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County of San Mateo

Fair Funding for San Mateo County's Communities

Over $1 Billion at Stake by 2030 for San Mateo County and its Cities

In 2004, the State of California reduced vehicle license fees and committed to replacing that revenue annually for every county and city in the state. For most of California, that commitment has been honored. For San Mateo County, it has not — the State is withholding $226 million owed for FY 2025-26 alone, and without a permanent fix, over $1 billion will be withheld from the County and its cities by 2030.

How Much Funding Is Owed

$226M

owed to San Mateo County and its cities for FY 2025-26

$1B+

at stake by 2030 without full repayment and a permanent fix

21

jurisdictions in San Mateo County excluded from this funding

$12B

in VLF funding paid annually to counties and cities in full, with San Mateo County and its cities deprived their full amount due

The Issue

How a 2004 Promise Created a Growing Funding Gap

A Promise Made in 2004

In 2004, the State replaced local Vehicle License Fee (VLF) revenue with an equivalent funding stream. Because the payment mechanism used to deliver that funding has become obsolete here, San Mateo County and its cities are now blocked from receiving their full amount due without State action.

It Works for Nearly Every Other County

The State distributes more than $12 billion annually in VLF replacement funds statewide. San Mateo County is one of the only counties not receiving what it is owed — leaving the County and its 20 cities without the funding they were promised.

An Outdated Payment Mechanism Denies San Mateo County its Funding

San Mateo County and all 20 cities are being denied their replacement funds because the payment mechanism has become outdated here — a mechanism the State has refused to fix. The State ensured the County and its cities were made whole for the full amount owed in the past but is no longer doing so, leaving 21 jurisdictions without the funding they were promised.

A Question of Fairness

Every other Bay Area county receives its full funding — San Mateo County does not. Local residents contribute billions to state revenues annually, yet the State is not honoring the same commitment made to all 58 counties. San Mateo County and its cities are not asking for anything more than what they are owed.

FY 2025–26

Shortfall by Jurisdiction

Search for your city or county below to see how much in VLF funding is being withheld from your community annually.

Total Countywide Shortfall

$226M

FY 2025–26 · as of July 2026

County of San Mateo$134.2M (59%)
All 20 Cities & Towns$91.6M (41%)

Find Your Jurisdiction

What's at Stake

Services that depend on this funding.

This funding supports essential local services that residents, businesses, commuters, visitors, and families rely on every day. Without this funding and a permanent solution, our communities face real and immediate risk to vital public services:

  • Housing & Homelessness

    • Nearly 3,000 people could lose shelter access
    • 5,500+ households at risk of losing rental assistance, increasing risk of homelessness

  • Health & Public Safety

    • Cuts to mental health care, crisis response, and wildfire prevention
    • Fewer nurses, police officers, firefighters, and emergency responders

  • Children & Families

    • 7,400 children could lose access to early literacy programs

  • Core Local Services

    • Reductions to libraries, parks, and youth and senior programs
    • Delayed road repairs and infrastructure maintenance, causing higher long-term costs

Our Response

What Are We Doing About It?

The County and all 20 cities are aligned and taking action — in court and through the Legislature — to secure full repayment of the funds due in the current State budget, and a permanent legislative fix ensuring San Mateo County is treated the same as all other counties, now and permanently.

  1. Legislative Engagement

    San Mateo County and its cities are working with San Mateo County's state legislators to secure full funding in the State's annual budget, and a permanent legislative fix.

    SMC Delegation Letter(March 5, 2026) (PDF, opens in new tab) VLF Shortfall Letter(March 10, 2026) (PDF, opens in new tab) VLF Request to Governor(June 15, 2026) (PDF, opens in new tab)

  2. Education

    San Mateo County and its cities are informing elected officials, the Governor's office, and the public of the County's rights and that San Mateo County must be treated consistently with every other county under state law.

    Fact Sheet(August 2026) (PDF, opens in new tab)

  3. Legal Action

    In fall 2025, San Mateo County, Alpine County, Mono County, and their cities initiated court proceedings to compel the State to pay the outstanding amounts owed for FY 2023-24.

Press & News

In the News