San Mateo County in a lawsuit filed this week claims the State of California “shorted” it and its 20 cities $38 million in funds distributed yearly beneath a decades-old deal involving vehicle-license charges that’s now enshrined in regulation.
California’s unprecedented “raid” on the funding stream disadvantaged San Mateo County and cities from East Palo Alto to Daly Metropolis of “critical” funds for serving residents, whereas giving a “windfall” to the state, the lawsuit filed Monday in San Francisco County Superior Courtroom claimed.
The lawsuit accuses California of breaking a authorized requirement to supply the funding, and seeks a court docket order mandating fee of the $38 million, plus unspecified damages.
Named as defendants are the State of California together with state Finance Division Director Joe Stephenshaw and State Controller Malia Cohen. A spokesperson for the Finance Division stated the division had not seen the lawsuit but and couldn’t touch upon it.
“Once we receive it and review it we will obviously have a filing with the court in response,” stated division spokesman H.D. Palmer.
State Controller’s workplace spokesman Bismarck Obando stated not one of the lawsuit’s allegations “pertain to the State Controller in her official capacity.”
The lawsuit revolves round a sophisticated compensation scheme for counties and cities, based mostly partly on how far property taxes in a county’s faculty districts go towards assembly education-funding necessities. The method dates again to 2004, when native governments agreed to obtain a diminished share of vehicle-licensing charges, in alternate for annual funds from the state to compensate them for the loss.
“The funding formula was supposed to treat every county the same, but because of how our schools are structured, San Mateo gets left out — and our residents pay the price,” stated San Mateo County Government Mike Callagy.
Beneath the association, San Mateo County will get about 60% of the compensatory funds for the county area, with the remainder shared amongst its 20 cities.
When state legislators — going through a shortfall of $12 billion in keeping with state officers and $30 billion in keeping with a CalMatters evaluation — handed the 2025 price range, solely San Mateo County, tiny Alpine County south of Lake Tahoe, and Mono County east of Yosemite Nationwide Park have been shortchanged, the lawsuit stated.
Initially Revealed: August 27, 2025 at 3:00 PM PDT
