San Mateo is planning for a $15 million general fund deficit next fiscal year, mirroring a similar trend many cities on the Peninsula face.
The city has already planned for a $6 million general fund shortfall for the 2024-25 fiscal year, which ends in June but, starting in July, it’s currently projecting an even higher deficit.
Karen Huang
The fiscal uncertainty is due to a variety of reasons, ranging from macroeconomic conditions — ongoing inflationary pressures, high interest rates and tariff-induced market swings — as well as a slowdown in tax revenue growth and higher personnel costs. For instance, insurance premiums are up about 23%, Finance Director Karen Huang said.
“This year’s budget development has been challenging,” Huang said. “Over the last few weeks, we’ve seen rapid development and changes in the U.S. trade policies, and we have also seen sell-offs in the stock market … and bond markets.”
About 90% of the city’s income comes from property, sales and real property transfer tax, meaning it’s highly dependent on the health of the real estate market. While it’s been relatively stable over the last couple years, it’s still declined since 2022, Huang said.
“We are taking a little bit of a different approach this year,” Huang said. “We are taking a more conservative approach when we develop the budget.”
Staff are developing a sustainability plan with ways to narrow the financial gaps, including the establishment of a grant management team to “to proactively pursue and manage grant funding opportunities,” a recent staff report said.
Earlier this month, the City Council restructured its reserve funds, freeing up $35 million from two funds, while establishing new capital investment and pension stabilization funds. It may also explore a revenue measure to put before voters in 2026.
“We really need to ask ourselves the tough questions on what we’re going to take on versus expecting the state and particularly the federal government to provide funding in the same manner we’ve come to expect over the last few decades,” said Councilmember Danielle Cwirko-Godcki.
The City Council will finalize a 2025-26 budget in June.
(650) 344-5200 ext. 102
(650) 344-5200 ext. 102
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Thomas Morgan said:
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Rick Bonilla said:
Linda, don’t mind these commenters (with the exception of Jorg) they live in a room full of mirrors and just can’t see outside.
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(4) comments
Pensions - major drag on city finances. Unwarranted and should be cut back.
Why did your reporter leave out HOW the money is spent? Missing from the article is WHERE the budget goes. More than 75% is for fire/police which is fine...residents continue to make demands for other areas of the budget.
A lot of it is just complete mismanagement of projects. The city had to spent millions on car-centric projects like those three grade separations. But of course they completely forgot about adding bike lanes. So of course you have more congestion and not less.
So now they have to come up with plans and ideas to make up for that after the fact.
The Bay Meadows neighborhood was supposed to be a transit oriented development (TOD) with high-density housing close to transit.
But the YIMBY-movement ironically always forgets that high-density, affordable housing requires high-density and affordable transportation, meaning bike lanes. This TOD has hardly any bike lanes and even walking can be dangerous here. So of course now you have parking issue because it's a car-centric development now.
And again getting from here through the grade separation projects to ECR by bike was in the plans but never implemented.
The North Central Complete Streets Plan says this neighborhood needs bike lanes. So a somewhat 'mature and professional' city council does take HUD funding to build those. Great. Then the next generation of council members and a new city manager comes in and being less mature and less professional, but more opinionated wants to take it all back at the expense of $2-3M in San Mateo funding.
San Mateo leadership should stick to it's plans and execute like real professionals would.
Increase the deficit $18M if the City Council follows through on its vote to spend up to $3M to convert the San Mateo High bike lanes to free car storage.
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