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County warns of large VLF shortfall; Redwood City staff say midyear forecast now requires drawing reserves
Summary
San Mateo County officials told the Redwood City Council a vehicle license fee (VLF) payment mechanism shortfall could be $119 million countywide, with Redwood City losing roughly $5.3–$5.4 million; city staff said the loss pushes the city to draw reserves earlier and to accelerate efficiency and economic development measures. Council accepted staff recommendations unanimously.
San Mateo County Executive Mike Hallagee told the Redwood City Council on Feb. 23 that the county faces an unprecedented reduction in vehicle license fee (VLF) backfill payments and that the county and cities together are confronting a roughly $119 million shortfall this fiscal year. "This is literally the taking of, potentially over $1,000,000,000 in county funds," Hallagee said, urging jurisdictions to press the issue with the state and prepare for service impacts.
Assistant County Executive Justin Mates explained the mechanics of the VLF “swap,” a 2004 statutory payment mechanism that routes in‑lieu VLF amounts through certain school district property tax allocations and a Prop. 98 backfill. He said San Mateo County’s mix of school districts has shifted toward locally funded (basic aid) districts, leaving too few state‑funded districts available to generate VLF backfill. "The shortfall this year is $119,000,000…
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