|
Getting your Trinity Audio player ready...
|
Redwood City could see about $3.5 million return to the general fund if Gov. Gavin Newsom approves the state budget recently passed by the California Legislature, which includes approximately $77 million to close a significant portion of the vehicle license fee owed to San Mateo County and its cities.
The funding in the state budget would provide relief to local governments and support police and fire protection, transportation infrastructure, libraries, parks, childcare programs and social services, according to a news release from the Office of Assembly member Diane Papan.
Menlo Park officials declined to say how much of the $77 million the city might receive, but spokesperson Kendra Calvert said the figure would be made public 72 hours before the City Council’s June 23 meeting, when the city is required under state law to release its staff report.
“This legislative funding proposal is an important step forward, but it does not make our communities whole,” Papan (D- San Mateo) said in a statement. “We are proud to have successfully included this potential relief during a challenging budget year, but the underlying inequity remains unresolved.”
The Senate Budget Committee on Monday approved the latest version of California’s 2026-27 budget, greenlighting $355.9 billion in spending, nearly $77 million of which would go to the county for backfill.
While the proposed budget allocation represents a substantial gain for San Mateo County, the funding would restore only about two-thirds of the amount that local governments estimate is owed under the original statutory framework.
For the last few years, San Mateo County was one of the few counties in California that were skipped by California’s Vehicle License Fee mechanism.
While the state stepped up with backfill for the last decade or so, which has prompted the county and its 20 cities to count on that money for their budgets, the state dug in its heels this year and appeared poised to offer zero backfill, prompting local leaders to head to Sacramento.
Local officials said the state’s payment mechanism for this funding has left the county and its 20 cities short $157 million over two fiscal years without state action, a figure projected to exceed $1 billion over the next decade without a permanent solution.
The problem first surfaced in fiscal year 2011-12, when San Mateo County faced a $432,000 shortfall, according to Justin Mates, a county assistant executive. The state wrote this backfill for San Mateo County into the governor’s proposed budget for fiscal year 2013-14 without any resistance. The county did not see another shortfall until fiscal year 2019-20, he said.
California had a large budget surplus at the time because of the COVID-19 pandemic, so the state jumped in to help and plug the shortfall again, according to Kenneth Kapphahn, a principal fiscal analyst with the Legislative Analyst’s Office.
However, Mates said the county faced an “increasingly contentious fight to get that money” starting with the fiscal year 2021-22 shortfall, when the state’s Department of Finance no longer included the county’s shortfall in its budget. That’s because state spending started to exceed its revenue.
The county and its cities were able to win this fight year after year, with the state finding just “enough coins underneath the cushion,” said Paul Steenhausen, a principal fiscal analyst at the California Legislative Analyst’s Office.
That is, until last June, when the state declined to fully reimburse the county and its cities for the first time, given the state’s annual deficit of around $35 billion the last few years, Mates said. Local leaders secured $76.5 million in backfill for fiscal year 2023-24, but San Mateo County and its cities were still left about $38 million short, Mates said.
The state’s defense has been that its reimbursements have been one-time gifts, no strings attached, according to the Legislative Analyst’s Office.
In fiscal year 2024-25, the countywide shortfall reached $119 million. County officials submitted a reimbursement claim to the state in August for inclusion in the 2026-27 state budget, Mates said.
In August, San Mateo County sued the state, along with its 20 cities and the counties of Mono and Alpine, which were also excluded from the backfill mechanism.
A press conference at Fire Station 9 in Redwood City on April 7 was meant to raise awareness of this VLF mechanistic issue and appeal for inclusion in the state budget.
“We need two things to correct this inequity – full payment of the outstanding amount owed, and a permanent legislative fix so this never happens again,” said Noelia Corzo, the president of the San Mateo County Board of Supervisors at the time.
Almanac Reporter Arden Margulis contributed to this report.
