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San Jose Facing A $45 Million Budget Shortfall Due To COVID-19 Pandemic

SAN JOSE (KPIX) - The city of San Jose is facing a $45 million budget deficit, much of it rapidly brought on by the effects of the coronavirus pandemic.

"This is the quickest turnaround I've ever seen," said City Councilmember Johnny Khamis, who said San Jose was in good financial shape at the start of the pandemic.

"We were looking at a $25-$35 million budget surplus and we went to a projected $45 million dollar deficit. That's about an $80 million swing within one month," Khamis said.

Like most Bay Area cities, San Jose makes most of its money by collecting sales and property taxes.

But with so many businesses closed, those income streams have gone practically dry.

Even those that are still open like car dealers, are not generating the sales taxes that they used to.

And with travel restricted, the city's other big source of income -- hotel or transient taxes -- are also down sharply.

Fortunately, San Jose has cash reserves and many emergency expenses related to the pandemic are being picked up by the state and federal government, not coming out of the city's general fund.

But the city is looking for ways to cut costs, such as deferring maintenance or building renovations.

And it's trying to avoid staff layoffs with wage and hiring freezes.

Khamis is arguing for a more aggressive approach.

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