San Mateo projects $15.2 million general fund deficit for 2025-26; officials propose mix of reserves, cost recovery and a possible revenue measure

Finance Director Karen Huang told the San Mateo City Council at a special meeting Monday, April 20, 2025, that the preliminary 2025-26 general fund budget projects a $15.2 million deficit on $172.4 million in revenue.

Huang said the city built the forecast on conservative assumptions amid national economic uncertainty, budgeting 4% growth in property tax, assuming sales tax will stay flat and including only half of a proposed state backfill for the vehicle license fee (VLF) shortfall. She told the council staff had budgeted the real property transfer tax at a baseline of $8 million plus $600,000 tied to Measure CC and set transient occupancy tax at about $4 million.

“The best course of action actually is go back to our fundamentals and look at our core revenue and see our core financial status,” Finance Director Karen Huang said. “We are taking a more conservative approach when we develop the budget.”

Why it matters: The projected shortfall would force the city to draw on stabilization reserves and consider a combination of one-time and ongoing strategies — including increased cost recovery, temporary use of reserves and exploring a 2026 revenue measure — to protect services and fund capital projects cited as city priorities.

Key revenue and expenditure figures presented

- Projected 2025-26 general fund revenue: $172.4 million (preliminary). Huang said a full state backfill of the VLF…