San José Council Gives Initial Approval to Mayor’s Controversial Homelessness and Pay Plans

San José Mayor Matt Mahan’s controversial plans on homelessness and City Hall pay won initial approval from the city council on Tuesday night after a long and tense meeting.

The council approved Mahan’s preliminary budget for the upcoming fiscal year, which includes his proposal to arrest people experiencing homelessness who refuse three offers of shelter. The idea set off hours of heated discussion among residents and council members, suggesting the proposal will continue to stir debate before the council takes a final vote in June.

With a working six-vote majority on the council — at least until a special election next month — Mahan is pursuing his most ambitious spending plan since taking office in 2023.

Beyond the idea he has dubbed “Responsibility to Shelter,” Mahan is proposing a 2026 ballot measure to tie council and mayoral pay raises to performance metrics. His budget also includes a shift in funding away from affordable housing toward interim housing and shelter.

“We will not be able to maintain the trust of our community and continue to spend tens of millions of dollars a year to invest in interim housing … if we cannot prove to [residents] that it allows us to resolve the homeless encampments that have caused so much harm to the broader community,” Mahan said.

The budget framework, known as the March Budget Message, was approved on a 7-4 vote, with Councilmembers Rosemary Kamei, Bien Doan, Pam Foley, Michael Mulcahy, George Casey and Carl Salas joining Mahan in support. Councilmembers David Cohen, Peter Ortiz, Domingo Candelas and Pamela Campos voted against the plan.

Mahan’s plan to impose penalties for refusing shelter has ignited a firestorm in South Bay politics, drawing criticism from state Assemblymembers Alex Lee and Ash Kalra, as well as members of the Santa Clara County Board of Supervisors. Opponents argue that it will leave unhoused people with damaging criminal records and sap city resources.

“In the short term, I worry about the impact this will have on emergency services who are already overburdened,” Ortiz said. “Officers are constantly forced to prioritize, to triage emergencies in the field. I’m just nervous about adding another responsibility to the police force.”

The city operates more than 1,000 shelter spaces, including tiny homes and converted motels, and hundreds more units are expected to open this year. The facilities are in high demand.

A recent report from city staff found that just 541 people out of the estimated 5,477 who are living without shelter in the city are “program-resistant.”

But crucially, the mayor and council have pledged to maintain no-encampment zones around new interim housing sites, which Mahan described as a key carrot for gaining neighborhood support.

Mahan said his proposal on pay raises is part of his vision to “deliver the outcomes our residents are demanding and to build trust in government.” If approved by voters, the Salary Setting Commission would align raises (beyond the cost of living) to the city’s progress on council-approved goals, such as reducing homelessness and crime.

Cohen said the program could lead future councils to prioritize short-term benchmarks or manipulate goals to ensure higher pay.

“We might say our current council wouldn’t do that, but going to the voters and changing it is a permanent change,” he added.

Both the homeless enforcement and council pay measures will be voted on separately from the rest of the budget in June.

The city faces an estimated $45.6 million shortfall in the fiscal year beginning July 1. Mahan is proposing to largely close the gap by shifting dedicated homeless funding away from building permanent affordable housing to cover the city’s interim housing costs.

The fate of funding created by Measure E, a 2020 real estate transfer tax, has been central to budget debates for the past two years. Now, Mahan is pushing to permanently allocate up to 90% for interim housing and shelter, with 10% going to homeless prevention programs like rental assistance.

More than a hundred residents lined up to speak at Tuesday’s meeting, with most focused on the more than 5,000 people experiencing homelessness in San José. Deborah Brown urged the council and Mahan to put aside their differences and work with urgency.

“Tonight, someone will be out there, freezing to death or sick and helpless, and my hope is that you as a unit, who the city has given you the permission to run this city, that you will take those funds that you have and get this problem solved,” Brown said. “I know you can do it.”