Burlingame is owed $4.6 million from fiscal year 2025-26 under a broken state funding formula that Sacramento has formally acknowledged but not fixed.

The state legislature passed Assembly Bill 184 on Aug. 31, a budget trailer bill that commits lawmakers to negotiate a solution to San Mateo County's Vehicle License Fee (VLF) shortfall beginning in fiscal year 2027-28. The bill also covers Mono and Alpine counties and would extend any fix statewide.

The countywide gap has nearly doubled in one year, growing from about $119 million in FY 2024-25 to roughly $226 million in FY 2025-26, according to a county statement. The county government absorbs about $134 million of that total, according to the county's Fair Funding campaign. The remaining $92 million falls on all 20 cities and towns, including Burlingame and Hillsborough.

County leaders say the new language is a step forward but far from a solution.

"They are in the wrong, they know they're in the wrong, and they are trying to somehow mollify us with intent language, which is not worth the paper it's written on if you don't then negotiate in good faith," Supervisor Jackie Speier told The Almanac on Sept. 3.

The dispute traces to a 2004 state budget deal. Counties and cities gave up vehicle license fee revenues and property taxes in exchange for replacement funding. San Mateo County officials say the formula shortchanges the county because of its unusually high number of basic-aid school districts, Patch reported.

For six consecutive years, the legislature approved one-time payments covering all or most of the annual gap, according to a county press release. Those payments never fixed the underlying formula. The county has spent about $80 million from reserves over the past two years to cover the gap, and officials call that approach unsustainable.

County and city leaders warn that more than 1,000 local government positions could be at risk if the shortfall persists. One unnamed city described potential cuts that include closing a fire station, eliminating 13 firefighter and six police positions, ending subsidized childcare for up to 815 children, and reducing library hours, according to a county statement. County and city officials estimate cumulative losses could top $1 billion by 2030.

County Executive Officer Mike Callagy said in a Sept. 3 statement that the county appreciates progress but called the situation "an impossible equation" until a permanent fix is in place. The county has proposed a FY 2026-27 budget that assumes the state delivers the full VLF amount owed. No program or service cuts are included in the proposal.

As of Sept. 3, Gov. Gavin Newsom had not signed AB 184. Supervisor Ray Mueller said negotiations with the state Department of Finance were expected to begin after Labor Day. Local officials are pushing for a resolution before Newsom leaves office and want a fix included in the governor's January 2027 budget proposal.

The Board of Supervisors is scheduled to vote on the county's FY 2026-27 budget on Tuesday, Sept. 29.