Restoring local funding owed to San Mateo County

When combined with funding the state still owes from the previous fiscal year, the total obligation now exceeds $157 million owed to San Mateo County cities and the county itself.

For Peninsula residents, that shortfall is not an abstract accounting issue. It threatens the services that communities rely on every day.

At the county level, vehicle license fee revenue supports a wide range of programs that help residents stay housed, healthy, and connected to opportunity. If state leaders continue to withhold these funds, the consequences could include closing shelters that house nearly 3,000 people, eliminating rental assistance for more than 5,500 families and seniors at risk of eviction, reducing early literacy programs that serve roughly 7,400 children, and cutting psychiatric services that support hundreds of residents experiencing homelessness or mental health crises.

Cities and organizations across San Mateo County are warning about similar consequences.

In Redwood City, officials say the current shortfall alone is roughly equivalent to the cost of 14 police officers or 19 firefighters, or the entire budget for the city’s downtown library. Similar tradeoffs are emerging across the Peninsula, where city leaders warn that losing this funding would mean choosing between public safety staffing, infrastructure maintenance and community programs.

Union workers see this shortfall not just in budgets, but on the ground. Fewer coworkers on shift, rising caseloads and the erosion of services they are proud to deliver to their communities will affect all of us. For the workforce, this is about more than dollars; it is about the ability to do their jobs safely and effectively.

These are not hypothetical scenarios. They are the real local impacts of a state funding formula that is no longer working as intended.

The problem traces back to the 2004 vehicle license fee “swap,” when counties and cities gave up local revenue to help the state balance its budget and meet school funding obligations. In return, the state promised to backfill those funds for local governments.

That promise has been honored across nearly the entire state.

But changes in school funding classifications over time have distorted the formula in San Mateo County, leaving our communities uniquely exposed while other counties remain protected.

The growing frustration among local governments is why every one of San Mateo County’s 20 cities has now joined the county in legal action against the state to recover tens of millions of dollars in unpaid funding. To ensure transparency and accountability, the county and all 20 cities have launched a shared public website (SMCFairFunding.org) documenting the impacts, legal action and unified effort of these 21 local governments to secure the funding they are rightfully owed.

San Mateo County may be perceived as affluent, but losing the VLF reimbursement we are owed would be catastrophic to our ability to deliver essential services. We are a cornerstone of California’s economy — home to innovative industries, small businesses and taxpayers who contribute billions to statewide priorities. Yet when it comes to honoring a longstanding commitment to local governments, our county has been denied its fair share.

As observers have noted, the situation highlights a broader flaw in the state’s budgeting system: technical formulas and accounting decisions made in Sacramento can quietly shift millions of dollars away from local communities, even when those funds were originally promised to them.

The principle at stake here is straightforward. When the state promised counties they would be made whole after restructuring the vehicle license fee, that promise was meant to apply to every county — not just most of them.

Gov. Newsom and state leaders now have an opportunity to correct this inequity in the final state budget. Doing so would protect essential services that everyone who lives, works, or visits San Mateo County depends on — while ensuring seniors, children and our most vulnerable neighbors are not left to bear the greatest harm — and restore fairness to a funding system that was never meant to leave any county behind.

San Mateo County has long done its part to support California’s success. Now it is time for the state to do its part for San Mateo County.

Noelia Corzo is president of the San Mateo County Board of Supervisors. Julie Lind is executive officer of the San Mateo County Central Labor Council.