Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael P. Callagy, County Executive
Subject: Fiscal Year 2025-26 Budget for Measure K Funds
RECOMMENDATION:
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Measure K: Approve Measure K budget allocations in preparation for the Fiscal Year 2025-26 Recommended Budget, as set forth in Attachment A.
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BACKGROUND:
In 2012, County voters approved a ballot initiative, Measure A, to levy a countywide half-cent sales tax to financially support critical County services and facilities. In November 2016, Measure K was passed by County voters to extend the sales tax for 20 years, until March 31, 2043.
In preparation for the upcoming Fiscal Year (FY) 2025-27 budget cycle, the Board of Supervisors (“Board”) ad-hoc Measure K subcommittee, consisting of Supervisors Speier and Canepa, worked with staff to review the anticipated Measure K revenue for FY 2025-26 and planned a Board retreat, which was held on March 4, 2025 for the full Board to consider Board categories, including options for Measure K expenditures.
DISCUSSION:
Mid-year estimates for Measure K revenue for FY 2025-26 were initially anticipated to total approximately $117 million. Since the release of those estimates, political and economic factors have led to market instability, raising concerns about a potential economic downturn that would negatively impact the County’s revenue sources. As a result of the continued uncertainty, Measure K revenue estimates have been adjusted downward to $114 million.
Given the rapidly evolving fiscal landscape, ongoing concerns regarding potential shortfalls in the County’s Vehicle License Fee Adjustment Amount (VLFAA), and rising costs for shelter services, at the retreat, both staff and the Board expressed concerns that Measure K funds may need to be shifted in the future to prioritize the most critical County services. The Board directed staff to work with department heads and the Measure K ad-hoc subcommittee to prioritize Measure K initiatives based on essential services as they relate to housing, food security, and healthcare.
Additionally, the Board directed staff to send a letter to all recipients of Measure K funds to alert them of the County’s potential funding challenges and the possibility that funding would change in the coming fiscal year. Staff will send such a letter and report regularly to keep the Board apprised of these issues and will make budget adjustments based on the Board’s direction.
In preparation for the Recommended Budget in June, staff requests that the Board approve Measure K funding allocations for FY 2025-26 as outlined in Attachment A. Approval of the Measure K allocations set forth in Attachment A facilitates the County’s budget preparations and funding of Measure K contracts commencing July 1, 2025.
The recommended Measure K allocations are for FY 2025-26 only; however, staff notes that when the FY 2025-26 Recommended Budget is submitted for this Board’s review in June including these amounts, the materials will also include the preliminary budget for FY 2026-27. The Board will not be approving the preliminary budget for FY 2026-27 in June, but it will include Measure K funded County staff positions. Including the following fiscal year’s preliminary budget is necessary given the County’s two-year budget process and does not preclude the Board from making adjustments to the Measure K funded positions and expenditures prior to or in connection with the FY 2026-27 budget cycle.
EQUITY IMPACT:
The recommended Measure K budget addresses pressing community needs and priorities. The Measure K allocation process has considered the voices, needs, and priorities as expressed by local community members, and the funding allocations seek to fund services that measurably improve the lives of all San Mateo County residents.
FISCAL IMPACT:
The FY 2025-26 Recommended Budget is expected to include a total of $114 million in Measure K revenue. The Measure K funding allocations approved by the Board by this action and set forth in Attachment A are made for planning purposes in preparation for the FY 2025-26 Recommended Budget authorize the departments to budget Measure K funds and execute necessary contracts. The Recommended Budget will be submitted in accordance with the Government Code in June 2025.