San Mateo County breathes sigh of relief after majority of vehicle license fee revenue retained in state budget

A majority of California cities receive substantial in-lieu VLF money from the state, as the reimbursement is determined by property tax revenue and the county’s school districts.

But because the setup of San Mateo County’s existing educational revenue structures doesn’t qualify the county for the full in-lieu VLF amount, representatives are left to haggle for the money each year. This leaves local cities uncertain of whether or not they will have VLF revenue, which is typically used to fund basic local services.

Securing two-thirds of VLF backfill — which will go toward funding from two years ago — is a win for the county, particularly because the state faced a looming budget deficit this year and was forced to cut millions in programming and services, Assemblymember Diane Papan, D-San Mateo, said.

“We secured the lion’s share of what the county was owed, and I think that’s a big win in these very austere times,” she said.

Papan, alongside other San Mateo County representatives like Assemblymember Marc Berman, had to keep negotiating for the VLF money as it was continually zeroed out of the budget, she said.

She acknowledged, however, that it would be optimal if the state could come to a more permanent agreement on the future of VLF funding.

“We’re going to work to see what we can do to shore it up, so we don’t always have this back and forth where we’re asking for it,” she said.

Berman also said that having to negotiate San Mateo County’s VLF funding every budget cycle was not a sustainable solution to the problem.

“I think the county and the state need to come to a permanent, long-term deal on VLF funding,” he said. “And I know that there are very strong opinions on both sides about what that deal should look like, and I respect that, but we have this fight every year.”