zerohedge.com / by Tyler Durden / Jul 7, 2017 4:50 PM
When you think about municipal bankruptcies, your mind likely conjures images of a decrepit Detroit littered with abandoned auto plants and burned down houses or the rapidly deteriorating city of Chicago with it’s gang wars and neighborhoods that look and feel more like an Iraqi battlefield than a U.S. suburb.
What you likely don’t think about is an ultra-posh suburb of San Francisco where the median home will run you over $1 million. But according to Bloomberg, the wealthy Northern California city of Moraga could be the next Cali domino to fall.
“We just don’t have enough revenue to take us through the future for many more years before we would really be in some of the situations other cities are, where they’re laying off mass numbers of employees or declaring bankruptcy,” town manager Robert Priebe said in an interview.
In Moraga, where the council discussed establishing a poet laureate position before approving the fiscal distress declaration, lowering headcount isn’t the first priority. The town’s $8.5 million budget this year authorizes about 36 full-time workers. Members instead opted to reduce services such as park maintenance in the community about 20 miles east of San Francisco.
“We’re not willing to hurt the public first,” Priebe said. “We’re not going to lay off half of our employees and have the quality of life of all of our citizens really be impacted.”
Moraga, where the median family income is $169,000 a year, illustrates an irony for some at the center of Silicon Valley’s latest economic boom. While real estate prices have surged due to the latest tech bubble, the local tax collections haven’t necessarily followed the same trajectory because of Proposition 13, the 1978 ballot measure that keeps homeowners’ tax bills from rising by more than inflation or 2% a year.