With a previously projected $250 million deficit, Santa Clara County’s fiscal forecast looked rather bleak for the coming year. But after making reductions and pulling revenues from its various departments, the county managed to bridge the gap in its newly released $12.4 billion budget.
The recommended budget for the 2024-25 fiscal year is the first overseen by County Executive James Williams, who took the helm last July as the county worked to close a $120 million deficit on its $11.3 billion budget. Since then, the fiscal uncertainty has continued with officials warning that the growing cost of labor and a slow turnover in property ownership — which has curbed tax revenue — is fueling a dismal financial forecast.
In his budget message, Williams said he had asked county staff to “present as many ideas as they could to generate revenue or otherwise relieve the General Fund, thereby minimizing the service and staff reductions that would otherwise be needed to close the gap.”
New revenues make up roughly half of the $251.3 million in deficit solutions and include fee increases in areas, like the Department of Planning and Development where building permit fees are expected to rise. The county has also made reductions in several spots, including eliminating vacant positions and reducing spending on some services and supply contracts. One county department is expected to sell off vehicles and desk phones that are rarely used.
Despite the challenges, Williams said they “prioritized the preservation of critical safety-net services and programs for the public” that align with the Board of Supervisors’ priorities. These include healthcare access, housing, public safety, criminal justice reform, support for children and families and sustainability.
In a statement, Board President Susan Ellenberg said that preserving core services are “non-negotiable,” but that “everything else is on the table” when it comes to the budget.
“This year, we are working with fewer dollars than we have in nearly a decade, and will have to make real, strategic cuts – cuts that will leave everyone, myself included, frustrated and unhappy,” she said. “It is my goal to get us to a structurally balanced budget that prioritizes what only county government can offer: safety net services for the residents who rely on them.”
Supervisor Otto Lee in a statement said the “recommended budget and deficit are not unexpected, and we recognize that this will be painful for the community. We’ll do our best to avoid layoffs of employees and continue to maintain high quality of vital services.”
Despite finding $251.3 million in change under the county’s couch cushions, Williams warned that the future ahead is still rocky.
“This is the first time in many years that we have had to contend with this magnitude of budget shortfall,” Williams said in the budget message. “While we expect to be structurally stable for the upcoming fiscal year, the reality is that we will continue facing challenging fiscal conditions for the foreseeable future, as shown in the current five-year forecast.”
The county predicts that the deficit could rise to $158 million in the 2026-27 fiscal year, partially due to rising labor and operating costs that are expected to outpace revenues. The Santa Clara Valley Healthcare system alone is projected to have operating costs that grow 8% in the upcoming fiscal year compared to last year’s adopted budget.
The issue could be further compounded by cuts made at the state level. California is currently facing a multi-billion dollar deficit and county officials are bracing for the impact.
