San Mateo County Leaders Press Sacramento to Restore Hundreds of Millions in Revenue that Funds Key Services

SACRAMENTO - San Mateo County leaders warned state lawmakers Thursday that a decades-old funding mechanism is depriving the county of hundreds of millions of dollars needed to sustain public safety, housing and other core services.

Local officials said the state's current payment structure has already left San Mateo County and its 20 cities short of approximately $157 million over the past two fiscal years, with projected losses expected to exceed $1 billion over the next decade, unless the state acts.

Appearing before the California State Senate Budget Subcommittee on State Administration and General Government, State Senator Josh Becker, Supervisor Jackie Speier and other local leaders urged lawmakers to restore the funding and establish a permanent solution.

"We are one of the economic engines of the state," Becker said, noting San Mateo County alone generates $203 billion annually in gross domestic product. "Yet year after year, the county must fight for funding that we are owed for crucial services. I am here today to advocate for every dollar our county is owed and push for a permanent fix so we can finally end this cycle of uncertainty."

The dispute centers on replacement funding that counties and cities receive tied to a vehicle license fee reduction approved more than two decades ago. These replacement payments are sometimes referred to as "in-lieu VLF" or "VLF." While most counties continue receiving full replacement payments, San Mateo County requires annual state action to receive the full amount due.

Speier warned the consequences of continued shortfalls would be felt across county services.

"We're talking about public safety being impacted. We're talking about not being able to keep the homeless off the street. The County not providing services to children with mental illness," Speier said after the testimony. "The vehicle license fee has always been the third most important source of funding for cities and counties."

Thursday's hearing marked the county's second appearance before state budget panels in two weeks, following testimony before an Assembly budget subcommittee on April 28 from mayors, firefighters, labor groups and nonprofit leaders. County leaders said they will continue pressing state lawmakers and the administration for a permanent fix during ongoing budget negotiations.

Speakers on Thursday warned that continued shortfalls could trigger cuts to public safety staffing, affordable housing programs and social services across the county.

Pacifica Mayor Christine Boles said, "Pacifica is already facing a $3 million structural deficit and the $2.4 million loss of VLF would put our deficit at 10% of our budget. We only have two officers on duty at night as it is, any cuts would be devastating to public safety and our ability to care for our community."

The issue has also drawn support from leaders outside San Mateo County.

"Protecting the full amount of VLF funding San Mateo County is entitled to is not just a local issue - it is an issue of basic fairness to ensure critical regional resources and therefore one which concerns neighbors as well," said Sergio Lopez, a Campbell councilmember and chair of the Valley Transportation Authority and president of the League of Cities - Peninsula Division.

Stacy Jimenez, a Foster City Councilmember, said, "The loss of VLF funding for our county and cities is nothing short of theft. This loss of money translates into loss of services and jobs that will have a devastating ripple effect. Fully funding and solving the VLF shortfall preserves local governments' ability to serve and care for our communities and is essential to the health of our county and beyond."

Greg Wright, Pacifica vice mayor, said, "With our structural budget deficit we are facing reductions in police and fire staff, increasing response times that put our citizens at risk. We have a functioning and effective homeless program whose funding would be at risk."

"The in-lieu vehicle licensing fee shortfall will directly impact vulnerable community members that rely on the stability that county programs can provide," said Kassandra Vivanco Guerrero of the nonprofit Nuestra Casa de East Palo Alto. "I work with these families directly on a daily basis and I am here to advocate for them. It is important for us to speak up for the people who aren't able to be here and do it for themselves."

That was echoed by Georgia Farooq, CEO of Thrive Alliance, which advocates for the nonprofit service sector.

"Our local nonprofits came out to Sacramento in force today - across all issue areas. It speaks to how critical VLF funding is for them to be able to meet compounding community needs."

Jim Lawrence, board chair of Fixin' San Mateo County, said he came to Sacramento "to fight for these funds to be paid to the county because the impact of them will negatively impact senior and low-income families significantly as county and nonprofits will not be able to bridge the gap."

Lisa Litsey, the executive director of Aspire House, a nonprofit that serves as a social and vocational rehabilitation program for adults living with mental illness, said organizations such as hers rely on funding to provide services to the community's most vulnerable residents. "We are a mental health organization. Those funds are vital," she said. "We work with our members to avoid hospitalization, which costs all of us even more."

Marya Ouro-Gbeleou of the nonprofit Daly City Partnership said, "Northern San Mateo County already experiences significant disparities in resources and investment, and further reductions will disproportionately impact low-income families, immigrants, seniors, and working households struggling with the region's high cost of living. We urge the State to fully restore these funds and establish a permanent solution moving forward."

"It is vital to restore in-lieu Vehicle License Fee funding for San Mateo County and find a permanent solution. Loss of this funding would be devastating for our members and for the whole community," said Kyla Valenti, treasurer of AFSCME Local 829, which represents over 4,000 employees and their families across San Mateo County.

Ken Chan of the Housing Leadership Council of San Mateo County said, "By withholding the VLF funds, the state will force cuts to affordable housing production programs that prevent our most vulnerable residents from becoming unhoused, and support to those currently without access to stable housing. This will have a cascading effect, putting many affordable housing proposals at risk and delaying the new homes our communities urgently need."

Manuel Rodriguez of the YMCA of Greater San Francisco said, "At our South San Francisco Community Resource Center, VLF-supported funding helps families access food assistance, housing stabilization, case management and critical support during crisis.

"The result will be more families falling through the cracks before they ever reach emergency systems."

Effie Milionis Verducci
Director of Strategic Communications & Community Partnerships
County Executive's Office
650-407-4915
[email protected]