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San Mateo County has unveiled its $4.9 billion budget for the coming fiscal year, but officials acknowledge concerns over state and federal funding could pose trouble in the months ahead.
The two-year budget proposal outlines spending plans through 2026-27 and funds public safety, health, housing and emergency preparedness in the county with 700,000 residents. County leaders warn that slowing revenue growth and increasing labor and contract costs are straining long-term fiscal sustainability.
County Executive Mike Callagy highlighted risks from changes to federal programs like Medicaid and food assistance, as well as California’s projected $12 billion shortfall. Some key county revenues, including vehicle license fee backfills, are already in jeopardy for the second year in a row. Officials say they may need to revise the budget again after state and federal budgets are finalized.
“It is increasingly evident that critical components of the county’s budget and operations specifically associated to programs such as Public Safety, Social Services, and Health are at significant risk,” Callagy said about the continued uncertainty regarding vehicle license fee backfills.
The general fund accounts for $3.5 billion of the upcoming year’s spending, with reserves projected to remain above the Board of Supervisors’ 15% target. The total budget declines slightly to $4.5 billion in the second year due to the completion of major capital projects.
Callagy anticipates $46 million in capital projects carried over from previous years, including $9 million for improvements to Flood Park. The board will look at new capital projects in September as part of its five-year capital improvement plan.
San Mateo County is not currently projecting an overall budget deficit, but officials warn that structural imbalances could emerge in the coming years. The county’s ongoing expenses — particularly rising labor costs — are outpacing revenue growth.
“The growth rate of ongoing expenses is consistently outpacing the growth rate of ongoing revenues, creating increasing fiscal pressure,” Callagy wrote.
Without adjustments, the county could face deficits in future years, especially if state and federal funding continues to be uncertain or delayed.
Despite these challenges, the county plans to increase its required reserves and continue investing in its top priorities: services for children, families and seniors; disaster preparedness; and housing. Callagy recommends an increase of 13 new positions, bringing the total to 6,111 county employees.
“This budget reflects a commitment to meeting immediate needs while preparing for a shifting fiscal landscape,” Callagy wrote in his budget message.
Public hearings on the budget are scheduled for late June. The Board of Supervisors must adopt a budget before July 1.
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