Mayor Mahan Releases June Budget Message that Resolves $50.3 Million Shortfall, Protects Core Services, and Invests in San José’s Top Priorities
Despite serious fiscal challenges, the proposal balances the budget while continuing investments in street homelessness reduction, housing production, public safety, cleaner neighborhoods and youth services..
FOR IMMEDIATE RELEASE
June 1, 2026
Media Contact:
Seamus Gann, Acting Chief Communications Officer, Office of Mayor Matt Mahan
SAN JOSÉ, CA - Mayor Matt Mahan today unveiled his June Budget Message for Fiscal Year 2026-2027 that resolves San José’s projected $50.3 million shortfall while identifying impactful investments that will move the needle on the issues residents care most about: increasing community safety, reducing unsheltered homelessness, cleaning up neighborhoods, building more housing, and growing the local economy.
The Mayor’s June Budget Message recommends the approval of the City Manager’s Proposed Budget, with additional direction to preserve core services, maintain fiscal discipline, and fund targeted community priorities across San José. Despite challenging fiscal conditions, the budget protects current investments in library hours and park maintenance, advances strategic reforms to optimize homelessness programs, and incorporates the vast majority of Council budget proposals that address pressing local needs within Council districts.
“Trust in City Hall is up nearly 40% because residents are seeing results — walking away from that focus would put our progress at risk,” said Mayor Matt Mahan. “San José families are stretching every dollar in a tough economy, and City Hall should be held to the same standard. This balanced, responsible budget closes our projected shortfall while still making meaningful progress on the basics.”
The June Budget Message builds on the City’s focus-area strategy and continues investments in measurable results, including:
Improving public safety and street conditions by directing continued work with County partners to track the use and outcomes of key tools connected to the City’s Focus Area goals, including CARE Court, Prop 1 treatment beds, SB 43 conservatorship reform, and Prop 36-mandated treatment.
Reducing unsheltered homelessness by building on secured County cost-sharing commitments that further optimize San José’s interim housing system, preparing an updated “functional zero” homelessness framework for Council discussion in September, and keeping the Taylor Street Safe Sleeping site available as a turnkey emergency asset while suspending operations to reduce costs.
Cleaning and beautifying neighborhoods by advancing a more coordinated approach to free Junk Pickup and BeautifySJ RAPID illegal dumping response; piloting fee-for-service graffiti removal on private property; strengthening the Downtown Enhanced Vacant Building Program; and funding targeted neighborhood cleanup, park, underpass and beautification projects across San José.
Building more housing by moving toward 90-day approvals for ministerial housing projects citywide, eliminating unnecessary local building code barriers, simplifying development fees into a clearer and more predictable structure, deferring fee collection to reduce upfront costs, and preparing a pilot to support up to 50 ADU homeownership units.
Growing San José’s economy by supporting commercial corridors and small business districts, supporting Downtown Ice and other cultural events, advancing airport marketing for San José’s 250th anniversary, and requiring stronger performance and return-on-investment reporting from Team San José.
Supporting immigrant families by maintaining one-time $500,000 in immigrant services funding and creating an additional one-time $500,000 reserve to respond if immigration enforcement activity escalates.
Investing in children and youth through a $3.35 million total commitment to the Children and Youth Services Master Plan, including demonstration sites in Mayfair/Poco Way and Seven Trees/Santee, paired with stronger performance metrics and outcome tracking.
The budget also reflects broad collaboration across City Hall. Councilmembers submitted 78 Budget Documents totaling more than $11 million in proposed one-time spending. The Mayor’s June Budget Message incorporates 67 of those proposals, funding community priorities while maintaining a balanced budget.
At the same time, Mayor Mahan warned that San José continues to face serious fiscal risks, including uncertainty around hotel tax revenue, potential Educational Revenue Augmentation Fund impacts, and possible losses in cardroom tax revenue. Together, those risks could create significant additional pressure on the General Fund, underscoring the need for continued fiscal restraint and responsible budgeting.
The San José City Council is expected to consider the June Budget Message as part of final adoption of the Fiscal Year 2026-2027 budget. A public hearing is scheduled for June 8, with the Council vote expected on June 9.
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About the City of San José
With nearly one million residents, San José is the largest city in the Bay Area and one of the nation's most diverse and creative. San José’s transformation into a global innovation center in the heart of Silicon Valley has resulted in the world's greatest concentration of technology talent and development.