Times are tight, and the state may take our money. What’s old is new again, and the cyclical trend from the early 2000s that led to Proposition 58 on the 2004 ballot has returned. It’s not just bell bottoms, prairie skirts and Uggs making a comeback, budget trickery is too.
Simply taking local revenue was straight up abandoned with Proposition 58’s passage as it allowed for the creation of a reserve fund and eliminated future borrowing, but new ways always emerge.
This year, Gov. Newsom’s budget shows a $28 billion deficit with an abundance of budget trickery including paying state employees a day late in the new fiscal year and other fun. Smoke and mirrors.
One of those tricks would have very real impacts to each and every one of us in San Mateo County and that is the subject of a pretty twisted and complicated maneuver related to education funds and vehicle license fees.
We’ve reported at length on this issue but it boils down to this: Residents pay their vehicle license fees, which the state reimburses to cities usually the following year using a reimbursement formula based on the number of noncommunity funded school districts. That works for most counties, but San Mateo County has few of those districts, as most of ours generate sufficient property taxes to meet their state-mandated minimum school funding needs.
We are considered a “very wealthy” county, at least if you believe outside media, but we have pockets of wealth that are isolated from other areas since we have 20 cities and towns and 24 school districts that don’t share resources, and that’s not going to change. This creates a burden on the areas outside the pockets.
The county, including all cities within its borders, is owed about $70 million from last fiscal year, and the projected amount owed for this year is $114 million. City budgets pay for development planning, police and fire services and infrastructure. And cities are stretched because the recovery from COVID is still not complete, sales tax revenue is still coming back, and hotel tax is nowhere near where it was before the pandemic. Softening numbers of property sales add to the mix, along with the need to raise wages for city workers to attract new hires in a very expensive place to live. And don’t forget pension obligations never went away.
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We may be seen as affluent, but tell that to the officials leading schools that would be Title 1 if they weren’t in the community-funded category, the cities struggling to fill the ranks of their first responders, parks and library staff, or the workers here struggling to make ends meet.
I imagine some of that was the subtext of conversations our Assemblymember Diane Papan, D-San Mateo, had with budget leaders such as Assemblymember Jesse Gabriel, D-Ventura, and state Sen. Scott Wiener, D-San Francisco, the budget committee chairs in their respective houses.
That led to the joint legislative budget agreement plan including the money originally to be swiped from San Mateo County. While that is a strong win, it’s not over. Yet, the inclusion does indicate an understanding there is an impact of these dollars going elsewhere. Before the end of the fiscal year, the next few weeks will include negotiations on a wide range of issues including this one. In the words of Francis Bacon, “Hope is good breakfast, but it is a bad supper.” In other words, cautious optimism.
So appreciation to both Papan and state Sen. Josh Becker, D-San Mateo, for fighting on this issue. Budget battles in poor economic times are never fun and there is every indication they will continue into the immediate future as that $100 billion surplus from last year vanished real quick. And everyone knows diminishing resources means fights.
There is also a lesson here for city councils, and candidates seeking to join them come November. Analyzing the city’s budget should take up much of the job of a councilmember, and not just rubber stamping staff recommendations but coming up with creative solutions because the financial horizon for every government agency in San Mateo County isn’t pretty even if this battle is won.
Inflation has done a number on average folks, and candidates and current office holders should think of some ideas on how to best spend and save our money to ensure fiscal stability now and into the future without relying too much on new fees and taxes. Now that’s a trend most can get behind.
Jon Mays is the editor-in-chief of the Daily Journal. He can be reached at jon@smdailyjournal.com. Follow Jon on X @jonmays.
(6) comments
I have to make a correction to my comment. Based on the news release, I believed the Housing & Economic Development Manager position was new. However, after checking further, I found that it was actually created in 2019 and first funded in fiscal year 2017. The news release was for the new appointment to fill the position. I apologize for that error.
I checked my records further for that older time period and found that Belmont's city budget for FY 2018 proposed a 48% increase in city personnel over the budget for FY 2015. This was after the passage of Measure I for infrastructure in late 2016, so city officials may have felt flush with cash.at that time. However, any fiscal woes today may be partly due to that huge increase in hiring at that time.
Belmont officials raise alarm about this possible funding loss every year in the budget process, including this year. They claim financial disaster will ensue if this funding is lost and taxes may have to be raised to deal with it. Yet, they recently created two new and expensive city management positions, including the Housing and Economic Development Manager just now, and the Assistant City Manager one year ago. It seems irresponsible to add these positions if there is a real danger of financial crisis in the future.
I remember when David Lim was on City Council in San Mateo it was cautioned that the City budgets should not rely on this source of funding and that it could be taken away at anytime (I think at that time the estimate would be it would end in two years). Fast forward ten years later and Cities seem over reliant on this funding source. I think would be wise to replace a swap with a swap. There are so much unfunded infrastructure and sea level rise to address. Why not have the State issue general obligation bonds (state repays) for infrastructure and sea level rise improvements (this would allow not only the current year but the entire balance owed)? Instead there is a victim mentality, and engaging in the same fight each year. Not to mention the current arrangement creates a temporary funding source which allows Cities and the County to incur future unfunded pension obligations (source lasts for 20-30 years, but the retirement obligation does not end when with the funding source).
Thomas, good point. The lesson, don't rely on revenue that the State can take away, or don't count your chickens before they're hatched.
I like your thinking here Thomas, makes alot of sense
Thank you for an excellent and informative article that our citizens should be aware of. One party government has it costs.
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