Assemblymember Papan Announces Inclusion of Local Vehicle License Fee Funds in State Budget

San Mateo County — Assemblymember Diane Papan announced today the successful inclusion of $76.5 million in the 2025 California State Budget, signed by Governor Gavin Newsom, that largely restores vehicle license fee (VLF) backfill revenues owed to San Mateo County and its 20 incorporated cities. This crucial funding supports essential local services such as police, fire protection, libraries, parks, childcare and a wide range of social services.

“The $76.5 million in State Budget funding is not just a line item—it’s a direct investment in public safety, local infrastructure, youth and senior services, and the core functions our communities rely on every day,” said Assemblymember Diane Papan. “I am deeply grateful to my colleagues—State Senators Scott Wiener and Josh Becker, and Assemblymembers Marc Berman and Catherine Stefani—for their close collaboration to make this right for our communities.”

The VLF issue has long challenged San Mateo County due to a statutory quirk dating back to the 2004-05 State Budget, which realigned funding responsibilities between state and local governments. Most counties were made whole through a property tax backfill mechanism known as the in-lieu VLF payment, but San Mateo County was uniquely affected by its pre-existing Educational Revenue Augmentation Fund (ERAF) structure. This ERAF structure created a shortfall in the backfill calculations, leading to a persistent underpayment of tens of millions of dollars annually.

“San Mateo County taxpayers deserve more as this allocation does not represent the full amount owed to our communities,” said Papan. “I am nonetheless proud that we fought hard during these austere times to successfully obtain resources to support the financial health of every city in our county.”

The $76.5 million in funding is expected to be distributed across all 20 cities and the County of San Mateo, helping to narrow fiscal gaps and stabilize service levels.