San Mateo County Board of Supervisors get midyear budget update

“The unknown is always difficult but we are trying to do something to make sure we have an understanding of what our future looks like,” Roberto Manchia, chief financial officer for the county, said.

For fiscal year 2024-25, the county is expecting to see a revenue decline of $2.3 million from taxes, compared to 2022-23, and Measure K revenue is also expected to decrease by $5.5 million from 2023-24 because of “economic pressures we’re facing,” Callagy said. 

The county’s roll value — or money obtained through property taxes — has reached an all-time high of $325.5 billion, but the growth since 2022 is decreasing. 

“This is something we’ll continue to monitor,” Callagy said. “Inflation and high interest rates have tempered new residential construction, we’ve seen also the commercial construction stall out in San Mateo County.” 

Commercial vacancy rates also continue to rise in industrial, office and retail spaces. In 2024, 10% of these spaces were vacant, which is part of the reason the property tax roll is flattening.

Despite the expected loss in revenue, unexpected savings have left the county with $36 million of unspent money in fiscal year 2024-25 that will be redirected back toward departmental services, paying for the vehicle license fee shortfall, one-time projects, and toward the county’s 11% reserve minimum.

Much of the savings are due to vacant staff positions, Manchia said, although this rate has decreased to 12.3% in 2024-25 from 14.6% in 2022-23. Staff turnover rate has also gone down to 9.9%.

The midyear budget projections look to inform the board’s discussion on its two-year budget plan for fiscal years 2025-27 that it will consider this spring. Focus points to inform this discussion, Callagy said, including median household incomes, median rent, vacancy rates and unemployment.

Median household incomes in 2023 were “quite well” in relation to 2022, despite a decrease in these numbers seen among Black and Hispanic residents — which both saw a decrease. The median household income across the county was around $150,000 in 2023. 

The cost for a one-bedroom rental has continued to increase, with the median rent in the county as $2,468 in 2023. 

“That’s something that we continue to monitor and continue to quite frankly worry about, especially with our own workforce even, the inability to live here in the county,” Callagy said.

While unemployment still remains below the state’s average — 5.43% compared to 7.31% — the countywide average weekly unemployment claims went up in 2024 compared to 2023. Callagy noted that in Q1 of 2024 the county saw the highest rate of weekly claims since Q4 of 2021.  

Unemployment will be a major area of focus for the county, Callagy said, because “the more unemployment we have, the more people become reliant on our services” which could lead to overextended resources. 

However, the board remains committed to maintaining the county’s safety net services, board President David Canepa said.  

“We know from the challenges of the past that being careful and sensible with our taxpayer dollars is the best approach we could take to brace for any economic uncertainty,” Canepa said.  

Callagy affirmed the county is preparing for the threat of longer term financial uncertainty should major revenue sources waver, but has “positioned itself well” for any short-term structural deficits that may be a result of federal policies.