Vehicle License Fee Shortfall

Vehicle License Fee Funding Shortfall

A State funding issue is affecting San Bruno's local services

The City of San Bruno is facing a significant revenue shortfall related to California's Vehicle License Fee (VLF) replacement funding system.

For fiscal year 2024–25, San Bruno's VLF funding shortfall was approximately $3 million.

Across San Mateo County and its 20 cities and towns, the combined shortfall was approximately $119 million.

This is general-purpose funding cities rely on to provide everyday services. San Bruno is working with communities across San Mateo County to seek a long-term solution at the State level.

The Issue at a Glance
~$3 million
San Bruno's FY 2024–25 VLF funding shortfall
~$119 million

Combined FY 2024–25 countywide shortfall
8 positions

Already eliminated as San Bruno responded to budget uncertainty
8 additional positions

Could potentially be at risk if further losses must be absorbed

How Did We Get Here?

For decades, California cities and counties received Vehicle License Fee revenue to help fund local services.
In 2004, the State reduced VLF revenue and replaced it with a property-tax-based funding system.
In simple terms:
Before 2004:
Vehicle License Fees → Local Government
After 2004:
Reduced VLF → Property Tax Replacement → Local Government

In San Mateo County, the mechanism used to provide this replacement revenue does not generate enough available funding to make the full payments without additional State action.
The nonpartisan California Legislative Analyst's Office identified this problem in San Mateo County more than a decade ago. It is sometimes referred to as "insufficient ERAF."

What Does This Mean for San Bruno?

This funding issue has real consequences for the services residents rely on.
San Bruno has already eliminated eight positions while responding to budget uncertainty, including:

• 3 firefighter positions
• 1 police officer position
• 4 positions supporting land development, economic development and technology

If additional revenue losses must be absorbed, another eight positions could potentially be affected, bringing the total reduction to approximately 10% of the City's General Fund workforce.

Further reductions could affect the City's ability to support:
Public Safety
Fire, police and regional emergency mutual aid
Infrastructure
Road, park and street-lighting projects
Housing & Economic Development
Processing development projects and supporting economic activity
Community Programs
Services including literacy, wellness and senior nutrition programs
Specific future reductions would be determined through the City's budget process.

San Bruno Is Not Alone

San Mateo County and all 20 cities and towns in the county are affected.

For FY 2024–25, the combined shortfall was approximately $119 million, including approximately $3 million for San Bruno.

San Bruno is working alongside other San Mateo County communities to pursue State funding and a long-term solution to the underlying VLF replacement mechanism.

Residents can help State leaders understand how this funding issue affects their community
.
Contact Your State Representatives

Consider contacting your representatives in the California Legislature and asking about a permanent solution to the VLF replacement funding shortfall affecting San Bruno and San Mateo County.

When reaching out, you can:

• Identify yourself as a San Bruno resident.
• Ask what is being done to address the VLF funding shortfall.
• Explain which local services matter to you.
• Ask for a long-term solution that provides predictable funding for affected communities.

Stay Informed

Follow San Bruno's budget discussions and City Council meetings for updates on the funding issue and potential impacts to City services.

Dive into this year's budget.

Follow City Council meetings.

Learn More

Go to San Mateo County Fair Funding to learn more and contact your state representatives.

Last updated: August 13 2026