San Jose Sees Covid Budget Gap But Better Times Ahead
(Bloomberg) -- San Jose, the heart of Silicon Valley, said it expects a $48 million budget shortfall for the year starting in July and that the hit from the coronavirus pandemic will give way to surpluses as soon as 2023.
Rising employee expenses are driving the deficit, which municipal leaders must close over the next few months. But the city’s baseline forecast for the next five years anticipates “strong” collections from key revenue sources such as property and sales taxes, according to a report released late Monday. Total general-fund revenue will grow by about 4% annually starting in fiscal 2023, it said.
“As this region continues to emerge from public health order restrictions, it is anticipated to continue benefiting from a high level of venture capital investment in the technology industry, employment growth, and a strong real estate market,” the report said.
Analysts are watching for signs of how San Jose and other cities in California’s technology-industry hub will fare in the near future. As more companies embrace remote work policies even after the pandemic eases, expensive real estate markets such as San Francisco may face permanent impacts.
San Jose, however, sees Google continuing its plans for a new downtown campus and two new high-rise office towers undergoing construction. The city, which is also the headquarters of Zoom Video Communications that facilitates virtual meetings, expects transient-occupancy taxes to rebound by 82% next year and a boost from an extension of a commuter rail line called Bay Area Rapid Transit.
“Despite the COVID-19 global pandemic and speculation on permanent remote working trends, San Jose continues to capitalize on the expansion of BART into San Jose and the continuing entitlement process of Google’s Downtown West project despite the economic turmoil from the global pandemic as another positive indication for future development in San Jose,” the report said.
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