Foster City adopts next fiscal year’s budget

The city is also owed roughly $2 million from the state, which has still not been included in the city’s budget due to fiscal uncertainty at the state level.

The money owed to Foster City, in addition to most cities countywide, is related to vehicle license fees paid by residents, which are directed to the state and then subsequently reimbursed to cities, typically by the following fiscal year. But the payback process is not straightforward. Instead of simply giving cities and counties back the amount of fee revenue collected in their respective jurisdictions, the state uses a complicated reimbursement formula associated with the types and amount of school districts in its area. With the state facing its own budget challenges, the VLF inclusion for the county has remained in flux. 

“The legislature’s version of the state’s budget includes reimbursement for the VLF shortfall,” Finance Director Nate Cruz said. “It still requires the governor’s signature, which is due by July 1, so the budget ... still does not include it, but the probability of it being actual revenue is much higher so that’s some good news to end this long process on.”

Last fiscal year, the city ended up with a surplus, despite originally projecting a shortfall, but it’s still facing a long-term structural deficit.

City officials have been discussing ways to increase revenue, and many other cities in the county that are also operating under deficits are weighing the likelihood of passing their own revenue ballot measures during the next election. During a recent City Council meeting, South San Francisco elected leaders leaned toward a parcel tax measure, which could help close its $12 million general fund deficit. But Foster City still hasn’t expressed desire for a ballot measure, despite a general acknowledgment that the city is in need of stronger revenue streams. With San Mateo County voters potentially seeing a regional sales tax measure in 2026, and potentially a renewal of the county-level Measure A sales tax, many jurisdictions have expressed hesitancy over putting forward their own local tax measure during the next election cycle. 

The 2025-26 budget goes into effect on July 1.