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Council warned not to count on $2.4M VLF backfill as budgeted revenues
Summary
Finance staff told the council the anticipated $2.4 million Vehicle License Fee backfill is not included in the FY 2025–26 proposed budget because the state reimbursement is uncertain and timing affects which fiscal year would receive the funds.
Council members asked whether the state Vehicle License Fee (VLF) backfill — a recurring source of relief in prior years — should be included in the proposed budget. Finance Director Tomo Oku explained that staff are anticipating a possible $2.4 million backfill but deliberately excluded it from the FY 2025–26 proposed budget because the timing and certainty of reimbursement are not guaranteed.
Councilmember questions repeatedly returned to the VLF timing and past receipts. One council member said they believed the city had not reliably received VLF backfill since the 2022 year; staff clarified receipt timing varies by state budget cycles and that inclusion of backfill in a given fiscal year depends on when the state disburses the funds. Tomo Oku summarized the staff approach: they plan conservatively and will treat any future VLF receipts as one‑time revenue rather than a recurring fix until a legislative solution is secured.
