Property Tax in-lieu of Vehicle License Fee (VLF) Shortfall Overview
April 10, 2024
• County
• Cities
• Special Districts
School Districts
1 % General Levy
Local Property Tax Apportionment
School District B
School District
C
School District
D
K-12 School District Funding School District
A
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District B School District C
School District
D
K-12 School District Funding School District
A
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District B School District C
School District
D
K-12 School District Funding School District
A
• County
• Cities
• Special Districts
School Districts
1 % General Levy
ERAF (Education Revenue Augmentation Fund)
• County
• Cities
• Special Districts
School Districts
1 % General Levy
ERAF (Education Revenue Augmentation Fund)
ERAF
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District B School District C
School District
D
K-12 School District Funding - ERAF School District
A
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
K-12 School District Funding - ERAF School District
A
School District
C
School District B
ERAF
ERAF
ERAF
LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
Key Factors for a School District Turning Basic Aid School District A
School District
C
School District B
LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
Key Factors for a School District Turning Basic Aid School District A
School District
C
School District B
LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
Key Factors for a School District Turning Basic Aid School District A
School District
C
School District B
LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
Key Factors for a School District Turning Basic Aid School District A
School District
C
School District B
LCFF (Local Control
Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
Key Factors for a School District Turning Basic Aid School District A
School District
C
ERAFSchool District B
ERAF
In-Lieu Vehicle License Fee (VLF)
• Part of budget compromise of 2004
• Created State’sIn-lieuVLF paymentobligationto counties and cities(VLF no longertied to vehicle registration
collected by State)
• VLF growth tied to local assessed value growth
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
In-Lieu VLF Funding Sources School District
A
School District
C
School District B
ERAF
ERAF
ERAF
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
In-Lieu VLF Funding Sources School District
A
School District
C
School District B
ERAF
ERAF
ERAF
VLF In-Lieu
VLF In-Lieu
VLF In-Lieu
LCFF (Local Control Funding Formula)
Non-Basic Aid Districts Basic Aid Districts School District D
In-Lieu VLF Funding Sources School District
A
School District
C
School District B
ERAF
ERAF
ERAF
VLF In-Lieu
VLF In-Lieu
VLF In-Lieu
Non-Basic Aid Districts Basic Aid Districts School District D
School District
Vehicle License Fee Shortfall School District
A
School District
C
School District B
ERAF
40 10
ERAF
30 10
20 10
ERAF VLF Funding Example 1:
VLF Obligation – $110M
Available Sources -$120M
Non-Basic Aid Districts Basic Aid Districts School District D
Vehicle License Fee Shortfall School District
A
School District B
ERAF
ERAF
School District
C
Non-Basic Aid Districts Basic Aid Districts School District D
Vehicle License Fee Shortfall School District
A
School District B
VLF In-Lieu
VLF In-Lieu
School District
C
School District
C
ERAF
40 10
ERAF
30 ERAF10
20 10
VLF Funding Example 2:
VLF Obligation - $110M
Available Sources - $70M
Shortfall: $40M
What Happens When There Is a VLF Shortfall?
• The VLF Swap Statute does notspecify how the State funds its in-lieu VLF obligation when the
specified funding sources are insufficient to fully satisfy amounts owed to the cities and county.
• If there is a shortfall, the county auditor controller files a claim with the State/DOF requesting payment
to county andcities
• Statewide, only 3 counties (and cities within) experience VLF shortfalls: San Mateo, Alpine and Mono
• All other 55 counties (and cities within) receive their full annual VLF revenue amounts from the State through the funding mechanism specified in the VLF Swap Statute • Historically, the State has always made counties andcities whole by reimbursing any in -lieu VLF shortfalls througha special appropriation inthe State budget. • In years when the State has failed to include VLF shortfall amounts in the proposed budget, the counties and cities have relied on theirstate delegations to advocate for the inclusion of the reimbursement in the enacted State
budget.
VLF Shortfall Data for San Mateo County
• Historical countywide (cities andcounty) VLF shortfalls andmethod of payment:
• FY 2011-12 = $432,286 = Funding included in Governor’s FY 2013-14 proposed budget
• FY 2019-20 = $10,098,355 = Funding included in Governor’s FY 2021-22 proposed budget*
• FY 2020-21 = $96,051,945 = Funding included in Governor’s FY 2022-23 proposed budget
• FY 2021-22 = $32,440,253 = Funding included in Legislature’s FY 2023 -24 approved budget
*amount was subsequently revised
• Current unpaid countywide VLF shortfalls
• FY 2022-23 = $70,048,146 = No funding included in Governor’s FY 2024 -25 proposed budget
• FY 2023-24 = $114,390,900 = Estimated shortfall for current year ending on June 30, 2024**
**estimate is subject to change as more information becomes available • Projected future countywide shortfall amounts
• Future (FY 2024-25 to 2031-32)shortfall amounts are estimated to total between $52 to $332 million per year
Agency
2023202420252026202720282029203020312032
County $41 $67 $31 $83 $113 $145 $150 $170 $159 $197
SSF 3 5 2 6 8 11 11 12 11 14
All
other
cities
26 42 19 51 70 89 92 104 98 121
Total $70 $114 $52 $140 $191 $245 $253 $286 $268 $332
VLF Shortfalls (in millions)
2023 Actual
2024 Estimate
2025-2024 Projection