Assembly Member Diane Papen warns of state budget pressures and vehicle license fee shortfalls affecting San Carlos

Assembly Member Diane Papen told the San Carlos City Council on Nov. 10 that state budget strains and a widening vehicle license fee shortfall are reducing predictable revenue for counties and cities.

Papen said the 2024–25 cycle produced a multi‑billion dollar shortfall statewide and that San Mateo County’s share of the vehicle license fee gap was unusually large this year. "The shortfall was 114 million," she said, noting that the county received roughly two‑thirds of the anticipated backfill this year, reducing city shares and complicating local budgeting.

That loss, Papen added, ripples through local health and human‑services funding and makes multiyear planning difficult: backfill payments arrive on a two‑year cadence and the size of future transfers is uncertain. She said county officials have filed suit against the state to recover the missing amounts.

Why it matters: San Carlos, like other cities in the county, relies on state backfills to cover programs that the state reduced in past reforms. A smaller or unpredictable VLF transfer can force cuts, defer maintenance or push the city to seek new local revenue.

Papen opened the update with a review of state fiscal mechanics and a reminder that California’s revenue base can swing with financial‑market events and one‑time receipts. "A lot of that has to do with structural things," she said, urging local officials to plan for volatility and greater accountability in spending.

She also summarized several bills she sponsored this year and their fates: restrictions on certain synthetic compounds in consumer cosmetics and a law to ease paratransit recertification for people with permanent disabilities were signed by the governor; other bills aimed at streamlining housing‑element interactions with the Department of Housing and Community Development and at requiring reporting from data centers were vetoed, she said.

Council reaction and public comment: Councilmembers pressed Papen on rainy‑day fund policy and localized water‑rate problems. Papen said legislative leaders are protective of reserves and that her office is engaged with Cal Water and the Public Advocates Office on local rate issues, but she offered no immediate remedy for San Carlos ratepayers.

During public comment, a resident raised concerns about AB 1827 and alleged the assemblymember had received campaign contributions from Cal Water and other water utilities; that commenter asked whether Papen would prioritize constituent interests over utility positions next year. Papen did not provide a voteable response in the meeting.

What’s next: Papen encouraged continued local‑state engagement on fiscal matters and said she will reintroduce and refine measures that were vetoed. City staff and councilmembers said they will continue monitoring state budget developments and the county lawsuit over VLF backfills.

The council did not take formal action on Papen’s update. The next procedural steps for any local follow‑up will be determined by staff and individual council direction.