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, avoiding program and service cuts.
The county and its 20 cities face an estimated $226 million shortfall in Vehicle License Fee replacement funding, including approximately $134 million owed to the county government. The shortfall stems from a state funding mechanism that has left the county and its cities without the full replacement revenue they are owed.
"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 and updated estimates for state and federal funding. The board is scheduled to consider adoption of the 2026-27 budget on September 29.