Representatives from over a dozen cities in San Mateo County joined the Board of Supervisors in a meeting Thursday to discuss the projected impacts of losing out on millions of dollars in funding owed from the state.
“It will change the face of delivery of services to our residents,” said San Mateo County Executive Mike Callagy. “There will be widespread impacts of a historic nature, but it shows how we stand together in a time of crisis.”
San Mateo County estimates that the state owes the county and its cities nearly $230 million dollars this year, money that was supposed to go to the county as part of an agreement known as the Vehicle License Fee Swap, or VLF Swap. The agreement was created in 2004 in which local governments and counties gave up their vehicle license fee revenues to help the state close its budget deficit.
In exchange, cities and counties agreed to receive annual property tax allocations known as the Vehicle License Fee Adjustment Amount, or VLFAA. But due to an outdated funding mechanism tied to school district property taxes, the state has singled out San Mateo County, neglecting to pay the money in full for the last few years as the state faces its own budget challenges, the county said.
“At the time that the formula was implemented, a promise was made to the county that if we ever got in this circumstance, the state would backfill,” said Supervisor Ray Mueller at a briefing before the meeting. “The budget of California started to hit hard times, and so it became convenient to hold out on that promise and to make it a legislative negotiation at the end of each session.”
County and city officials have repeatedly visited Sacramento over the last several months, urging Gov. Gavin Newsom and the Department of Finance to provide what’s owed. In his recent budget, Newsom restored about $80 million of the owed funding, but the county wants a permanent fix.
“Whatever moment of relief came that day, it has fast departed,” Mueller said. “We were grateful, but without full repayment and without a permanent legislative solution, we were left vulnerable.”
At the meeting, Callagy outlined the list of potential impacts if the county does not receive the funding that it is owed — about $134 million.
“The staggering loss of the positions, as you will hear in just a few minutes, will be catastrophic,” he said.
The county expects to have to cut 600 positions, with about half of those hitting health and human services positions like nurses, mental health professionals, physicians, social workers. It would look at possibly having to eliminate programs like specialized care for children with chronic conditions, behavioral health services for in schools, and in-home care for seniors and disabled people.
The county may also have to close a county jail and fire stations on top of eliminating around 170 public safety positions, which includes laying off 52 sworn deputies and sergeants in the county’s Sheriff’s Office, 40 probation officers, and 23 employees in the District Attorney’s Office. If 40 probation officers are cut, then more than 1,000 people on probation would be left unsupervised.
“All of these things would be in jeopardy with this devastating loss,” Callagy said.
One by one, representatives from 15 towns and cities spoke about the possible consequences of not getting the funding.
“The VLF shortfall is not just a budget problem,” said Daly City Mayor Glenn Sylvester. “This is not numbers on a spreadsheet. They represent people, programs, and services that our residents depend on every day.”
Daly City is facing a potential loss of $12.5 million to its budget, a loss that could result in nearly 50 city positions being cut. The city would have to eliminate library and recreation programs and close senior facilities.
The City of East Palo Alto could lose about 13% of its general fund and face service reductions, hiring freezes, or employee furloughs.
“We have had many difficult periods of time in our city, and this shortfall would really become one of the most difficult economic situations,” said East Palo Alto Vice Mayor Ruben Abrica. “This is the kind of thing that would be catastrophic for many families, for the government too.”
August deadline looms for funding
The counties and cities have until the end of August to convince the state to include the owed funding in a trailer bill, which are bills needed to implement the approved budget.
If the counties and cities are unsuccessful, then they will have to continue pushing the state to get the funding secured through the next fiscal year budget. Supervisors told the cities to organize and spread the word far and wide about the possible consequences of not getting the funding.
“We need a hurricane of people calling the governor’s office to say this is unsustainable,” said Supervisor Jackie Speier. “We’ve got to turn the heat on and up.”
Speier and Mueller also urged cities to contact the campaign for Xavier Becerra, the Democratic candidate for governor. If Newsom’s term ends this year without sufficiently addressing the VLF issue in San Mateo County, then the next governor will be hearing from the county and its cities.
Nevertheless, Speier pressed Newsom to fix the problem before his term is up.
“The governor has to take the cotton out of his ears and listen to us,” she said at the briefing. “This is not money that we’re asking for. This is money that is owed us. It is a theft by the state of California, and we should call it that.”
