By Burt Tsuei

A Realtor with 20+ Years of proven track record of high quality service in the San Mateo County/Bay Area. A lifelong Bay Area resident, Burt works with buyers and sellers from Pacifica to South San Francisco to Redwood City and beyond.

If you own a home on the peninsula, you’re paying some of the highest taxes in California. So it’s worth knowing that more than $157 million meant for San Mateo County is sitting in Sacramento instead.

Fifty-five of California’s 58 counties get their full vehicle license fee payment every year. We’re one of only three that don’t, and that money pays for police, fire, mental health, and the services a city runs on.

A trade made in 2004 set this in motion. Facing a budget problem, the state cut the vehicle license fee, the one you pay when you register your car. Drivers liked it, but that fee had funded cities and counties directly, so local governments stood to lose a huge share of their budgets overnight. The fix was a swap. Cities and counties gave up the fee revenue, and the state promised to replace it every year, permanently, through a new formula tied to property taxes. Statewide, that system moves about $12 billion a year, and for two decades it’s worked the way it should. Just not here.

The problem is buried in the formula, which is tied to how California funds schools. Districts split into two types. In basic aid districts, local property taxes alone cover the state’s minimum school funding. Non-basic aid districts don’t clear that bar, so the state kicks in the difference.

San Mateo County is full of basic aid districts, far more than most counties, and the formula pegs our local government funding to the non-basic aid side. The more of our schools that fund themselves, the less the formula sends back. That’s how a county this prosperous ends up shortchanged while 55 others are made whole. Only San Mateo, Alpine, and Mono are treated this way.

In fiscal year 2023-2024, the county and its 20 cities should have received $114 million. We got $76 million, a $38 million hole in a single year, with more than a billion dollars at risk down the road if nothing changes.

City by city, it gets concrete. Each is short per year:

• Daly City: $6.5 million
• San Mateo: $6.9 million
• Redwood City: $5.4 million
• South San Francisco: $5.2 million

And down the list: Half Moon Bay, Hillsborough, Atherton, Belmont, Millbrae, Brisbane, Colma, Portola Valley, Woodside. None of them spared.

The county itself is owed close to $71 million. This is police staffing, fire response times, homeless services, road maintenance, the basics. Pacifica shows how thin the margin already is. Its mayor has said publicly the city runs a $3 million structural deficit, that losing $2.4 million would push it to roughly 10% of the budget, and that with only two officers on at night, any cut would hit public safety hard.

Countywide, public safety alone would lose $13 million. The county drained $22 million from reserves last year just to cover the gap, and has now sued the state. All 20 cities joined the suit, and getting 20 cities to agree on anything is rare.

Here’s the part worth sitting with. I’m not going to tell you how to vote or what to make of Gavin Newsom. That’s yours to decide. But this isn’t news to Sacramento. The county has been sounding the alarm since 2019, the state’s own legislators know about it, and the lawsuit names the governor’s finance director as a defendant. Even so, the state’s first budget proposal this year left our funding out entirely, and it took heavy lobbying to claw back even two-thirds of what we’re owed.

Meanwhile, the governor, widely floated as a 2028 presidential contender, is spending his time on national TV, his podcast, and book tours. That’s his prerogative. But when a corner of his own state, where the median home tops $2 million, and people pay among the highest property taxes in California, keeps getting passed over on a known problem, it’s fair to ask who that leadership is actually working for.

Why this matters to us as real estate professionals is simple. People pay a premium to live on the peninsula for the quality of life, the schools, the safety, the services, and proximity to two of the strongest job markets on earth. Let the state keep starving what holds that up, and it shows up in property values and in whether people still want to move here.

The county has posted the full breakdown at smcfairfunding.org, and it’s worth a look.

If you’re weighing a move, thinking of selling, or just want to talk through the market, call or text us at 1-650-274-3598, email us at Burt@RealEstateBurt.com, or visit realestateburt.com.