Nonprofit service providers and county programs will no longer be allocated money from San Mateo County’s Measure K discretionary funds beginning July 2027, a significant reduction in fiscal support caused by the county’s loss of state revenue.
Revenue generated by the county’s half-cent sales tax, passed by voters nearly a decade ago, has historically been put back into the community through grants to local organizations and county officers to sustain programs for the most vulnerable residents.
Grantees will continue to be allocated their committed Measure K dollars for the upcoming fiscal year, but there will be no budget for Fiscal Year 2027-28, Chief Financial Officer Roberto Manchia said to the Board of Supervisors on Tuesday.
“Diving into Measure K and the many grants it funds is not an easy task … but it is something we have to do,” board President Noelia Corzo said. “It’s really important we remember we want these services and these grants to be touching our residents, to be supporting them and for them to be impactful,”
Ceasing allocations from Measure K has been discussed as a necessary financial move by county staff in recent years as the county grapples with loss of its vehicle license fee shortfall funds. San Mateo County can no longer rely on what was once an annual appropriation of funds by the state, and therefore drastic budgeting must be made.
More than $118 million was approved to be allocated in Fiscal Year 2026-27 to county organizations with Measure K dollars, as essentially a final allotment until other revenue can be sourced.
$125 million shortfall
Meanwhile, the county is estimated to see a $125 million shortfall in VLF refunds, assuming no allocation remains included in the governor’s May budget.
Until these refunds are provided, the county will be unable to use Measure K in the same way it has previously; instead, the tax revenue will backfill the gaps in state funding.
Housing and homelessness is the largest area that receives Measure K allocations, at $68.7 million for the next year; $6 million of that is for ongoing shelter operations.
As a priority of the county, more than 70% of all the county’s input into support programs, meals and housing vouchers is covered through Measure K dollars, Manchia said.
“If we were to lose that, we would have to think through the consequences of what that would mean for our communities and for our residents, and what that would mean for our cities, our downtowns and other spaces,” Manchia said.
Supervisor Jackie Speier noted that the significant freeze of funding allocations toward supported unhoused residents ultimately impacts everyone in San Mateo County.
“We don’t have a San Francisco homeless problem, in part because we’ve invested so much into services and facilities into the homeless,” Speier said. “There’s real legitimate concern that all of us as residents in this county should be concerned about if Measure K funding goes away for all of these programs.”
As the county draws back its financial support for organizations, all cities throughout San Mateo County will likely have to fill gaps, placing an even further strain on already tight budgets, Supervisor Ray Mueller said.
“The number of nonprofits that will be affected by this … will spread throughout the entire community of San Mateo County,” Mueller said. “What will end up happening, as we backfill those Measure K dollars, it will be felt in general fund budgets throughout the county as every city is asked to make up for that impact.”
The organizations receiving funding through Measure K for the upcoming fiscal year are largely recipients of a three-year commitment of funding, the final of which will be this upcoming disbursement.
It was considered to dilute the money going out and spread it longer, but organizations favor the consistency, County Executive Mike Callagy said.
“They have employees, and any immediate reduction would result in layoffs, and given what we’re facing as a county, it might be money well spent to keep people employed right now … with the understanding that is the runway we have and they have to make adjustments through the year,” Callagy said.
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The beginning of Tuesday’s meeting opened with public comment, which included a handful of nonprofit leaders advocating one last time to ensure their third-year allocations maintain as promised, and shared hope there will be room for financial support in the future.
“It did give me hope and reminded me that many of our nonprofit organizations, they serve people on the ground every day and they figure out the way to get it done,” Corzo said.
Some of the Measure K allocations go into established county offices and organizations to support viability of programs.
The county’s parks department will receive $2.5 million to maintain and repair public spaces. Approximately $935,000 will go to San Mateo County Health to staff financial elder abuse investigations. To promote third-grade reading proficiency throughout the county, more than $7 million is granted to school districts and San Mateo County Libraries.
District-specific discretionary funds
Supervisors have also historically awarded $500,000 each annually to organizations within their district at their discretion. Awardees have included small nonprofits providing support for underserved communities, such as StreetCode Academy providing free technology education in East Palo Alto or to Foster City Village to supporting safety and emergency preparedness for seniors.
