Redwood City — The California Legislature has taken its first formal step toward working on a fix for the broken Vehicle License Fee adjustment amount (VLF) funding mechanism that continues to short San Mateo County and its 20 cities hundreds of millions of dollars annually, but local leaders say acknowledgment alone won't cover a payroll or keep a fire station staffed.

This year's state budget trailer bill, AB 184, states the Legislature’s intent that the State work collaboratively with San Mateo, Mono and Alpine counties, their cities and other affected jurisdictions to craft a mutually agreeable legislative and fiscal solution for the VLF shortfall, beginning in FY 2027-28 and extending statewide to any jurisdiction facing similar losses in the future.

The shortfall has nearly doubled in a single year, growing from roughly $119 million in FY 2024-25 to approximately $226 million in FY 2025-26, a loss that threatens public safety, public health, mental health and other essential services across the county's 21 jurisdictions.

"While we appreciate that the State has formally acknowledged the problem and expressed a commitment to finding a solution, intent language does not restore a single dollar of funding to the communities that are owed it," said San Mateo County Supervisor Jackie Speier. "There is no reason to wait for a solution. We need this resolved before Governor Newsom leaves office. Every day we delay, our local governments, public employees, community organizations and the people they serve face damaging uncertainty over the funding they depend on. Our communities need certainty, and they need it now."

"We have been clear from the beginning that we are not asking for special treatment. We are asking for equal treatment," said San Mateo County Supervisor Ray Mueller. "This new language gives us an important opportunity to work toward a permanent solution. We appreciate our state delegation Assemblymembers Diane Papan and Marc Berman, Senator Josh Becker, our labor partners, cities and community organizations that helped bring us to this point. Now it’s time to turn intent into action and fix this."

Months of Escalating Pressure

The AB 184 language follows a sustained campaign for a solution by the county, its cities and local partners. Most recently, on August 13, elected officials, labor representatives, community organizations and public safety leaders held a joint press conference and study session describing the public programs and positions at stake, and demonstrating that the issue reaches well beyond government budgets and into frontline staffing and services.

For example, one city has shared the potential closures associated with the millions it would need to cut from its annual budget, including closing a fire station, eliminating 13 firefighters and increasing response times throughout the city; eliminating six Police Department staff; and eliminating all city-subsidized childcare impacting up to 815 children. They would need to close adult day care, close all libraries and pools 1 day/week, eliminate their literacy and STEM programs, delay affordable housing projects, and delay all Housing Element compliance. These losses represent up to 100 city staff positions in one city, alone. 

If left unresolved, San Mateo County stands to lose more than $1 billion total by 2030 -- an unprecedented funding loss with unprecedented consequences across the County. As a result, local state legislative delegates and leaders across the San Mateo County cities, labor organizations and community partners have appealed to the State urging a permanent fix.

“A VLF shortfall isn't an abstract line item. When public agencies are forced to cut positions, and here we’re talking about upwards of 1,000 essential positions that are in jeopardy, the effects ripple outward: slower emergency response, longer waits for care, and less money circulating through local businesses, because public employees are also taxpayers, renters and customers in this community. Our members have shown up for the state's priorities year after year, in public health, public safety, and the essential services Sacramento asks us to deliver. That work deserves a real answer, not another delay. We need this Governor and the Department of Finance to work with counties on a mutually agreed-upon solution and commit to including it in the Governor’s January 2027 Budget proposal , before more families and communities bear the cost of inaction," said Julie Lind, Executive Secretary of the San Mateo County Labor Council.

The push has justifiably drawn statewide attention, as any solution would have relevance statewide should other jurisdictions face similar losses in the future. On August 27, CalMatters published an opinion piece by Supervisors Speier and Mueller, “A broken promise could cost some California counties and cities millions of dollars”.

The Work Continues

The Legislature's stated intent is for a solution to take effect in FY 2027-28, applying statewide to any county or city facing a VLF shortfall. San Mateo County and its cities will keep working with the state and local partners toward a fix that is durable, equitable and protects jurisdictions' fiscal stability.

"We appreciate the progress that has been made and the willingness of our legislative partners to engage on a structural solution," said County Executive Officer Mike Callagy. "But until this is resolved, we are managing an impossible equation, preparing our organizations for a future that could include massive cuts, protecting essential services for as long as fiscally possible, and pursuing every available avenue to secure the funding our County and cities are rightfully owed.”

Interview Availability:

• San Mateo County Supervisor Ray Mueller
  To request an interview, please email Marisol Escalera: mdurani@smcgov.org
• San Mateo County Supervisor Jackie Speier
  To request an interview, please email Katrina Rill: krill@smcgov.org

CEO Media Contact:

Effie Milionis Verducci, Director, Strategic Communications & Community Partnerships
County of San Mateo
C: (650) 407-4915
everducci@smcgov.org

For additional information about the VLF funding issue and ongoing efforts to secure a permanent solution, visit SMCFairFunding.org.

About San Mateo County
Established in 1856, the County of San Mateo stretches from the Pacific Ocean to San Francisco Bay and includes 20 cities and rural communities. Home to more than 750,000 residents, it is one of California’s most diverse counties with an economy driven by innovation, life sciences, agriculture and international trade and travel. In addition to serving unincorporated communities, the County provides countywide services that support the health, safety and quality of life of residents. Learn more at smcgov.org.