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To address its ongoing structural deficit, the San Mateo City Council is contemplating a sales tax measure in an upcoming election, as well as a general obligation bond to fund infrastructure projects.
The city adopted its 2025-26 budget less than two months ago, which projects a nearly $12 million shortfall. A long-term deficit of $5 million to $7 million is also expected, which it hopes to narrow with a voter-approved tax in the 2026 or 2028 elections.
Out of several options — including parcel and utility taxes — councilmembers unanimously favored exploring a sales tax to help shore up its operating deficit. A general obligation bond was also favored, though it would only be able to fund capital infrastructure projects.
“I do have concerns that a sales tax remains somewhat regressive, or can be perceived that way, however I do understand the deficits we’re facing,” Councilmember Danielle Cwirko-Godycki said. “I’m supportive of the sales tax proposal and looking at a [general obligation] bond.”
The sales tax would not be imposed on groceries and prescription medicine.
Councilmember Nicole Fernandez said the revenue measure is a “necessary evil,” given funding volatility.
“We couldn’t anticipate the cuts that would be coming from the federal and state in terms of the services and the infrastructure upgrades that we would need for the city in order to maintain basic services at level,” Fernandez said. “We understand that San Mateans are living in challenging times but so is the city.”
San Mateo’s current sales tax rate is 9.625%, and it has about a one-quarter cent capacity before hitting the state limit, according to a staff report. However, the city may lose its ability to add the tax measure if a county or regional measure is placed on the ballot beforehand. The report added that the wording in Senate Bill 63, which is a proposed regional sales tax to fund public transit, may still allow room for local measure even if it proceeds.
Cities throughout the Peninsula are also grappling with how to deal with their own structural deficits. Earlier this summer, the South San Francisco City Council, which faces a $12 million general fund deficit, voiced support for exploring a parcel tax to close its structural deficit.
San Mateo plans to conduct polling this fall, with the City Council revisiting the item in November.
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Dirk van Ulden said:
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(5) comments
When I watched this Council study session discussion last Monday, I heard the usual misleading, but technically correct comments about an increase in sales tax, the most regressive tax there is. Especially from Danielle C-G. She made the same point that Terence made here, "sales tax is [not] currently imposed for groceries or prescription medicine." This encourages voters to believe they can go to the grocery store and walk out paying no tax. True if you buy a raw chicken. But buy it cooked and hot and you do pay tax. Pick up some dish soap, paper towels, Kleenex and Tide soap on the way out, and you will pay tax on your whole "grocery" bill. Similar for the trip to CVS. The prescription is likely the only item you won't pay tax on there. People who will be asked to increase the tax should start paying closer attention to a the places they are taxed, right now. Then when the city pollster tries to mislead them with "no tax on groceries" etc. they will know how to respond. The answer is NO.
Here's an idea: cut spending.
In my 60+ years as a tax payer, I have never, ever heard a governmental agency announce that they are cutting spending. Even though we have an DOGE effort underway, I don't see any reduction in our taxes yet or in overall government spending. The trick is that our local city government announces more hiring and more goodies for the so-called needy, which is followed up in a month or so with an inevitable new tax proposal. How many city council members ever say no to new expenditures and additional staff? They never ask their constituents directly but hide behind a pre-baked opinion survey that guarantees the desired outcome. One of our former council members actually asked the police chief if he needed more funding, just in case. No, on all new taxes and ignore the proliferating cry babies.
Folks, San Mateo and any other Peninsula city are in a situation of their making and we shouldn’t bail them out. The article says “is contemplating” which is shorthand for “will propose” because they need taxpayers to foot the bill for ever-increasing salaries, pensions, and benefits. Let’s see evidence of fiscal management before giving them any more of our hard-earned money. Vote NO on everything, including sales taxes, obligation bonds, parcel and utility taxes or anything else being dreamed up to lighten your wallets. BTW, I don’t believe sales tax is currently imposed for groceries or prescription medicine. These may be regulated by state law.
Well said Terence. We're voting NO on everything! Time for a DOGEing of city hall. They will keep asking for money until we finally say an explicit NO.
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