There are certain allocations that must continue beyond the coming year, such as funds generated at the airport, which must be used at the airport, Manchia said. This includes approximately $2.7 million in Fiscal Year 2026-27, which goes to investigations at the San Francisco International Airport, cargo inspections and support systems at the San Carlos and Half Moon Bay airports.
Getting Measure K dollars back to local programs will require immense effort to advocate at the state level for the VLF refund, Mueller said. A campaign must commence from each resident to place pressure on Sacramento, he said.
“It’s time to take the discussion outside the walkways of the county buildings and start reaching the public so they understand how this is going to impact our community,” Mueller said. “It’s time for the meetings that are taking place privately to stop and have a very public conversation that Sacramento is going to pay attention to.”
Supervisor Lisa Gauthier added that the incoming governor — who will be elected on residents’ ballots in November — must “understand what’s important to San Mateo County,” reiterating a priority she’s mentioned previously.
Why the loss?
Vehicle license fees paid by county residents 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.
All 20 cities in San Mateo County joined a lawsuit originally filed in August 2025 by San Mateo County accusing the state of California of withholding nearly $38 million in funds legally owed to local governmental agencies, according to county officials.
The lawsuit details that this year San Mateo County local governments received only $76.5 million of the $114.3 million owed under the state funding formula — a nearly $38 million gap.
Callagy said the loss of VLF refunds will impact future generations living in San Mateo County, and residents must be “united in this fight” and advocate to the state for what is owed.
“We’ve got to make sure every household in this county understands what is at stake here,” Callagy said. “We’re talking about over a one billion [dollars] lost to this county in the next decade if we do not get our funding.”
As the county prepares to host press conferences and an “information tour” of what is fiscally at stake, with the support of local legislators and representatives, Mueller said he hopes Sacramento “knows what’s coming.”
“They were just given fair warning,” Mueller said.
(5) comments
This is the typical bait and switch by Jackie Speier & Friends.
Sales tax (Measure K) has nothing to with with the Education tax (VLF) - Measure K tax is still flowing.
Measure K was clearly advertised as a sales tax to give money to "equitable" causes. That sales tax is still flowing, the Board of Supervisors could still be spending it on "Equity", but Jackie Speier and Lisa Gauthier are the ones deciding to give that "Equity" money to county staff that mostly is just producing slideshows and spreadsheets.
First of all the VLF funding was never intended for the county to spend. It was for school fundings. But once our school districts got too rich, the ERAF (Education funding) was re-rerouted by the county and kept for themselves. The Board basically used the VLF-education funding for building highways and prisons. The Board of Supervisors and their CEO got addicted to the windfall and also handed it out in form of salary and bonuses - now the state took the windfall away and the Board chooses to punish the poor and blame the state for it.
3 out of the 4 remaining ERAF districts are wealthier ones. All the other rushed out to add tax measures that then made them non-basic aid (aka rich). A parcel tax is non-deductible a donation if one can itemize is, or at least $2K is an above the line deduction with the new tax bill. It is harder and perhaps less reliable to expect donations. Not to mention the controllers office misallocated property tax for 5 years which likely led to the basic aid districts to pass tax measures and make them non-basic aid. A short-term gimmick that is going to cause long-term pain. Then there is even year elections and every agency will have a tax measure. Good luck schools, I am going to guess they will get the short end of the stick. Government is broken up in such a way no one is really responsible in the end. While tax payer pay taxes and just want everything to work.
Schools always get the short end, since the money is going to the districts and mostly staying there. Most districts here spend <30% on real classroom education.
That number should be 60%. But the good news is the superintendents and all their directors get rich and fly first class.
https://www.mv-voice.com/education/2024/11/15/amid-public-scrutiny-state-will-audit-mountain-view-whismans-finances/
I say no more to new taxes. Supporters like to say they can't take this tax, which is true, but it does not prevent Sacramento or Washington from reducing other revenues they have control over.
It's time to repeal Prop 98, no more guaranteed funding for schools who have not and do not produce the top students in the nation. Unions and teachers are democrats, they are the roosters who have been raiding the taxpayer hen house since 1988 and producing NOTHING! It's time to create a voucher system that allows every child who is an American citizen a choice, their bodies, their choice.
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