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County officials warn $119 million VLF shortfall will force cuts; ask San Carlos to join advocacy
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Summary
San Mateo County leaders told the San Carlos City Council that a change in the vehicle-license-fee payment mechanism could remove about $1 billion from county revenues over 10 years and create a $119 million shortfall this year; they urged cities to join a county-led advocacy campaign and a press conference in Redwood City on April 7.
San Mateo County officials told the San Carlos City Council on March 23 that a mismatch in the state's vehicle-license-fee (VLF) payment mechanism has created a large funding shortfall that could force service cuts across the county.
County Manager Mike Hallagy said the change amounts to "the most significant taking by the state in San Mateo County history," and warned it "will result in over $1,000,000,000 being taken out of this county in the next 10 years." Assistant County Executive Justin Mates described how the current VLF payment mechanism is tied to school funding and said San Mateo County now lacks enough "non basic aid" school districts to make the mechanism work for local governments.
Mates said the state distributed about $12 billion through the VLF-related mechanism statewide in the most recent year but that San Mateo County faces a countywide shortfall of $119 million this fiscal year, on top of a $38 million shortfall the county already is litigating. "We were shorted $38,000,000," he said of last year's allocation, noting a lawsuit seeking reimbursement is pending.
County staff said the shortfall would affect general fund services including homeless prevention, affordable housing, foster-youth support and other programs. Mates highlighted San Carlos's portion of the county shortfall as approximately $2,300,000 for the 2024-25 year.
County officials asked cities to support a coordinated advocacy effort. Hallagy urged local leaders to help inform the public and to join a press conference planned for April 7 in Redwood City. Mates said the county and cities are preparing advocacy letters to the governor and legislative budget chairs and are forming a coalition of school districts, nonprofits and local leaders.
Council members asked whether the county planned legislative or in-person lobbying trips to Sacramento; county staff said such visits were possible and part of a wider strategy. Hallagy said officials are preparing service-cut scenarios and coordination plans with city managers and consultants but did not present formal mitigation measures for San Carlos specifically.
Next steps: county staff said they will continue outreach to cities and legislators, coordinate public messaging, and pursue legislative and legal remedies while preparing for potential budget reductions if state reimbursement does not arrive.
Sources: county presentation to San Carlos City Council (SEG 018'SEG 309).
