March 8, 2007

Budget issues top priority list

Reed delivers inaugural State of the City address

San Jose not yet a great city, but best days are ahead, claims Reed

By Ali Abdollahi
Staff Writer

Mayor Chuck Reed gave his first State of the City address at the McEnery Convention Center on March 7 to a sold-out crowd who paid $20 each to attend the breakfast. “San Jose is a good city with great people,” Reed said. “But it’s not yet a great city.”

An image of Mayor Chuck Reed is shown on the screen as a women signs what is being said at the Community Breakfast/State of the City Address at San Jose Convention center on March 7.

Reed made only passing references to the ethics scandal that plagued his predecessor’s term in office. He spoke briefly of the “Reed Reforms,” which he called, “a series of measures to help instill honesty, fiscal responsibility and open government into the culture of city hall.”

“There’s more to be done,” said Reed. “But you can all be proud of the work the Council has begun to restore public trust.”

Reed emphasized the importance of addressing the city’s budget issues. “We cannot become a great city unless we eliminate our structural budget deficit,” said Reed. “That is our greatest challenge. The budget deficit is public enemy number one—an enemy that will steal our hopes and kill our dreams of becoming a great city if we let it, which we will not.”

The next budgetary year will mark the sixth consecutive year of budget shortfalls, with more shortfalls projected for the following four years. For the last five years, the city has balanced the budget by reducing services to neighborhoods and businesses, according to Reed. “As a result, our streets and parks are deteriorating, our pools are closed, and the time it takes for police to get to your house when you have an emergency is getting longer.”

Reed added that the city has a backlog of more than $400 million for repairs and maintenance, and that another $25 million is required to merely prevent the problem from growing worse.

San Jose’s distinction as the “Safest Big City in America” is “at risk,” said Reed. Reductions made in response to the budget deficit have forced police to focus resources on patrols and emergency calls, stretching the department thin and allowing for property crimes to rise. “We can’t be a great city if our neighborhoods and schools are not safe,” Reed said.

Increase revenue, reduce expenses
“We have a structural budget deficit because our expenses are going up faster than revenues,” said Reed. “The solution is to reverse that relationship.”

He said that, while Silicon Valley companies are growing again, the city cannot take for granted that the companies driving the local economy will stay in San Jose. Said Reed, “We have to be business friendly to get the revenues we need to improve our neighborhoods.”

San Jose Councilmember Nancy Pyle of District 10 with Chun Min Su and Nancy Young, Community Honorees representing the Leland Bridge Parent Group, at the Community Breakfast/State of the City.

An essential step to court businesses, according to Reed, is to improve and streamline the city’s permitting process. Reed raised his right hand and said, “I pledge to you that one year from today San Jose’s permitting process will be measurably approved.”

Reed also emphasized the need to attract new companies. He said that he will seek federal funding to help the city develop a pilot manufacturing facility to allow local bioscience innovators to grow in San Jose and help prevent the outsourcing of jobs.

Improving retail activity was highlighted as a way to improve the city’s general fund revenue. “We are losing 20 percent of our sales tax revenues to other cities,” said Reed. “That amounts to tens of millions of dollars every year in lost revenues.” Reed said the city must make it easier for major retailers to get through the city’s approval process. He also said that the McEnery Convention Center and the San Jose Arena needed capital investment in order to generate more general fund revenue.

Reed then shifted focus to what he called “the hard part—” slowing the growth in expenses. That process, according to Reed, begins with changing the budget process. “We will start a transparent, full-disclosure budget so that we can see every expense that is growing faster than revenues and all of the future impacts of our decisions. We have to set priorities and stick with them,” Reed said.

He referred to the community-based budget priority process that he instituted last month, which led to a city council priority-setting session.

The San Jose Police department color guard present "the color's" at the start of the state of the Community Breakfast/State of the City address at the San Jose Convention center. Photos by Dan Miranda

Another method of cost reduction mentioned by Reed is the use of capital funds to reduce operating costs, such as using more efficient energy sources. “Let’s start by installing solar power on city buildings, like (The Tech Museum of Innovation),” Reed said. “Not only can we reduce operating costs, we can also showcase our local clean and green solar technologies, educate our kids and community, end our addiction to oil, and help reduce global warming.”

San Jose can also save operating expenses for police, code enforcement and transportation by helping move the homeless into permanent housing. “We should use affordable housing capital dollars to help the homeless by building more extremely low income housing units,” said Reed. “And it’s the right thing to do.”

Reed also emphasized the need to collect and analyze date to find inefficiencies and waste. “San Jose is the capital of Silicon Valley, where technology has made our private sector workforce the most productive in the world,” Reed said. “The city has to do the same.”

“We will not pass these problems on to our children. We are going to take on these problems and we are going to succeed,” Reed said. “The best days of San Jose are ahead of us.”