San Mateo County cities join county's lawsuit against state over withheld $38 million

"All 20 cities in San Mateo County have joined the county in suing the state, accusing officials of withholding more than $38 million in promised funding and demanding the money be restored. The lawsuit, originally filed in August in San Francisco, focuses on a state funding system that county officials say shortchanges only three counties: San Mateo, Alpine and Mono."

"San Mateo County and its cities received $76.5 million of the roughly $114.3 million they were owed last year, leaving a shortfall of about $38 million, according to county officials. The lawsuit says the shortfall violates California law and a 2004 deal, under which cities and counties agreed to reduce vehicle license fee revenue in exchange for state replacement payments calculated through a complex formula."

"The lawsuit notes that in 2004, cities and counties agreed to give the state a portion of property tax revenue and accept lower vehicle license fees to help the state close a budget gap. In return, the state promised replacement payments that would grow each year with local property values. The deal was later protected by a constitutional amendment to ensure local governments would reliably receive the funding."

San Mateo County and all 20 of its cities have sued the state, alleging the state withheld about $38 million in promised replacement payments tied to vehicle license fees. County officials say the funding system unfairly shortchanges San Mateo, Alpine and Mono counties while 55 other counties receive full amounts. The local jurisdictions received $76.5 million of roughly $114.3 million owed last year, creating a significant shortfall. The payments trace to a 2004 agreement where cities and counties accepted lower vehicle license fees and gave up some property tax revenue in exchange for growing state replacement payments, later protected by a constitutional amendment. Local leaders say the missing funds strain budgets for health care, public safety and affordable housing, and Alpine and Mono have joined the lawsuit seeking restoration of the withheld money.

Read at The Mercury News