Santa Clara County leaders are confronting a $470 million deficit in the upcoming fiscal year, resulting in the largest midyear budget adjustment in more than a decade as they work to close $200 million of the gap. The Board of Supervisors voted unanimously to reassign 60 employees, primarily from the public hospital system, to other county roles without layoffs. In total, county officials eliminated 365 full-time positions, with 305 of those currently unfilled across several departments. An additional $60 million in revenue projections has also been identified to help reduce the shortfall for fiscal year 2026-27. According to San José Spotlight, this leaves an estimated $270 million gap still to be addressed.
The budget challenges persist despite a voter-approved five-eighths cent sales tax increase, known as Measure A, which is expected to generate $330 million annually until it expires in 2031. The measure was introduced to offset federal spending cuts under H.R. 1 during President Donald Trump’s administration.
Board President Otto Lee said at the meeting, “These are very tough cuts (…) You’ve gone through all these (departments) to find places for those who have been affected and fill positions so that no one in this county is being laid off.” County Executive James Williams outlined a three-part strategy developed after recognizing the scale of federal funding reductions: “Once we were able to recognize the overwhelming magnitude of these unprecedented federal cuts and impact they would have, we put forward a three-part strategy to bridge this extraordinary gap.” Williams added that lobbying state lawmakers is crucial: “We need to make sure the state steps up and does its part to ensure the 6% of hospitals in California that are public — and which provide more than 50% of the burn and trauma care in the state and form the backbone of health care for all Californians — is able to continue to deliver that service.”
District 4 Supervisor Susan Ellenberg said previous decisions helped mitigate current challenges: “We saw the economy turning. We saw those years of enormous and exponential growth in property tax revenue slowing down and, frankly, as dire as the situation is right now, I think without the choices we made over the last couple years it would be exponentially worse (…) I know that’s not very comforting for most folks, but as we move through this process, it will be important to keep all stakeholders — patients, clients, service program recipients, community partners, county employees and the public — clearly and consistently informed about any changes that could affect them.”
District 5 Supervisor Margaret Abe-Koga questioned increased spending on lobbying while other departments face reductions: “In light of the cuts we’re looking at, it’s hard for me to support adding money into something like (the lobbying office) (…) As elected officials, I found the most effective advocacy going to Sacramento is using us. I know we’re all busy, but I think we have relationships with our legislators so I would look (for it) to be more utilized.” Williams responded that increased lobbying efforts aim for additional funding from state lawmakers.
The county projects further financial strain ahead; losses totaling another $500 million are anticipated for fiscal year 2027-28 due largely to rising employee salary obligations and health insurance costs.
