San Mateo County keeps $6.2 billion budget intact while waiting on $134 million from state
San Mateo County, California – San Mateo County is heading toward final approval of a roughly $6.2 billion budget without cutting programs or services, but that stability rests on one major assumption: the state will deliver Vehicle License Fee replacement money local officials say the County is already owed.
For now, County leaders are budgeting as though the full payment will arrive. That allows them to protect services in fiscal year 2026-27 while negotiations continue over a funding gap that has grown to an estimated $226 million for San Mateo County and its 20 cities.
About $134 million of that amount is owed directly to County government, according to the County. Officials say the shortfall comes from a state funding mechanism that has failed to provide the full replacement revenue expected from Vehicle License Fees.
“We are budgeting for the funding San Mateo County is owed,” County Executive Mike Callagy said.
“We are encouraged that the Governor’s Office and Department of Finance have committed to working with us toward a permanent solution. We want to continue providing the services our residents rely on, but using one-time reserves year after year to cover an ongoing state funding shortfall is simply not sustainable.”
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The Board of Supervisors approved its recommended 2026-27 budget in June. Since then, officials have closed the books on the previous fiscal year, revised state and federal funding estimates and incorporated updated financial information.
Supervisors are scheduled to consider the final revisions on Sept. 29.
The revised spending plan includes a $4.6 billion General Fund and authorizes 5,948 positions, a net increase of three positions compared with the June budget. The overall budget is about $983 million larger than the earlier version, largely because of year-end balances carried forward, reserves and other one-time adjustments.
Measure K funding accounts for $109.8 million of the revisions. That includes $76.6 million for housing and homelessness programs, $8.2 million for children, families and seniors, and $2.6 million for emergency preparedness.
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The budget also anticipates changes affecting health and social services. The Human Services Agency expects about 52,000 Medi-Cal beneficiaries to face new eligibility, renewal, work and documentation requirements.
General Fund contingencies and reserves would remain at $624.8 million, equal to 15.6% of net appropriations and slightly above the County’s 15% reserve requirement.
County officials warn that the current approach cannot continue indefinitely. Without a permanent solution to the VLF shortfall, future program and service reductions could become necessary.
The proposed September revisions and additional budget documents are available through the County’s Office of Budget, Policy and Performance.
