City Council Approves Budget Trims to Fund Worker Raises

The San José City Council on Tuesday gave its final approval to raises for thousands of municipal employees, finding trims in the city budget to pay for the wage increases.

The vote brought a close to a contentious bargaining process that nearly resulted in a historic strike by city workers last month. Council members acknowledged that the pay hikes for city employees could lead to growing budget shortfalls in the years ahead, but approved an agreement that avoids large cuts to city services in the current fiscal year.

“What we did here collectively as a council was push beyond our comfort zone,” said Councilmember David Cohen, who co-authored the budget agreement. “But it’s important, I believe, that our employees feel valued and are compensated as well as possible. We knew that whatever final agreement we came to, we would be dealing with budget cuts in the year ahead.”

Under the agreement, members of MEF-AFSCME Local 101 and IFPTE Local 21, which represent workers including city planners, code inspectors and librarians, will receive raises of at least 14.5% over three years.

That deal, along with a handful of smaller agreements with other bargaining units, will cost the city $13.8 million from the general fund in the current fiscal year. As a result, the council was forced to rebalance the city budget passed in June.

Mayor Matt Mahan was the lone vote against the agreement, arguing that the raises “are not within our projection or in line with our revenue.”

“We need to be very honest with ourselves and our community that we’re looking at some offsets that are not too painful this year, but if the projections hold and we don’t get lucky, it could be very painful over the next couple of years,” he added.

In the current fiscal year, the shortfall will largely be filled by tapping reserves, although the council also approved $2.8 million in cuts. These include reductions in funding for outdoor event programs Viva CalleSJ and Viva Parks SJ. To avoid larger cuts, Council members agreed to trim $100,000 each from their office budgets — and $200,000 from Mahan’s office.

“I’ve seen what some would do with this money and I fail to see how hiring content creators for our offices would help the families of our district,” said Councilmember Peter Ortiz. “I don’t think we need more IG reels and TikTok videos.”

A recommendation by city staff to enact larger cuts to the Parks, Recreation & Neighborhood Services department drew criticism from dozens of residents and workers at Tuesday’s meeting. Speakers urged the city to maintain funding for Viva CalleSJ, an outdoor event in which streets are closed for walking, biking and vendors, along with Viva Parks — which brings free arts and entertainment programming to city parks.

“It’s really disheartening having to fight so hard to make a livable wage and to be able to live here in the city that I call my home,” said Jeremy Corrales, a city parks employee. “But it’s even more discouraging knowing that we’re trying to cut programming that enriches the lives of residents here in San José.”

The city estimates that each Viva CalleSJ event, the most recent of which was held this past weekend in Japantown and Tamien Park, attracts 100,000 people and generates $1 million in economic activity.

The deal approved by the Council maintains the city staffing necessary for the events, but will require the Parks, Recreation and Neighborhood Services department to raise roughly $350,000 through sponsorships and grants to pay for the non-personnel costs to maintain a third yearly Viva CalleSJ event.

Most Council members viewed the budget maneuvering as a worthwhile cost to avoid a labor stoppage. The unions representing roughly 4,500 city employees nearly hit the picket lines to protest wages, which they argued were not competitive with neighboring cities.

Throughout the negotiations and again on Tuesday, union members targeted their ire at Mahan, accusing the mayor of exaggerating the severity of cuts needed to balance the budget in future years as a result of the new contracts.

Councilmember Pat Foley, who helped forge the final agreement, said approving the contracts was critical, but echoed some of Mahan’s concerns.

“This year, it’s easy because it’s $2.8 million that we’re trying to make up the deficit,” Foley said. “But next year, I acknowledge that it’s going to be more difficult than that.”