San Mateo County Releases $5.5 Billion Budget as Policy Shifts Raise Uncertainty

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Redwood City - San Mateo County today released a revised $5.5 billion budget that maintains critical services even as officials warn of uncertainty from federal policy shifts and an unresolved state shortfall.

The Board of Supervisors is scheduled to consider the spending plan at its meeting on Tuesday, Sept. 23. If adopted, it will update spending and staffing levels for the 2025-26 fiscal year, which began July 1.

The revisions reflect year-end rollover adjustments, changes in state and federal revenue, higher employee health costs and targeted additions in health and public safety programs. The plan increases spending by about $610 million and adds 24 positions, bringing total county staffing to 5,889.

County Executive Michael Callagy said the County's priority is to maintain services that tens of thousands of local residents rely upon, from the Daly City Health Center and other neighborhood clinics to service offices from East Palo Alto to Half Moon Bay that help families request food assistance and housing support.

"We don't control what happens in Sacramento or Washington, but we can prepare responsibly here at home," Callagy said. "Through this Board's careful fiscal stewardship, we're protecting the services residents count on while keeping the County on solid financial footing."

County staff said that while the state budget has not brought major cuts this year, uncertainty remains. Changes at the federal level could affect Medi-Cal, food aid and other safety-net programs, with added costs falling to local government. Much will depend on how federal rules are written and how the state responds.

As one example of the ripple effects of potential policy changes, Human Services Agency officials are also preparing for possible shifts in food assistance. About 2,000 local residents rely on a waiver that allows certain adults without dependents to stay eligible for CalFresh.

Leaders said they are tracking these programs carefully to anticipate impacts on both clients and the County's budget.

While most federal provisions take effect later, the County expects to provide more details during the midyear budget update as guidance becomes clearer.

The County is also contending with a deficit in state reimbursement of the Vehicle License Fee Adjustment Amount, a critical funding source. For FY 2023-24, the state paid only two-thirds of what was owed, leaving the County with a $22.3 million funding gap that is being covered by reserves. In August, the County sued the stateseeking full reimbursement of $38 million the County argues is owed to San Mateo County and 20 local cities.

"Using reserves for one-time pressures is prudent, but it's not a long-term fix," Callagy said. "We'll keep pursuing every dollar the state owes while making sure today's needs are met."

The County now holds $581.6 million in General Fund reserves, or 16.9 percent of net appropriations. Officials said the fund balance and long-term financial policies position San Mateo County to absorb short-term pressures while continuing essential services.

"This plan keeps the doors open at our clinics, supports vulnerable families and invests in the future," Callagy said. "We have a solid team across the organization deeply committed to public service, and while we work through the budget numbers, our commitment to the public never stops."

The "September Revisions FY 2025-26" is available at the Office of Budget Policy and Performance.

Effie Milionis Verducci
Interim Director of Strategic Communications
650-407-4915
[email protected]