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San Mateo, Mono and Alpine press Legislature for vehicle license‑fee backfill after ERAF shortfall
Summary
San Mateo County and several of its cities asked the Assembly Budget Subcommittee 5 to fund a vehicle license fee (VLF) 'in‑lieu' backfill for 2023‑24 that the administration did not include in the May revision; county and city officials said the enacted 2004 VLF swap design leaves a structural shortfall in counties with few non‑basic‑aid school
Local officials from San Mateo County and several cities told the Assembly Budget Subcommittee 5 that a structural quirk in the 2004 VLF ('vehicle license fee') backfill arrangement leaves some counties—San Mateo, Mono and Alpine—without sufficient Educational Revenue Augmentation Fund (ERAF) or non‑basic‑aid school district property taxes to cover the state's in‑lieu VLF backfill obligation.
Assemblymember Emily Papan outlined the history: in 2004 the state reduced the VLF rate and agreed to "hold local governments harmless" by redirecting a portion of local property taxes through ERAF to replace the lost VLF revenue; that arrangement works in most counties. San Mateo County officials said the combination of very high property values and low K‑12 student enrollment produced insufficient ERAF and limited non‑basic‑aid property tax available to fund the in‑lieu VLF obligation, producing what county officials called an "insufficient ERAF" outcome.
San Mateo County staff and city officials said the county would face a shortfall of roughly $114 million for 2023‑24 (request figure for 2025‑26 would be higher, county representatives said), with the county as a whole seeking $118 million in backfill for the fiscal year paid with a two‑year lag (i.e., 2023‑24 shortfall paid in 2025‑26). City officials listed the equivalent budget impacts for local municipalities—losses equivalent to multiple police officers, firefighters or maintenance staff—and unions said layoffs and service cuts would be likely.
Department of Finance staff said there is no statutory obligation to provide this backfill in cases of insufficient ERAF and the May revision did not include a statewide appropriation for the counties' requests. Several counties and city representatives urged a short‑term appropriation while lawmakers consider a longer‑term statutory fix to ensure equitable treatment across counties.
No appropriation was adopted at the hearing; speakers asked the subcommittee and the Legislature to include funding for the San Mateo shortfall in final budget actions or pursue a multi‑year statutory fix so that counties do not need annual relief.
