San Mateo County approves budget amid shortfall

Amid the high inflation and interest rates that prohibit home buying, as well as heightened commercial vacancy rates, the county is seeing a downturn with its collected sales tax and other tax revenue.

Callagy said sales tax is down 1.5% and compounded with inflation, the county is seeing a $10 million shortfall. There is estimated to be a 5% growth in the real estate market, which Callagy acknowledged as “still a growth” but a “far cry from those 8-9% growth rates that we’ve seen in the past.”

The county will work with a 12.4% decrease in total funds allocated for fiscal year 2024-25 as compared to 2023-24. The general fund, which the county has more control over, will be $2.94 billion.

“I’m trying to thread a needle so we don’t have to have layoffs,” Callagy said. “But we will be asking all departments to look at and differentiate for me the mandated and non-mandated services that we provide.”

The significant budget adjustments are largely based on the close-to-complete capital projects including the Medical Center in South San Francisco and the Pescadero Fire Station among others.

“It’s really looking at how we can better service our residents in spaces that feel comfortable for them to come in to do their work in or have services delivered,” Chief Financial Officer Robert Manchia said.

Strengthening essential services already established within the county is a focus of the budget recommendation as well. Manchia said there will be a focus on expanding the Department of Housing to stabilize its resources to deliver its commitment to affordable housing.

Also, the budget bolsters emergency preparedness and includes the establishment of the Office of Labor Standards and Enforcement.

The recommended Measure K appropriations dedicated to child, family and senior services for the upcoming fiscal year was also specified. The countywide half-cent sales tax passed in 2016 totals $174.9 million in the upcoming fiscal year.

The board approved reallocating $4 million of the Measure K funds to cover funding gaps for certain services. The appropriations will be included in the upcoming September budget revision, according to a staff report, and resulted in a working budget of almost $9.2 million dedicated to children, families and seniors. About 24 applications from organizations seeking Measure K grants have been approved thus far.

Areas not included within the allocations that raised concern by supervisors and public commenters include immigration defense support and human trafficking.

Supervisor Noelia Corzo said she wished funds were dedicated to addressing human trafficking. Callagy said it was not prioritized in this allotment because funding could be sourced elsewhere, such as the Sheriff’s Office.

Corzo, with support from Ray Mueller, echoed concerns that have been shared within the community over the exclusion of funding for immigration defense.

“We believe this is also very important work,” Callagy said. “Really what we hope to do is have an opportunity to sit down with the organizations and really kind of figure out a path forward.”

Callagy said there is still $850,000 already dedicated for this coming year, but no legal aid service was awarded more money this round.

The county has supported removal defense services — which assist immigrants facing deportation — and has been provided by a network of legal services and community-based organizations since 2018. Funding has been distributed to Legal Aid that then contracts out with multiple legal providers, many of whom shared during public comment concern over this funding cut ahead of election season this fall.

Supervisor Mueller said he wanted to reassure his district constituents that he plans to continue to financially support these services.

“I just wanted to go ahead and let folks know that within my district, my office does plan on bringing in discretionary Measure K in order to shore that up in my district,” Mueller said.

According to the staff report, the amount awarded was less than a tenth of funds requested by the various agencies vying for fiscal support — and that was prior to the $4 million redistributed to address funding gaps. To shore up budget deficits and provide critical county services, while acknowledging financial stress many are facing, Mueller said the county may continue to have to give out less grants in the future.

“Unfortunately, there’s going to be the question of whether we go to [a bond] measure or how do we go and pick up revenue,” Mueller said. “At the outset, what I want to say to county staff is, I am not interested in going to ask the taxpayers for more money.”