Financial Sustainability

San Mateo is taking action to address its ongoing structural budget challenges and build a sustainable financial future. 

Over the past five years, local prices have increased nearly 18%, while the City’s General Fund budget has increased approximately 16%. The City continues to reduce costs, identify efficiencies, and pursue additional savings while maintaining essential services and infrastructure.

Building a Sustainable Financial FutureFinancial Sustainability Illustration

The financial decisions we make today will have an impact on generations to come. 

The City Council took action to advance a comprehensive Financial Sustainability Plan focused on addressing the City’s structural budget challenges and strengthening San Mateo’s long-term financial position.

Identifying Savings and New Funding

The City has already reduced General Fund costs by approximately $4 million through operating budget reductions and reduced contributions to the Housing Set-Aside and Workers’ Compensation funds. 

$4 Million in Budget Reductions in the 2026-27 Fiscal Year alone.

  • $1.6 Million Saved in Workers Compensation 
  •  $1.3 Million in Housing General Fund Contribution

  • $1 Million in Operational Efficiencies

$2 Million More Identified for Potential Savings

  • Holding 10 Vacant Positions Open
  • Maximizing Grants and Other Dedicated Funding
  • Continuing to Review Operating Expenses
  • $110k Annually in Revenue from Parking Agreement

Compounding the Challenge: VLF Funding

After years of receiving Vehicle License Fee (VLF) funding, San Mateo now faces significant losses.

  • Historically: State backfilled annual shortfalls
  • FY 2023-24: State funded only 67% of the shortfall, with $2.2M lost
  • FY 2024-25: State funded only 65% of the shortfall, with $2.4M lost
  • FY 2025-26: $7.1M anticipated shortfall, now increased to $12.9M estimated loss, with the City actively fighting for this reimbursement from the State.

There is currently no State commitment to repay these outstanding amounts. Even with VLF funding fully restored, San Mateo faces an ongoing $5–7M structural deficit. Learn more at SMCFairFunding.org.

San Mateo's Spend Per Resident

San Mateo already spends less per resident than most comparable neighboring cities, underscoring the importance of balancing additional reductions with maintaining core services.Spend Per Capita Graphic

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