City leaders held a budget session Friday outlining the problems and potential solutions in the nation's 10th largest city.
However, if the federal government is ready to invest some of the stimulus funds on infrastructure, San Jose leaders said they are ready to put people to work in January.
Mayor Chuck reed said he and council members are working hard to keep the city in the black.
"We've been fortunate," Reed said. "Our City Hall unions have been engaged in our process. They are willing to make concessions to work with us. The problem is too bog to solve by only a few people being engaged."
The mayor said the city fire and police unions have been less cooperative in making concessions.
He said potential layoffs are looming in 2009.