County Proposes Final 2026-27 Budget Revisions Without Program or Service Cuts

REDWOOD CITY - San Mateo County is proposing final revisions to its fiscal year 2026-27 budget that assume the state will provide the full amount of Vehicle License Fee revenue owed to the County while local officials work toward a permanent solution to the longstanding funding shortfall.

The County is proceeding in good faith that the state will fulfill its funding obligations and is not proposing cuts to programs and services in the 2026-27 fiscal year while discussions over a permanent solution continue.

"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."

The Board of Supervisors approved a recommended fiscal year 2026-27 budget in June. Since then, the County has closed the books on the previous fiscal year, updated estimates for state and federal funding and made other adjustments based on the latest financial information.

Those final revisions will come before the Board on Sept. 29, when supervisors are scheduled to consider adoption of the 2026-27 budget.

The County and its 20 cities face an estimated $226 million shortfall in VLF replacement funding, including approximately $134 million owed to the County government. The shortfall stems from a state funding mechanism that has left San Mateo County and its cities without the full replacement revenue they are owed.

The proposed budget assumes the County will receive its full VLF funding. Without a permanent fix, County officials say reductions to programs and services would be needed in the future.

The budget totals approximately $6.2 billion across all County funds, including a $4.6 billion General Fund, and authorizes 5,948 positions. That represents a net increase of three positions from the budget approved by the Board in June.

The approximately $983 million increase from the June budget largely reflects year-end fund balances carried forward into the new fiscal year, reserves and one-time adjustments.

The revisions include $109.8 million in Measure K funding for previously approved projects and programs, including $76.6 million for housing and homelessness services, $8.2 million for children, families and seniors, and $2.6 million for emergency preparedness. The remaining adjustments include District Discretionary funding, capital and technology projects, and salary and benefit changes.

The budget also prepares the County for federal and state changes affecting the health and social safety net. The Human Services Agency expects approximately 52,000 Medi-Cal beneficiaries to navigate new eligibility, renewal, work and documentation requirements.

The proposed budget maintains $624.8 million in General Fund contingencies and reserves, equal to 15.6 percent of net appropriations and above the County's 15 percent reserve requirement.

The proposed September Revisions and other County budget documents are available at https://www.smcgov.org/ceo/office-budget-policy-and-performance

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.

Effie Milionis Verducci
Director, Strategic Communications and Community Partnerships
650-407-4915
[email protected]