San Mateo County leaders advocate for $157 million in vehicle license fee funding

Around 55 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. With hundreds of millions that go toward basic services on the line, the county can no longer let that practice continue and requires a long-term solution, Noelia Corzo, president of the San Mateo County Board of Supervisors, said. 

“The problem is known, the cause is understood, but until today, the state has chosen not to act, because the payment mechanism used to deliver the promised funding has become obsolete,” she said. 

The county and all of its cities have already taken the fight to the courts, suing the state for $38 million that was not included in a deal that provided the county only two-thirds of its VLF money. In addition to that $38 million from last year, $119 million the county and its cities are expecting for this year is not included in the state budget at all.  

But in a surprising turn of events, Corzo said, the county had its “first productive conversation” with the California Department of Finance about a plan to replace VLF funds. She wouldn’t reveal the details of that conversation, but did say the county hoped to have an update in around two weeks.  

Still, government, police, fire, housing and labor leaders drove home the point that the current system is unsustainable. Integral jobs, programs and services are on the line, San Mateo County Supervisor Jackie Speier said. Redwood City, for example, would be forced to lay off either 14 police officers or nine firefighters if $7 million in VLF funding isn’t returned to their city, she said. 

“This is real money. It’s also real service providers that won’t be there when we need them,” she said. “It’s a fire engine unable to get there quick enough when you’re having a heart attack. It’s the difference between a shelter bed being available or not for a person who is unhoused.” 

The $13 million cut to San Mateo County’s public safety services that would occur if VLF is not received is unacceptable, said Ken Stenquist, president of the San Mateo County Police Chiefs and Sheriffs Association. 

“This issue of the state of California withholding these fundings is not a budget crisis. It is a public safety crisis,” he said. “This is not about politics. This is about reliability. I can’t budget from year to year, not knowing if we’re going to be losing millions of dollars from one year to the next.” 

Without the VLF money, San Mateo County will no longer have the money for the basic social services programs to which it provides tens of millions, nonprofit agency Samaritan House CEO Laura Bent said. Samaritan House could be forced to close eight shelters and displace 3,000 individuals, she said. 

“These services are not nice to have. They save lives every day and ensure that the most vulnerable people in our communities are treated with dignity and given a chance to get back on their feet,” Bent said. “We urge the governor to act now to ensure full funding to these services are not lost. And have no doubt, if they are lost, they will impact every single resident in our county.” 

Both U.S. Rep. Kevin Mullin, D-South San Francisco, and a representative for state Sen. Josh Becker, D-Menlo Park, emphasized that San Mateo County is an economic engine for the state, providing more in funding via taxes than it receives back. In fact, the county contributes approximately 15% of the state’s income tax, Becker’s Senior Field Representative Joan Dentler said. 

“The local leaders who are gathered here today know exactly what’s at stake. This is not abstract,” she said. “The legislators are done coming to the negotiating table year after year, demanding what was promised to this county to deliver the services their constituents and community expect and pay for.” 

A lack of funding for basic services also makes it far more challenging for localities to act on the state’s housing goals, which has been a major California priority for years, Mullin said. 

“The state is pushing localities to build more housing, but when resources are strained and local investment is reduced, it makes it harder to qualify for federal tax credits to build the housing that the state wants us to build,” he said. 

The VLF issue truly impacts every single San Mateo County resident, Julie Lind, San Mateo County Labor Council executive officer, said.

“If the state of California steals the money that rightfully and legally belongs to our county, the fire stations in danger of closure — we’re your firefighters. The libraries whose hours will be gutted to the bone — we’re your librarians. The mental health and substance abuse services on the line — we are your counselors,” she said. “But we’re not just a workforce on a spreadsheet. We’re your neighbors.”