|
Getting your Trinity Audio player ready...
|
State officials agreed to negotiate with San Mateo County leaders over Vehicle Licensing Fee distribution, potentially staving off massive cuts to fire, police, infrastructure and other public services.
In a budget “trailer,” Assembly Bill 184, passed Aug. 31, the state legislature approved plans to negotiate a new formula for backfilling Vehicle Licensing Fee (VLF) fund revenues to San Mateo, Alpine and Mono counties. While the bill has yet to be signed by Gov. Gavin Newsom, county leaders say the statement of intent to negotiate is a significant step, even if it’s only “one rung on the ladder.”
“There is a ladder to climb and until you reach the top of that ladder, you’re not successful,” Supervisor Ray Mueller told this news organization. “We’ve been able to climb a few of those rungs but there are many more to climb.”
Officials from San Mateo County and all 20 of its cities have been raising alarms for the past few years, saying they’re facing growing deficits from shrinking VLF funds. County officials are projecting $226 million in countywide shortfalls in the next fiscal year, and $1 billion in total losses by 2030 unless the backfill formula is reworked.
At an Aug. 13 press conference, county and city representatives said without the backfill funds they say they’re owed, more than 1,000 employees would have to be laid off. Those layoffs would ripple across every public service sector, resulting in slower response times from police and fire departments, less medical staff at hospitals and worse public services overall.
Supervisor Jackie Speier said the anticipated cuts would be “devastating.” She said she’s been disappointed in the state government’s slow progress toward the negotiating table, and while she hopes the statement of intent will lead to earnest negotiations, she’s still skeptical.
“They are in the wrong, they know they’re in the wrong, and they are trying to somehow mollify us with intent language, which is not worth the paper it’s written on if you don’t then negotiate in good faith,” Speier said in an interview.
The shortfalls stem from a ballot measure approved by California voters in 2004 which reduced the VLF tax. After the reduction passed, legislators replaced lost revenue with another funding stream through local school districts that receive state General Fund money. For most counties, this replacement mechanism restores the full amount of funding.
However, a majority of school districts in San Mateo County are what’s known as “basic-aid districts,” meaning that funding from property taxes is enough to keep them from qualifying for state subsidies. Previously, the state backfilled San Mateo County’s projected losses, but ballooning VLF shortfall expectations and a tightening state budget have led to lower backfilled funds.
Finding a permanent fix
The one-paragraph commitment passed in AB 184 says the state intends to negotiate “mutually agreeable legislative and fiscal solutions to the revenue shortfall from the vehicle license fee.”
It also says the state’s goal is to have a solution up and running by the next fiscal year, which starts July 1, and for the solution to be applicable to all “counties and cities to the extent those counties and cities experience revenue shortfall from the vehicle license fee in any fiscal year beginning with the 2027–28 fiscal year.”
A spokesperson for the state’s Department of Finance declined to comment further and did not want to speculate about future negotiations.
Assemblymember Diane Papan (D-San Mateo) said it’s particularly important that the negotiated solution applies broadly, not just to the three currently impacted counties. As other counties’ property values rise, they risk getting into San Mateo County’s current predicament: Their school districts will become basic-aid districts and fall out of alignment with the current VLF backfill formula. She pointed to Napa and Marin counties as likely examples.
“Right now, it involves some small counties, Alpine, Mono, but you start getting bigger counties and they’ve got a much bigger problem on their hands,” Papan said.
That makes it even more urgent for a permanent fix to be negotiated, she added. It would also prevent impacted counties and cities from spending time and energy asking the state for backfill funding every year.
“This formula … may not be viable in the future, that’s why you get this discussion of what’s a permanent fix,” Papan said.
Mueller said he’s looking for a solution that ensures San Mateo County receives funding equal to the amount of VLF revenue generated. Where that money comes from will be part of the negotiations, but Mueller said he wants assurance that it will be backfilled by the state’s General Fund.
Negotiations could begin after Labor Day with the Department of Finance and a slate of local representatives that includes the county’s state delegation, Mueller said. His goal is to have a permanent fix in Newsom’s fiscal year 2027-28 budget proposal, but because negotiations haven’t started yet and the situation is still uncertain, the county and its 20 cities will still need to prepare themselves for the potential cuts.
“We’re going to leave nothing on the table, we are just going to fight for this funding restoration, because it’s that important,” Mueller said.
