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Coronavirus Continues To Deepen City Budget Deficit

Projected City deficit is continuing to grow from impacts caused by coronavirus, swelling by another $2.7 million from the highest projections given just two months ago.

In April, City Manager Deanna Santana told the Council the $4.7 million deficit given in January would likely grow to between $18 million and $20 million because of COVID-19. However, Kenn Lee, Director of Finance, told the Council Tuesday night that City employees estimate that shortfall to be $22.7 million and could increase further.

“Nobody could have predicted that level of economic impact to hit our nation or our state or our local jurisdiction,” Lee told the Council.


With the newest numbers, the 4-year budget forecast looks even more grim, with a projected $34 million deficit. After the Council hired Santana in 2017, she and a team of new hires began chipping at the projected looming deficit and had made much headway prior to the Santa Clara County Public Health Department’s shelter-in-place order going into effect in mid-March.

The news about the deficit came as part of a budget study session at the Council’s regular meeting. During the discussion, Lee detailed how the pandemic has hit the City hard, forcing City employees to do some finagling. Unless something changes, he said, more drastic measures will need to be taken to stop the financial hemorrhaging.

Although the City is attempting to scrimp its one-time reserves, cut costs wherever it can and has instituted a hiring freeze, it still has a challenging road ahead to eliminate the deficit, Lee said.

“Our goal is to avoid layoffs to the extent that we can,” Lee said. “The deficit is deep; it is tough; it is challenging.”

As previously discussed, Lee again brought up putting a transient occupancy tax (TOT) increase on the ballot in November, something he called “critical.”

Over the next four years, Santa Clara aims to spend $471.4 million of the $515.5 million earmarked for capital improvement projects on infrastructure. Of that money, $147.4 million is slated for 2020-21, with 44 percent of the work deemed “critical.”

Among those critical projects is the Laurelwood pump station, which is in desperate need of repair to provide flood protection, Lee said, and $600,000 to allow handicapped access, a cost forced onto the City after it lost a lawsuit.

Despite the City’s investment in infrastructure, the next five years also see nearly $300 million in unfunded projects, the lion’s share of which is in parks and trails ($104.5 million) and transportation ($76 million.)


Maintenance District Renewals

The Council also approved two maintenance district agreements. Such agreements establish the share businesses have to pay for the City to perform upkeep on parking and other publicly available amenities in such business districts.

Although both agreements passed, they didn’t do so without some contention.

Business owners in Franklin Square — including Mayor Lisa Gillmor, who recused herself during the discussion — split the $10,300 to cover the business contributions to things such as sidewalk maintenance.

Council Member Raj Chahal questioned why the $152,000 City-paid portion of the agreement for Franklin Square is so high. He said, “other businesses are not getting the same treatment,” calling the agreement “inequitable.”

The split for the cost has been in place since 2002, and Craig Mobeck, Director of Public Works, told Chahal that “each maintenance district is unique.”

Requiring the businesses to pay more will only “hurt small businesses,” said Council Member Debi Davis. Council Member Kathy Watanabe said the City should pay as much as it does since it is more responsible.

“We are trying to salvage the downtown, not lose business owners,” she said.

Although the agreement passed unanimously, Chahal wasn’t the only one with concerns about the split.

“While I recognize Franklin Square as a great community asset, I am uncomfortable with the heavy subsidy from the City’s general funds to maintain parking lots, sidewalks landscaping and fountains,” Suds Jain, a member of the Planning Commission, wrote. “It seems the assessment on the property owners is only 1/15 of what the City pays to maintain Franklin Square.”


Police Department To Revamp Use Of Force Procedures

The City will also review its use-of-force policies within the police department following a slew of local protests in response to the killing of George Floyd.

As part of her update, Santana said the City will examine “common-sense policies” surrounding the police department’s use of force and determine where it is falling short on a series of reforms known as the “8 Can’t Wait” program. The program details eight ways to curtail excessive use of police force through better training, including the banning of choke-holds.

The Council meets again Tuesday, June 23 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.

Members of the public can participate in the City Council meetings on Zoom at; Meeting ID: 997-0675-9306 or call 1(669) 900-6833, via the City’s eComment (available during the meeting) or by email to

For those without the above access, the City Cafeteria has been set up to accommodate up to 10 people at a time and public comment will be given from that location.


1 Comment
  1. John Slos 4 years ago

    This is a LIE.
    “Our goal is to avoid layoffs to the extent that we can,” Lee said. “The deficit is deep; it is tough; it is challenging.”
    I work here and the City says it will fire people first to save money. They have already laid off a lot of employees and in a meeting they stated that if we came up with a way to save the City money, they would still lay people off as their “RIGHT” to save money quick. Not sell property, not furlough, not increase fees, but to FIRE PEOPLE.
    The City and Council only cares about the TOP and that’s it. This is a lie and it is blatant and constant, the new City Manager does not give a crap about the regular employee, which is the same as everywhere else that she has worked.

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