Nearly 1,000 public employees across San Mateo County could lose their jobs next fiscal year — including police officers and firefighters in cities that have detailed specific cuts — if Sacramento doesn't fix a $226 million Vehicle License Fee funding gap before a Sept. 1 legislative deadline.

County and city officials from all 20 municipalities gathered Thursday, Aug. 13 outside County Center in Redwood City to demand a permanent solution, warning that the shortfall would mean longer 911 response times and gutted public safety programs.

"It is a theft by the state of California, and we should call it that," Supervisor Jackie Speier told the crowd of about 100 to thunderous applause. Speier wore red, which she said reflected being "red-hot mad" at Gov. Gavin Newsom.

San Mateo's $12.9 million hit

For San Mateo specifically, the damage is steep. City Manager Alex Khojikian said the city's VLF shortfall jumped from $7.1 million to $12.9 million, with 80% of that tied to staff costs, according to a county press release. That money pays for the staff who deliver essential services to the city's 105,000 residents.

Central County Fire Chief Dave Pucci, who also serves as president of the San Mateo County Fire Chiefs Association, said at the press conference that practically nothing can be cut from fire budgets without immediately affecting operations. He pointed to a recent Foster City incident that required 150 firefighters for more than a day while crews still answered other 911 calls countywide.

The county government's share of the $226 million shortfall is approximately $134 million, according to a county press release. Supervisor Ray Mueller said that figure puts more than 600 county public servants on the chopping block.

As we reported Aug. 13, county officials had initially put the shortfall at $230 million; that figure has since been refined to $226 million countywide, per the county's official press release, and the gap also threatens libraries, parks, roads and health care services countywide.

Neighboring cities face deep cuts

Redwood City faces a $10.1 million deficit, nearly 10% of its general fund. Mayor Elmer Martínez Saballos said the city would eliminate 40 frontline positions including firefighters, police officers and librarians. Redwood City Police Chief Kristina Bell said proactive programs like mental health co-responder teams, youth diversion and traffic safety task forces would be first on the cut list.

San Bruno has already eliminated eight positions, including three firefighter and one police officer slots, with City Manager Alex McIntyre saying deeper cuts are coming.

Menlo Park expects to lose 27 positions starting next July — a 9% reduction in tenured staff across all departments — to close a $5.4 million gap, about 6% of its general fund.

A 2004 problem still unfixed

The shortfall traces to a 2004 state budget deal that reduced the Vehicle License Fee rate paid by vehicle owners and created a replacement funding mechanism. That system works for 55 other California counties, delivering more than $12 billion annually. But San Mateo County, along with Mono and Alpine counties, does not receive its full replacement funding without further state action.

For six consecutive years, the Legislature has approved one-time appropriations covering all or a substantial portion of the gap but has not fixed the underlying formula flaw. The county has drawn approximately $40 million from reserves in each of the past two years to cover the difference, a practice officials called unsustainable.

In June, Newsom signed a budget that included nearly $77 million in one-time VLF backfill for San Mateo County, enough to cover about two-thirds of what local governments say they are owed. Mueller called the partial fix bittersweet because it does not guarantee future payments.

Sept. 1 deadline looms

Speier told the Almanac that the county has a state legislator ready to champion a permanent fix, but negotiations are ongoing. If the funding mechanism is not amended by Sept. 1, the responsibility falls to the next governor as Newsom terms out.

County Executive Mike Callagy called the shortfall the most significant fiscal issue the county has faced in its modern history.

Residents can find their city's estimated shortfall at smcfairfunding.org.