San Mateo County is just one of four Bay Area counties not facing a structural budget deficit, but external pressures continue to raise supervisors and staff concerns for future fiscal landscapes.
The growing unhoused senior population and uncertainty in federal funding and state reimbursements are concerns of the county as it vigilantly seeks to maintain its long-term fiscal sustainability.
Balancing the $5.5 billion budget, with approximately $900 million in the general fund, may look extremely different in coming years, should the state continue to not reimburse what is owed for the county’s Vehicle License Fee shortfall, County Executive Mike Callagy said.
This lack of reimbursement “is the single largest threat to the financial stability of the county,” Callagy said.
Gov. Gavin Newsom’s proposed budget for Fiscal Year 2026-27 does not include funding to cover the $119.2 million shortfall identified for Fiscal Year 2024-25. This omission similarly occurred for the Fiscal Year 2023-24 shortfall, until there was intervention that attempted to make whole what the county was owed. Even then, the state only reimbursed two-thirds of the shortfall owed.
What is owed to the county and left out of the state budget will likely only grow, unless something major happens to make the reimbursement consistent. To advocate on behalf of the county, Noelia Corzo, president of the Board of Supervisors, and Supervisor Jackie Speier will be forming a subcommittee to work closely with Sacramento in getting what the county is owed.
“We have a pretty healthy budget and reserve policy compared to others … and we’ve been able to get a lot of amazing work done,” Corzo said. “But if we have to make cuts because of VLF shortfall, all of that is in jeopardy.”
The county has made efforts, elsewhere, to stabilize the county’s budget. Of the current budget, 16% is kept as reserves, which could sustain the county in the case of an absolute emergency, or loss of one-time dollars.
Callagy noted that sustained threats to the budget’s fiscal sustainability would require more significant action, or associated cuts, far beyond dipping into reserves.
While the county is proceeding with an abundance of caution while analyzing its future budgets, overall, San Mateo County is fiscally stable.
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“Through disciplined financial management, prudent use of one-time resources, and sustained investments in county priorities, the county has avoided a structural deficit while continuing to deliver essential and mandated services,” a staff report reads.
The Board of Supervisors have identified three areas of budget priorities, including housing and homelessness; child, family and seniors; and emergency preparedness.
While the county is witnessing progress in expanding housing stability and making investments into permanent supportive housing and targeted services for unhoused folks, the impact on the senior population remains a concern.
Approximately 63% of the unhoused population are 55 years or older, Speier said. Supervisors unanimously expressed a desire to address this population urgently.
The permanent supportive housing development in South San Francisco at 721 Airport Blvd. will likely open this year, Callagy said, and work continues to be done to address encampments. A $14.1 million grant has helped move 50 individuals formerly residing in encampments into stable housing, and seven of 19 encampments were “resolved” in 2025.
The county is also looking to establish a Navigation Center in North County, similar to the one operating in Redwood City. Estimated to cost $8 million to $10 million to operate each year, it will be a big lift to operate a second facility, but staff is currently in search of the adequate place to support populations living further north.
“It is not [inexpensive] but the amount of lives we impact there is tremendous,” Callagy said.
The midyear budget update also includes adding positions to support the establishment of the Family Justice Center, which is slated to open in July, Callagy said. The center intends to deliver a “coordinated, survivor-centered response to domestic violence, child abuse and other forms of abuse,” by providing multifaceted support all in one place.
Other increases in positions include three dedicated to supporting a human trafficking initiative, led by District Attorney Steve Wagstaffe and his staff, and Sheriff Ken Binder with the support of the Sheriff’s Office.
More details on the updated budget is available in the Board of Supervisor’s Feb. 10 meeting agenda.
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